NEW YORK (AP) — Shares of Impax Laboratories Inc. lost about a quarter of their value Tuesday after the drugmaker disclosed new problems at a manufacturing plant in California.
THE SPARK: After the market closed on Monday, Impax said the Food and Drug Administration identified 12 different problems at the Hayward, Calif., facility that Impax needs to fix. That includes three issues the company had previously addressed.
THE BIG PICTURE: The FDA sent Impax a warning letter in January 2011 based on an inspection of the plant. The original warning letter cited problems in Impax's sampling and testing, its production record review, and the process it used to determine why manufacturing batches did not meet quality specifications.
A March 2012 inspection turned up other problems even though the original ones had been resolved. Impax said it has worked hard to make sure it meets the FDA's standards and is disappointed with the results of the latest inspection.
The company said it will respond to the FDA within 15 business days, as required by law, and plans to address the problems the FDA identified.
Impax needs to address the problems to gain approval of Rytary, a drug designed to treat symptoms of Parkinson's disease. That's because it plans to manufacture Rytary at the Hayward plant.
THE ANALYSIS: Jefferies & Co. analyst Corey Davis said investors feel Impax has not responded to the manufacturing problems with enough urgency because so many key generic drugs are made at the facility. Impax also did not discuss the ongoing inspection during its fourth-quarter conference call Feb. 25.
Davis said he thinks the problems will be cleared up eventually, but he lowered his 2013 sales estimate by about $100 million and his 2014 estimate by $60 million, mostly because he expects lower sales of Impax's generic version of the attention deficit hyperactivity disorder drug Concerta.
He now forecasts 2013 net income of 48 cents per share for Impax, down from an earlier estimate of 85 cents per share. FactSet says analysts expected $1.08 per share on Friday.
The analyst kept a "Hold" rating on Impax shares and cut his price target to $17 per share from $18.
SHARE ACTION: The Dow Jones Industrial Average reached all-time highs Tuesday, but Impax stock lost $5.22, or 26 percent, to $14.80 in afternoon trading after dropping as low as $14.69, their lowest price since August 2011.