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Monday, October 23, 2006

Replidyne Feels FDA Pain in Non-Approvable Letter

Replidyn (RDYN) is feeling the wrath of the FDA. It may be worse for the newer biotech sector as far as recent and near-future biotech IPO's, too. The reason it is worse than it sounds is because RDY is a fresh IPO and the street was expecting this to actually go through to at least an "Approvable" status if not an outright approval. At least its partnership with Forest Labs (FRX) doesn't look dead on arrival.

Replidyne (RDYN) and Forest Laboratories (FRX) reported that the FDA has issued a Non- Approvable letter for Replidyne's new drug application (NDA) for faropenem medoxomil. This is the company's novel oral, community antibiotic. Replidyne submitted the NDA in December 2005 for four different adult indications:

-acute bacterial sinusitis (ABS),
-community-acquired pneumonia (CAP),
-acute exacerbation of chronic bronchitis (AECB),
-and uncomplicated skin and skin structure infections (SSSI).

The NDA as filed was based on the results of eleven Phase III clinical trials for these indications and a safety data base of more than 5,000 patients treated with faropenem.

FDA recommends further clinical studies for all indications. For ABS and AECB, superiority studies may be needed and for CAP, studies requiring additional microbiologic evaluation. In its letter the FDA did not raise any safety concerns or chemistry, manufacturing or controls (CMC) issues related to the product. Replidyne and Forest intend to discuss the clinical plans with the FDA including the number of trials needed for each indication, and expect that a minimum of two years will be required for completion of the clinical studies.

"Based on the filing packages we included in our NDA submission, particularly for ABS and CAP, we are disappointed that the FDA is requiring additional clinical trials," said Kenneth J. Collins, President and Chief Executive Officer of Replidyne. "However, we believe that at the doses studied faropenem has a clearly demonstrated favorable safety profile. Replidyne is in a strong financial position to continue the development of faropenem with our partner Forest and to advance our promising pipeline."

Howard Solomon, Chairman and Chief Executive Officer of Forest, stated, "It is our intention to work together with Replidyne to conduct the additional clinical trials required to obtain FDA approval for at least two respiratory indications in order to launch faropenem. Upon approval, faropenem will be a valuable additional pipeline product for us."

The "good" news (if you can derive anything good here) is that Forest at least issued a joint statement with Replidyne, so if the company is planning to dump the partnership it is at least hiding it intentions of doing so.

RDYN has only been public for about 6 weeks and its trading range is $8.40 to $10.74. RDYN closed at $10.24 on Friday and its last trade pre-market was down as low as $5.00 in pre-market activity.

Jon C. Ogg
October 23, 2006

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