An Indirect Sign of Good Things to Come

As stock-moving events go for biotechs, getting the EU to sign off on the manufacturing facility doesn't rank very high. Honestly, I can't even remember seeing a biotech ever issuing a press release about it.

Yet Alexza Pharmaceuticals (NAS: ALXA) was up as much as 7% today on just that news, before trailing off later in the day. The company announced -- in a press release -- that it received its EU Certificate of GMP Compliance of a Manufacturer. That's the official way of saying it can make its inhaled antipsychotic Adasuve and sell it in the EU, assuming it gains approval. That decision from the EU regulatory agency isn't expected until at least December.

So what's the big deal? While an approval is the real stock-moving event, clearing up manufacturing issues seem to be the key to getting Adasuve on the market.

In May, the Food and Drug Administration rejected the drug, and management said manufacturing issues were the only major problem the agency had with Adasuve. Alexza already resubmitted for approval and expects a new ruling by the FDA on or before Dec. 21.

If one regulatory body has signed off on the manufacturing of the drug, it's certainly a good sign that the FDA will do the same. Just keep in mind that the agencies don't always move in lockstep. There are plenty of examples of drugs that are approved in the E.U. and not in the U.S.: Merck's (NYS: MRK) Cordaptive, InterMune's (NAS: ITMN) Esbriet, and Sanofi's (NYS: SNY) Acomplia, just to name a few.

Generally speaking, it's easier to get a drug approved in the EU than the U.S., but the stateside market is more important to Alexza because it has the full rights to the drug here but licensed out the European rights to Grupo Ferrer.

Unfortunately, manufacturing remains mostly a black box to investors. The EU manufacturing approval shines a little light on the box, but investors won't be certain that there isn't anything else hiding in the box until the FDA rules at the end of the year. Expect a much bigger jump than the one we saw today if the FDA approves the drug this time around.

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