DURHAM — Stock in Inspire Pharmaceuticals plunged more than 30 percent before the markets opened today on word that the Food and Drug Administration has questions about the company’s proposed drug.

Inspire (Nasdaq: ISPH) issued a statement at 7:30 AM saying that the FDA had sent a so-called approvable letter for Diquafosol, a treatment for the 10 million Americans suffering from dry eye.
Shares dropped from $16.35, its close on Friday, to around $11. They recovered 10 percent once the markets opened at 9:30 AM.

Inspire finished the day off 20 percent at $13.14, a drop of $3.21 a share.

Despite the FDA concern, Dr. Christy Shaffer said in a conference call later Monday morning that the FDA letter “is a positive step in the right direction.” She also pointed out that “90 percent” of drugs that receive an approvable letter are “ultimately” approved.

The letter indicates that the FDA may approve the drug. However, the FDA said it wanted more information through another clinical study in order to support efficacy claims submitted by Inspire for inclusion in product packaging.

“We are committed to working with the FDA to address the Agency’s additional requirements for approval of this important product,” Shaffer said in a statement.

Inspire said that it “plans to meet with the FDA as soon as possible.” The company noted that it had completed another study after its new drug application had been submitted for review and would present the results to the FDA to see if it “will be sufficient to meet this requirement.”

“No other specific deficiencies were noted in the approvable letter,” Inspire added.

The letter could mean a lengthy delay in bringing Diquafosol to market.

Shaffer said Inspire planned to push for European approval in 2004. She also pointed out that Allergan, Inspire’s corporate partner, has been “encouraging.” Inspire received the FDA letter on Friday.
If another study is required, Shaffer said similar studies have taken as long as six months.

“I just want to reassure you that through the holidays we will be working with the FDA,” Shaffer said in concluding the conference call. She received numerous questions from a large number of analysts, and she reiterated that Inspire would develop and deploy an action plan as quickly as possible. The FDA required a response from Inspire within 10 days. Shaffer said she hoped to schedule a meeting with the FDA “sometime in January.”

Inspire: www.inspirepharm.com