Impax Laboratories Inc.
), which fell 15.2% immediately after the company announced that
the FDA has inspected its Taiwan facility, continued to fall in the
subsequent trading session. Shares are down 16.6% since the
The FDA observed potential problems when it conducted a general
Good Manufacturing Practices (GMP) inspection and a Pre-Approval
Inspection at its Taiwan facility where the company will
manufacture its Parkinson's disease drug Rytary. The inspection was
conducted from Jul 21 to Jul 26, 2014.
The FDA issued Form 483 with 10 inspectional observations which it
wants Impax to address. The problems to be addressed involve
validation of equipment, testing of samples, rejection of drugs
that fail to meet the established specifications, and measures
designed to keep microorganisms out of products.
Impax expects to respond to these observations within 15 business
days from the receipt of Form 483. Impax is working diligently on
the issues noted by the FDA and expects to resolve the matter
We note that Impax has been hampered by quality control issues
since 2011. In May 2011, Impax had received a warning letter from
the FDA after an inspection of the company's facility at Hayward,
In 2012, the FDA conducted a re-inspection of the concerned
facility. A satisfactory re-inspection by the FDA is mandatory to
close the warning letter. However, the outcome of the re-inspection
was not positive and the regulatory body issued a new Form 483 in
As for the Taiwan facility inspection, the company said it does not
know if the outcome of the inspection will affect the FDA's review
of Rytary. In April this year, Impax resubmitted a New Drug
Application (NDA) for Rytary with updated safety and stability
information. The FDA is expected to come up with a decision on
Rytary's approval status by Oct 9.
The issuance of Form 483 is a major setback for the company. While
we have low visibility as to when these issues can be resolved,
chances remain high that Rytary's approval may get delayed.
Impax currently carries a Zacks Rank #3 (Hold). Investors looking
for better-ranked stocks in the healthcare sector can consider
), Allergan Inc. (
) and Dr. Reddy's Laboratories Ltd. (
). While Mallinckrodt and Allergan carry Zacks Rank #1 (Strong
Buy), Dr. Reddy's Lab is a Zacks Rank #2 (Buy) stock.
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