On October 13, the FDA informed Egalet Corp. (NASDAQ:EGLT) that it would not meet the Prescription Drug User Fee Act (PDUFA) date for its decision on Arymo ER. The FDA’s final decision, when it does come, could have a big impact on other companies in the abuse-deterrent opioid space including Teva Pharmaceutical Industries Ltd. (ADR) (NYSE:TEVA), and others.

For access to the full Inside the FDA report on Egalet and Arymo ER, click here.

Arymo is Egalet’s abuse-deterrent formulation of morphine, which was up for review by the Anesthetic and Analgesic Drug Products Advisory Committee (AADPAC) and the Drug Safety and Risk Management Advisory Committee back on August 4. Arymo is a hard-as-steel version of morphine that cannot be chewed, ground up, or injected, or at least that is the aim of its abuse-deterrent properties. The meeting saw all 4 votes from the committee come out in favor of approval and all 3 abuse-deterrent labels. The vote was 18-1 for approval and an abuse-deterrent label for the intranasal and intravenous routes, and 16-3 for an abuse-deterrent label for the oral route. Nevertheless, the FDA demurred on meeting its deadline.

For access to the full Inside the FDA report on Egalet and Arymo ER, click here.

The FDA identified no particular issue with Egalet’s application for Arymo but advised the company that it is still working on the product label. Since then, the stock has tanked 28%.

Is the collapse warranted? We feel that it isn’t, and that Egalet is now a good short term buy. We say this with confidence because after thoroughly going through the 271-page transcript of the actual meeting, the joint panel did seem to be quite convinced that Arymo is in fact abuse-deterrent through all potential routes; oral, nasal, and intravenous.

So why the delay? The transcript does in fact reveal certain issues with the wording of the label, issues that were indeed brought up by many of the doctors voting on the joint panel, including those that voted yes on all 4 votes.

In this week’s Inside the FDA, we will take a close look at these issues, and why they may have caused the FDA to delay its decision. We will also look at what exactly makes Arymo abuse-deterrent, how it works, the target population, and the competition it has in the abuse-deterrent opioid space.

What may be of particular importance though as it relates to this transcript, and not just for Egalet, is the FDA’s decision specifically on the oral route. This is the vote that had the largest opposition from panelists, and while only 3 panelists voted against the abuse-deterrent label for the oral route, many others raised issues with the wording of the proposed label. If the FDA does deny this label for Arymo, it would speak volumes about how FDA review panels influence actual FDA decisions. Essentially, it would mean that it is not really the final vote tally that matters most, but rather the reasons behind the votes as explained by the panelists in the meeting itself – reasons investors don’t often get from cursory news pieces on FDA panel votes.

Bottom line, it would mean that going through FDA panel meeting transcripts is much more important for biotech investors than trading just on the news of the final vote tally. Aside from the nice bounce for Egalet likely to come if and when the FDA does approve Arymo, understanding the import of FDA panel votes and the reasoning behind each individual vote has longer term value.

For access to the full Inside the FDA report on Egalet and Arymo ER, click here.