Lipocine Inc (NASDAQ:LPCN) just announced an update relating to its lead development program and the company has taken a real hit on the back of the news. The update details the outcome of a Bone, Reproductive and Urologic Drugs Advisory Committee, which was set up to discuss the company’s New Drug Application (NDA) for an asset called TLANDO.

TLANDO is targeting an indication of testosterone replacement therapy in adult males. This is something of a touchy subject with the regulatory authorities in the US right now, with the concern primarily rooted in the high rate of misuse of testosterone products already on shelves.

Testosterone affects up to 10% of males, and is especially prevalent in men over 40 years old. It’s often colloquially referred to as male menopause.

For sufferers, testosterone injections are available, as are a range of other alternative administration types. The most popular is a gel product that gets absorbed into the skin. The problem is that many men that don’t suffer from testosterone deficiency take these easy administration products in an attempt to boost their testosterone levels. This is classified as misuse or even abuse by healthcare authorities, but it’s tough to combat it based on the easy access to these products and ease of use.

TLANDO falls into this category. It is testosterone in relatively low doses administered in pill form and Lipocine has designed it to offer an alternative to the injections that most currently require.

And the drug works. In studies conducted by Lipocine in patients that suffer from androgen deficiency syndrome, the drug was shown to be safe and effective in getting testosterone into the patient and boosts levels to somewhere around normal.

It’s this data that underpins the NDA that’s with the agency right now and it’s this data that was up for discussion at the Bone, Reproductive and Urologic Drugs Advisory Committee meeting.

The committee voted 13 to 6 against the question of the overall benefit/risk profile of TLANDO being acceptable to support approval as a testosterone replacement therapy.

In other words, the panel doesn’t think the drug should be approved in its current form.

A comment from committee member Douglas Bauer of the University of California San Francisco, as reported in MedPage Today clarifies why:

“I voted ‘no’ because … the indication is the same as the existing preparations and we know there is huge off-label use… I think that’s unacceptable, and I don’t think that the sponsor’s proposals to try to change that, frankly, are likely to be very successful.”

So the concern is that while this drug may offer a nice simple administration alternative to patients that suffer from this condition, it might also offer individuals that seek to misuse these sorts of drugs an additional option.

Lipocine was aware of this heading into its NDA submission, of course, and put some preventative measures in place as part of its application, but based on the comment from Bauer above, the panel feels that these measures aren’t sufficient to prevent abuse.

Markets have predictably responded negatively to the news, with Lipocine trading down substantially. At close of trade on Wednesday, the company traded at a more than 53% discount to its daily open price.

Chances are we’ll see a continuation of the weakness heading into the close of the week as markets absorb the news. Looking outside of share price implications, it’s now all about the drug’s PDUFA date, which is slated for May 8, 2018. The FDA doesn’t have to follow the recommendation of its panel, so there’s a chance that the agency will approve the drug despite the panel’s concerns.

If this turns out to be the case, Lipocine will quickly recover much of its lost strength and likely push past yesterday’s open pricing heading into the middle of the year.

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