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Dec 9 (Reuters) - Targanta Therapeutics Corp TARG.O said U.S. health regulators declined the approval of its antibiotic and raised questions about the safety of the drug, triggering a 63 percent drop in its shares.
The U.S. Food and Drug Administration asked the company to perform an additional clinical study to show efficacy and safety of the drug, oritavancin, for treating complicated skin and skin structure infections (cSSSI), Targanta said, citing a response letter from the FDA.
Analysts said the FDA response was expected, but were surprised by the safety issues raised by the agency as it was not mentioned previously.
The FDA mentioned several safety findings from the two pivotal studies for cSSSI, including a higher dropout rate and a greater number of patients who died or had a serious adverse event in the oritavancin-treated group, Targanta said.
Last month, an advisory committee to the FDA had narrowly voted against approval, saying it could not conclusively prove the drug was as effective as existing treatments, contradicting an earlier FDA staff determination.
Analysts expect the additional trial to take around two years to complete and believe that the company could secure a partner to meet its funding needs.
"They need to somehow raise cash. Because they have a late-stage asset that has a relatively clear path to approval, albeit with some risk, they would probably get some commercial interest," Cowen and Co analyst Ian Sanderson said by phone.
He said a development or commercialization partnership was the most feasible alternative with the company.
However, the drug is expected to get approved eventually.
"We believe that oritavancin, despite changing hands a couple of times, is a good drug with a number of differentiated characteristics," Leerink Swann analyst Howard Liang said.
Oritavancin was originally discovered and developed by Eli Lilly (LLY.N) and was licensed to InterMune Inc ITMN.O. Targanta acquired the worldwide rights to oritavancin from InterMune in late 2005.
Targanta is seeking FDA approval to sell the drug under the name Nuvocid for adults with complicated skin infections from a variety of bacteria, including some resistant to other antibiotics. Shares of Targanta were down 98 cents to $1.27 in midday trade. They had touched a low of 83 cents earlier in the day, making it one of the top percentage losers on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Himani Sarkar, Anil D'Silva)