Novo Nordisk A/S (ADR) (NVO), Dynavax Technologies Corporation (DVAX), Merck & Co., Inc. (MRK): Three Biggest FDA Rejections This Year (So Far)

In this case, the FDA decided against approval for Merck & Co., Inc. (NYSE:MRK)’s insomnia drug suvorexant. The agency’s primary concern related to safety concerns with high dosages of the drug. However, the FDA left the door wide open for approval of suvorexant at lower doses.

The good news for Merck & Co., Inc. (NYSE:MRK) was that no further clinical studies were required to move ahead with pursuing regulatory approval for 10 mg dosages of suvorexant. However, the manufacturing study needed for the lower dose means that possible approval is pushed back to at least the summer of 2014.

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Other companies have felt the lack of love from the FDA this year, too. Gilead Sciences, Inc. (NASDAQ:GILD), for example, failed to win approval for HIV drugs elvitegravir and cobicistat. In a bit of a twist, these drugs are part of Gilead Sciences, Inc. (NASDAQ:GILD)’s four-drug combo Stribild, which the FDA approved in 2012. The FDA cited quality control issues with the manufacture of elvitegravir and cobicistat as the reason for the rejection.

Likewise, Johnson & Johnson (NYSE:JNJ) got turned down for the second time in its bid to win approval for Xarelto as a treatment for acute coronary syndrome, or ACS. The FDA previously approved the blood thinner for other indications.

If you’re new to investing in pharmaceutical and biotech companies, it’s important to understand the potential impact that negative FDA decisions might have on a stock. Dynavax Technologies Corporation (NASDAQ:DVAX)’s future largely hinged on Heplisav, so buying shares before the FDA decision entailed significant risk. On the other hand, buying Merck & Co., Inc. (NYSE:MRK) before the announcement on suvorexant wouldn’t have been such a risky proposition, because the drugmaker has plenty of other drugs generating revenue and more in its pipeline.

There are several more FDA decisions between now and the end of 2013. It’s quite possible that even bigger rejections are in store. The “complete response letter” club always has room for more.

The article 3 Biggest FDA Rejections This Year (So Far) originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences and Johnson & Johnson and owns shares of Johnson & Johnson.

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