$KMDA,,,Be Careful with this one: Kamada announ
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Posted On: 06/24/2017 3:43:22 PM
$KMDA,,,Be Careful with this one:
Kamada announced on Thursday that it has withdrawn the Marketing Authorization Application (MAA) for its inhaled Alpha-1 Antitrypsin (AAT) therapy. The company has been developing this asset in an indication of Alpha-1 Antitrypsin Deficiency (AATD), and submitted to the European Medicines Agency (EMA) for approval based on what looked like some relatively solid phase 3 data. As per the latest news, however, the data isn’t as strong as it first looked. We don’t have too much information on the driver behind the withdrawal, other than a statement by Kamada saying that the EMA believes that the data provided is insufficient and that an additional clinical trial will be required.
The fact that an additional clinical trial will be required is the key input here. When a regulatory agency turns down a drug, it isn’t always necessarily really bad news, but if it turns down a drug and requests a fresh trial, it means the company in question is going to have to allocate capital towards conducting said trial.
Generally, this capital derives from equity raise, and any such equity raise is normally dilutive to shareholders. Markets take this into account and will often sell-off on a company on the back of such news as a result, in an attempt to rebalance share price against the potential impact of dilution.
That is exactly what we are seeing here, and Kamada currently trades for a 17% discount to its preannouncement capitalization.
Kamada announced on Thursday that it has withdrawn the Marketing Authorization Application (MAA) for its inhaled Alpha-1 Antitrypsin (AAT) therapy. The company has been developing this asset in an indication of Alpha-1 Antitrypsin Deficiency (AATD), and submitted to the European Medicines Agency (EMA) for approval based on what looked like some relatively solid phase 3 data. As per the latest news, however, the data isn’t as strong as it first looked. We don’t have too much information on the driver behind the withdrawal, other than a statement by Kamada saying that the EMA believes that the data provided is insufficient and that an additional clinical trial will be required.
The fact that an additional clinical trial will be required is the key input here. When a regulatory agency turns down a drug, it isn’t always necessarily really bad news, but if it turns down a drug and requests a fresh trial, it means the company in question is going to have to allocate capital towards conducting said trial.
Generally, this capital derives from equity raise, and any such equity raise is normally dilutive to shareholders. Markets take this into account and will often sell-off on a company on the back of such news as a result, in an attempt to rebalance share price against the potential impact of dilution.
That is exactly what we are seeing here, and Kamada currently trades for a 17% discount to its preannouncement capitalization.
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