Jazz Tumbles as FDA Rebuffs Drug’s Date-Rape Chemical

Jazz Pharmaceuticals Inc. (JAZZ) tumbled the most in 19 months in Nasdaq Stock Market trading after failing to win a U.S. panel’s backing for a fibromyalgia drug that contains a chemical linked to date rape.

Jazz fell $2.27, or 22 percent, to $7.96 in composite trading at 4 p.m. New York time. It was the Palo Alto, California-based company’s biggest single-day drop since Jan. 15, 2009.

The treatment, known as JZP-6, doesn’t provide enough benefits to outweigh risks of abuse and accidental overdose, outside advisers to the Food and Drug Administration concluded at an Aug. 20 meeting. While the FDA usually follows its advisory panels’ recommendations, it isn’t required to do so.

The drug, known chemically as sodium oxybate, is sold by Jazz under the name Xyrem for people with narcolepsy, a rare sleep disorder. The company is seeking approval to market the treatment for patients with fibromyalgia, a more common disorder that causes chronic muscle pain and fatigue. Illegal forms of the drug’s active ingredient, the sedative gamma hydroxybutyrate, or GHB, have been used as club drugs and in the commission of date rapes, according to the National Institute on Drug Abuse.

‘Multitude of Concerns’

“The negative vote was driven by a multitude of concerns that went beyond the ones identified in the FDA briefing documents,” said William Tanner, an analyst with Lazard Capital Markets in New York, in a report today. He cut his target price for shares to $6.50 from $11 and removed fibromyalgia use from his revenue projections for Xyrem.

Jazz expects the FDA to complete its review of the drug by Oct. 11. The company has proposed selling it under the name Rekinla through about 15 specialty pharmacies that would mail it to patients. The Drug Enforcement Administration classifies Xyrem as a schedule III controlled substance, meaning distribution is restricted because of the potential for abuse.

Jazz will “carefully consider the input of the committee as we seek to address the needs of fibromyalgia patients,” Bruce Cozadd, chairman and chief executive officer, said in a statement after the FDA panel meeting.

To contact the reporter on this story: Molly Peterson in Bethesda, Maryland at mpeterson9@bloomberg.net; Tom Randall in New York at trandall6@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

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