Nastech Pharmaceutical Co. Inc.'s stock continued to fall Friday after it announced one day earlier an FDA not-approvable letter for its generic intranasal calcitonin-salmon formulation to treat osteoporosis in post-menopausal women.

Shares (NASDAQ:NSTK) dropped about 16 percent, or $2.40 on Thursday, to close at $12.86, and were down another 41 cents on Friday, closing at $12.45.

The agency's decision came as a surprise to investors and the company. Novartis AG's calcitonin-salmon nasal spray, Miacalcin, has been on the market since 1995, and Unigene Laboratories Inc. gained approval of Fortical calcitonin-salmon nasal spray last August. (See BioWorld Today, Aug. 16, 2005.)

Bothell, Wash.-based Nastech learned of the not-approvable status early last week and conducted a meeting with the FDA the next day, at which time the agency expressed its concern of potential immunogenicity that could result from an interaction between calcitonin-salmon and chlorobutanol, the preservative in the formulation.

The FDA accepted the ANDA in February 2004.

"It came as a bit of a surprise after 29 months that they raised the possibility that immunogenicity should be studied," said Steven Quay, Nastech's chairman, president and CEO, later adding that "we've always believed this was a true generic where only bioequivalency would need to be established."

If the company cannot satisfy the FDA's concerns with upcoming laboratory studies, it will need to conduct an immunogenicity study and pursue approval with a 505(b)(2) new drug application instead of an ANDA.

"Abbreviated NDA's are a very special part of the FDA law in which the only clinical data that the FDA is allowed to review for the NDA is bioavailability or bioequivalence," Quay said. "If there's any other interest in efficacy or safety, it no longer qualifies as an ANDA filing."

It was through the 505(b)(2) process that Fairfield, N.J.-based Unigene gained approval of Fortical. The company took a different route to approval because its product - which uses the same active ingredient, same dose and same administration protocol as the innovator drug, Miacalcin - is produced through a biotech fermentation process, and biotech products do not have "a generic avenue available," said Warren Levy, Unigene's president and CEO.

As a result, Unigene dealt with immunogenicity issues beforehand, and the company's product "uses a completely different preservative, a combination of alcohols," he said.

In early talks with the FDA, Nastech cited Desmopressin acetate (Ferring Pharmaceuticals; for diabetes insipidus) as an example of an innovator product - like Basel, Switzerland-based Novartis' Miacalcin - that did not use the preservative chlorobutanol, but that later resulted in an approved generic product that did use the preservative. The company has stressed that none of its own clinical trials of its generic Miacalcin version have exhibited any allergic reactions.

Quay said he believes the FDA's concerns stem from unusual immunological reactions to erythropoietin in which patients developed aplastic anemia after being treated with the red blood cell stimulator. The problem was traced to a Puerto Rican manufacturer that had changed the rubber stoppers in the manufacturing process of the drug, he said.

"This was discovered and sleuthed out by some scientists at the FDA," Quay said, "who are now looking at all peptides and proteins" more closely for safety issues.

Nastech's other lead products are unaffected by the FDA's concerns since the calcitonin-salmon formulation did not use the company's advanced tight junction drug delivery technology, which is part of several of the company's partnerships.

In June, Nastech announced an $89 million deal to formulate a spray version of the diabetes drug Byetta (exenatide), launched last year by Amylin Pharmaceuticals Inc., of San Diego, and Indianapolis-based Eli Lilly and Co. (See BioWorld Today, June 27, 2006.)

It also is working with Novo Nordisk A/S, of Bagsvaerd, Denmark, in an undisclosed area; and with Procter & Gamble Pharmaceuticals Inc., a division of The Procter & Gamble Co., of Cincinnati, on a parathyroid hormone nasal spray for osteoporosis. That product should enter Phase III trials by the end of this year.

Next in the company's pipeline is PYY3-36 for obesity, which lost its partner, Whitehouse Station, N.J.-based Merck & Co. Inc., earlier this year when the product failed to demonstrate efficacy in a preliminary proof-of-concept study. It currently is the subject of an investigational new drug application for a Phase I trial.

Nastech also works in RNAi, and recently bought Cambridge, Mass.-based Galenea Corp.'s intellectual property estate.

If the company manages to gain approval of its calcitonin-salmon formulation, it could take a share of Miacalcin's sales, which annually are about $400 million worldwide. Nastech's product is partnered with Par Pharmaceutical Inc., of Spring Valley, N.Y.

"It was our only foray into the generic sphere," Quay said, "and we think we'll resolve this with the FDA."