Why Evolus Shares Are Getting Slammed

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Evolus Inc. (NASDAQ: EOLS) watched its shares come crashing down on Wednesday after the company announced that the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) for one of its drugs. Specifically, the agency singled out DWP-450 for the treatment of glabellar lines, also known as frown lines, in adult patients.

In the CRL, deficiencies cited by the FDA were isolated to items related to Chemistry, Manufacturing, and Controls (CMC) processes. No deficiencies were related to clinical or nonclinical matters. Evolus expects to respond with a complete submission to FDA within 90 days.

At the same time, the FDA issued an Establishment Inspection Report (EIR) to Daewoong Pharmaceutical confirming the favorable completion of its preapproval inspection of Daewoong’s manufacturing facility in South Korea, which was purpose-built for production of DWP-450.

The DWP-450 manufacturing facility is fully validated by Daewoong under current good manufacturing practice requirements and has capacity expected to meet anticipated product demand. Evolus plans to utilize the Daewoong facility to support commercial production following the anticipated approval of DWP-450.

David Moatazedi, president and CEO of Evolus, commented:

The successful completion of the FDA inspection of the manufacturing facility and issuance of the EIR represents a key operational milestone and entirely concludes the pre-approval inspection process by the FDA.

He added:

We are pleased with the progress we continue to make with the FDA, and this CRL confirms our confidence in our clinical submission. Deficiencies cited within the CRL are isolated to CMC matters and we expect to respond comprehensively within 90 days. Overall, we view these updates as positive, which together give us the line of sight necessary to build our commercial infrastructure. We look forward to working closely with the FDA and remain committed to bringing DWP-450 to market by spring 2019.

Shares of Evolus were last seen down about 18% at $11.93, with a consensus analyst price target of $22.50 and a 52-week range of $6.75 to $17.50.