Shares of Chiasma Inc (NASDAQ:CHMA) lost over half their value in last trading session, after the Food and Drug Administration reported the new drug application for treatment of a rare ailment pertaining to the pituitary gland is not prepared for approval in its existing form. Following the news, the stock price of Chiasma plunged more than 63% to close the last trading session at $3.75. The decline came at a share volume of 7.36 million compared to average share volume of 465,618.

The update

Chiasma, a biopharmaceutical firm focused on enhancing the lives of patients with serious and rare chronic diseases, released an update pertaining to the previously reported Complete Response Letter that was received on April 15, 2016 from the U.S. It was regarding the company’s NDA for Mycapssa™ capsules product for the maintenance regimen of adult patients suffering with acromegaly.

The FDA releases complete response letters to highlight that the review cycle for an NDA is complete and the application is not prepared for approval in its existing form. After the update, the company would have to plan another clinical trial because its NDA didn’t offer substantial evidence of efficacy to support approval.

The management view

Mark Leuchtenberger, the CEO of Chiasma, said that they are disappointed, surprised and respectfully disagree with the recent FDA’s decision. The FDA encouraged them to request a close of review meeting so as to discuss the path forward, and they will do so. Leuchtenberger further added that they continue to believe in Mycapssa potential to help large number of patients suffering with this rare disease.

The company plans to work diligently to obtain U.S. approval for the treatment. In the meantime, Chiasma is proceeding with its recently commenced MPOWERED™ Phase 3 study comparing the efficacy and safety of Mycapssa to once-a-month somatostatin analog injections. This study is done in order to support a potential MAA with the European Medicines Agency.