@Nnyck777 I was also surprised that this was the issue. I thought that as part of the FDA process there was an interim feedback step on the label, before the approval decsion. I had interpreted the absence of any communication from $BOT on a label discussion/modification prior to the approval decision as supporting the low risk of approval (I think I wrote as much in an earlier straw).

From a purely analytic perspective, a shift of 9-months to the right means a 7-8% drop in value, particularly given CEO assurance that they are funded to meet a delayed launch.

Being down 20% at time of writing purely shows that some of the hot money looking to trade the approval is getting out to have a punt somewhere else, although we've recovered strongly from the -37% in the first minutes of trading this morning. I suspect more strategic buyers might increase over the coming weeks given the buying opportunity and the now high level of assurance that approval will follow in 9 months or so.

All this underscores the risk in pre-revenue, first-product pharma companies.

Even though I expect that in a year I will regret it, I can't bring myself to hold a larger position. However, I am happy to hold and see where we stand in 9 month's time.

Despite the bad news, the absence of any comment on safety, efficacy or label claim are a further de-risking (even though we saw this risk as low to begin with). In that respect, today's news supports the thesis and you could argue that on a risk-reward basis I should be increasing my position.

However, it is a mis-step that perhaps reflects a broader lack of capability of this young firm. Correct labelling is a science and not an art, so it is a failure of execution to have gotten this wrong. I suspect the labelling input was provided by an external contractor (wouln't like to be in their shoes right now!)

In conclusion, I'll hold where I am. In the grand scheme of things, I don't consider this a big deal, but just a reminder of the breadth of risks we are dealing with, which I had already accounted for in a conservative position sizing.

I am still sitting here perplexed - so the FDA has agreed the product is:

1. Safe
2. Effective
3. manufacturing facility is gold and production is fine

Have you ever seen this before? I sure haven’t - essentially it’s approved with a few labeling adjustments.

How is this stock not going to sky rocket? A forward looking market should see this as almost a guarantee of income. Japanese market growing very quickly too.

I am scratching my head if my portfolio size wasn’t so skewed already I’d buy more.

Would this not be a golden opportunity for a fund like Milford? Yes a young biotech but a very experienced US team.

Somehow I get the feeling that the FDA have local/vested (USA) interests in mind.

They seem to have a habit of rejecting or slowing approvals from foreign entities.

Anyway enough spreading conspiracy theories.

Would be interesting to spend some time to present value the 8 month delay in potential revenue and see if that equates to a 20% fall (or around 40m wiped from the market cap)

@edgescape at a WACC of 11%, one years delay would be a loss of value (and SP) of 11% plus any excess cost. So my estimate is that 9 months delay might justify 8% SP fall.

Of course, conspiracy theories aside, the absence of any safety or efficacy comment from FDA and with approved manufacturing, the removal of these risks arguably more than offsets the delay risk, which is @Nnyck777 ’s argument. (If you value the business on zero approval risk, you get numbers way in advance of the SP.)

in response to @Nnyck777’s last post, I believe the % of NDA’s rejected for PIL or label deficiencies is very low. (I’m trying to find a source, but I think it is only a few percent of applications.) But it does happen.

I’m happy to wait as I expect that patience will be rewarded.

@Nnyck777 and @mikebrisy I agree that BOT does appear significantly derisked relative to last week.

I think there is more to the label issue than just the 3 points that were raised. I caught the middle-to-end of the webinar yesterday and I thought management while surprised where downplaying the significance of this a bit. Trying to sell that the timeline delay is a good thing as they now wont have salespeople sitting idle over the holiday period was gold class spin. They did mention that they will be having a meeting with the FDA to go through this decision and to understand fully whats needed. The part that makes me think they may have to do a little more than just tell people to wash their hands and fold the paper differently is that the FDA is requiring them to complete a human factors study. This appears overkill for the problems highlighted, and I assume they had already done one of these with the existing instructions, if these are standard practice.

This isn't to suggest that they wont get it all done and approved though, as safety and efficacy have been ticked off. It looks a bit more interesting to me off the back of this stumble. Especially if stop losses are hit today and the sell off continues over the rest of the week.

who needs amusement parks when you can ride biotech rollercoasters!

@Slideup see my other post just made. I've thought about this overnight, and I think the need for the observed study trial is because the product is gel-based and applied using an applicator. There is probably a right way and several wrong ways to use this device, which create the complexity. The patient information needs to be simple and clear and create a high probability across a representative population that it leads to correct use. If the FDA reviewer found the existing instructions unclear and provided feedback on this, then the updated instructions would need to be validated. Otherwise its just a to-ing and fro-ing on expert opinion.

The key words from yesterday's presentation on slide 7 are "Reformat the Instructions for Use so that it does not fold and "revise" the Instructions to further simplify the guidance for application."

I agree that most of the slide was taken up with trivial changes (label the applicator "applicator"). It also reinforces my assessment that these really were rookie errors that underscore $BOT's lack of experience. However, I believe that slide 7 is a complete and transparent portrayal of the situtation.

I expect that in the face-to-face meeting, $BOT will try to establish what level of "further simplify" will suffice, as clearly this is subjective matter.

A face-to-face conversation with the FDA is highly desirable because $BOT will want to surface any concerns, rationale or ideas that maybe didn't make the letter. They won't want to leave anything to chance.

Unless they totally screw up the revisions, I believe that approval at resubmission is as close to certain as you can get.

I didn't attend yesterday's presentation. Was there anything you heard that is at odds with this assessment?

@mikebrisy good point and nice study find. It does appear like they are all very easy fixes. Making clear how to use the applicator and the gel. I had been assuming that they had already done a human validation trial as part of the initial intructions, and as such all those new additions, which are relatively minor could be ticked off. But if this assumption is incorrect then I can understand the requirement for external validation through a independant trial.

Nothing really surprising out of the webinar and questions - was a good amount of shock and surprise portrayed from the CEO, board. I think their main objective was to calm the punters and they did a pretty good job of that. I think they were actually very relieved that no major problems were identified with the efficacy or safety side of things. The only thing that turned me off a bit was the downplaying the significance of the delay and trying to portray it as a silver lining. This is partly their job, just irks me a bit. I did get the impression that if you asked them last week this wouldn't have been on their radar of probable outcomes. They did mention that they have manufactured their first batches and these are being validated currently. They said these wont go bad as the expiration date clock doesn't start until it is bottled. Once valiodated these will become the first commercial product. They are doing shelf life trials with these batches and the approval delay will just let them extend this by 6 months -- they expect a 3yr shelf life and anything beyond that is a bonus but not critical. I am guessing they are doing some kind of accelerated stability trial (from memory I think this is something like 55c for 2 weeks is equivalent to 1 year normal shelf conditions), so the 6 month delay here doesn't really provide any benefit to them, but it does makes a nice story.

They reiterated they have plenty of cash and will keep running things tightly until its ready for commercial launch. They hadn't invested in any sales staff yet so no costs associated with that. I would be surprised if they can't address the problems and get approval. It sounded like once they fix the problem and get the trial data in then they request the review from the FDA and within 30days this has to occur. They already have the dates for the validation trial and it is just 40 people from the cohort of potential users - so they didn't see any problem filling it.

I can't see a reason for the SP to rally anytime soon but I think it will be interesting to see where it forms a base. The risk reward bet is much better now.

@Slideup better than a roller coaster - you get the ups and downs and the ulcer for free! I have sat with this stock for 6 years and I swear I have lost more sleep over this stock then anything else I own. Honestly, taking a day or two off to recover to dig my heels in for another 6 months delay. BOT is not co-operating and going according to my plan! I was meant to take profit to re-distribute to NEU and maybe retire ;)

Nice to hear from all participating here. Great study @mikebrisy. I understand the applicator is a new patent for this drug however human factors trials were definitely run on this and submitted to the FDA according to Matt Callahan in this last webinar. So I am unsure what specific hiccup was missed by management that the FDA picked up on. Let’s remember that this isn’t Vince or Howie’s first dermatological rodeo and they have 40 or so FDA approvals for dermatology drugs between them. Hence as a share holder I am willing to give them some leeway. It is also their experience that was the major reason I invested in the company.

@Nnyck777 sure. I wasn't having a go at Vince or Howie but more observing that the depth of expertise across all the different functions needed to deliver a new product to market will inevitably be thin at a small firm launching its first product. I wasn't aware the applicator was a new patent for this drug. That makes sense, as the instructions would likely therefore be novel too, bringing novelty risk, irrespective of how well they'd been tested/validated.

The CEO and Chair could never be across all the detail and their key role is allocating the right people. I didn't see this coming, but given that it has (and being wise after the event) I'm not surprised. Having worked at the big cap end of the business, it is amazing the resources, reviews and expertise that gets applied at each step leading to submission. Its just part of the risk profile that comes with the territory. The more I think about it, the more I like the risk-reward from this point forward, and when the price action settles, maybe I need to up my stake ... just a little. :-)

No doubt we will hear back from Howie after they've had their feedback session with the FDA. I imagine, he will be quite focused on ensuring the market understands the chances of success from this point forward.

No doubt also, the traders will be back in the run-up to the next approval milestone!