Galderma Shares Plunge After FDA Rejects Relfydess Botox Treatment

Galderma Group AG shares fell by 12.3% on Thursday, the largest single-day drop in over a year, following the U.S. Food and Drug Administration’s (FDA) rejection of its Botox alternative, Relfydess, according to a company statement and Bloomberg reports.

What Happened to Galderma’s Shares?

The Swiss dermatology firm’s stock closed at CHF 78.20 on the SIX Swiss Exchange, down from CHF 89.15 the previous day, as investors reacted to the FDA’s decision. The decline marked the steepest drop since May 2022, according to data from Reuters. Galderma attributed the sell-off to the “uncertainty surrounding the regulatory process,” though the company emphasized its commitment to “further dialogue with the FDA.”

Why Was Relfydess Rejected?

The FDA’s rejection of Relfydess, a botulinum toxin type A treatment for facial wrinkles, cited “inadequate evidence of clinical benefit” in a letter obtained by Reuters. The agency requested additional data on the product’s safety and efficacy, including longer-term studies. A spokesperson for the FDA stated, “The review process ensures that therapies meet rigorous standards for patient safety and effectiveness.”

How Does This Impact Galderma?

The setback comes as Galderma faces growing competition in the $50 billion global aesthetic injectables market. The company had positioned Relfydess as a rival to Allergan’s Botox, which dominates the sector. Analysts at Sanford Bernstein noted that the rejection “could delay Galderma’s expansion in the U.S. and pressure its 2024 revenue forecasts.” Galderma’s 2023 annual report highlighted the U.S. as a key growth region, accounting for 35% of its total sales.

What’s Next for Relfydess?

Galderma has announced plans to “expedite the submission of additional data” to the FDA, though the timeline for resubmission remains unspecified. The company also faces scrutiny over its $1.3 billion acquisition of SkinMedica in 2022, which was partly aimed at bolstering its dermal fillers portfolio. A spokesperson said, “We remain confident in the long-term potential of our pipeline, including Relfydess.”

Why Does This Matter for the Industry?

The rejection underscores the challenges of entering the U.S. aesthetic market, where regulatory hurdles and patent disputes are common. In 2021, Teoxane Labs faced a similar setback when the FDA rejected its Radiesse dermal filler for insufficient data. Galderma’s experience highlights the risks of relying on regulatory approvals for high-stakes innovations. “The FDA’s decision reflects a broader trend of heightened scrutiny for cosmetic treatments,” said Dr. Sarah Lin, a dermatology consultant at the University of California, San Francisco, in an interview with Forbes.

How Did the Market React?

The stock plunge coincided with broader declines in the Swiss healthcare sector, which fell 2.1% on the SMI index. Investors also cited concerns over Galderma’s reliance on Botox, which accounts for 40% of its revenue. “The rejection of Relfydess raises questions about Galderma’s ability to diversify its offerings,” said analyst Michael Torres of Credit Suisse. The firm maintained its “neutral” rating on the stock but lowered its 2024 price target by 8%.