Connetics Drug Is Not Approved

Connetics Corp., a specialty pharmaceutical company, said Tuesday that the Food and Drug Administration had issued a “non-approvable letter” and concluded that its drug Extina was ineffective for the treatment of seborrheic dermatitis.

As a result, Palo Alto-based Connetics said, it expects fourth-quarter product revenue and earnings per share to be at the low end of its guidance for revenue of $43 million to $46 million, and earnings of 16 cents to 18 cents a share.

The company said it would evaluate all options for Extina. But Connetics noted that any potential lost revenue for the drug in 2005 would be offset by savings on the costs of bringing the drug to market.

Connetics said it was surprised and disappointed by the decision because it believed, based on its discussions with the FDA, that it had met the requirements for approval.

The company said it still expected growth from its core brands in 2005 and was preparing for the launch of Evoclin, an acne treatment, next month. It also said it had submitted a new drug application for Velac, another acne treatment.

Connetics shares fell $1.64, or 5.9%, to $26.35 on Nasdaq.