Guess which ASX cannabis share is crashing 36% following an FDA blow

Rookie mistake: This cannabis share just missed out on FDA approval for a simple reason.

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A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash

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The Botanix Pharmaceuticals Ltd (ASX: BOT) share price has returned from its trading halt and crashed deep into the red.

In morning trade, the cannabis-focused ASX dermatology share is down a massive 36% to 11.5 cents.

What's going on with this ASX cannabis share?

Investors have been selling Botanix shares after the company provided an update on its Sofpironium Bromide.

The company is currently in the process of seeking US Food and Drug Administration (FDA) approval for the anticholinergic/antimuscarinic drug for the treatment of primary axillary hyperhidrosis. This is a medical condition that results in excessive underarm sweating.

According to the update, Botanix has received a Complete Response Letter from the US FDA with respect to its new drug application (NDA) for Sofpironium Bromide.

Unfortunately, the ASX cannabis share has been dealt a blow by the regulator. However, it certainly isn't a knockout blow.

The only deficiency the US FDA identified was the "Instructions for Use" of Sofpironium Bromide. The regulator requires additional edits to the instructions and minor wording on the product carton, followed by another short human factors validation study before the NDA can be resubmitted.

Importantly, the company highlights that no clinical efficacy, safety, pharmacology, non-clinical or manufacturing issues were raised, and no additional clinical studies are required to support approval.

However, there will be a disappointing delay to contend with because of this blunder. It intends to resubmit the NDA early in the first quarter of calendar year 2024. It will then target approval by the middle of 2024.

'We are certainly disappointed'

Botanix's executive chairman, Vince Ippolito, sees positives and negatives from today's news. He said:

Given the validation of the safety and efficacy data submitted in the NDA for Sofpironium Bromide we were confident of a successful approval and so we are certainly disappointed this issue has held back the timely approval of this important product. No safety, efficacy, or manufacturing issues were raised by FDA and no new clinical trials are required – so this gives us a great confidence in our initial submission, data and future resubmission.

Importantly, we are now clear on what is required by the FDA, and it is our goal to work with FDA to address their comments on the patient instructions, so that we can resubmit for approval as rapidly as possible. Primary axillary hyperhidrosis is a medical condition which has debilitating effects on patients and with limited options available in the market, Sofpironium Bromide once approved, will provide a much needed alternative for this population.

Judging by the performance of the ASX cannabis share today, investors appear frustrated that the company has failed at such a seemingly simple step and now must wait upwards of nine months to go again.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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