Resources for Food and Drug Administration (FDA)

FDA Approval Bleeds Omrix's Stock

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It's interesting when a biotech company announces an FDA approval for a new indication, yet its stock price remains flat or even goes down. Either approval was completely expected, as it was for Onyx Pharmaceuticals (Nasdaq: ONXX), or investors think there's very little market for the product.

Let's see which camp Omrix Biopharmaceuticals' (Nasdaq: OMRI) approval for Evicel falls in. Shares of the Rule Breakers pick are down since the company announced the FDA approval of its label expansion yesterday.

Evicel is a human-derived product designed to stop bleeding during surgery. It has previously been approved for liver and vascular surgery, but now Omrix's marketing partner, Johnson & Johnson (NYSE: JNJ), will be able to market it to all surgeons. Ironically, in the clinical trials to support the label expansion, Evicel was compared to Johnson & Johnson's Surgicel cellulose product, so Johnson & Johnson will be selling its own competing product.

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