OBSERVER file photo The more than 400,000-square-foot facility in Dunkirk could be in operation later this year.

Athenex, which has built a state of the art facility in the town of Dunkirk off Route 5, was hit with a major setback Monday morning. In a news release, the company noted the U.S. Food and Drug Administration said its new drug application for oral paclitaxel plus encequidar for the treatment of metastatic breast cancer is not ready for approval in its present form.

Its stock on the NASDAQ tumbled quickly. After closing Friday at $12.10, it opened at $5.39 and closed at $5.46 on Monday.

In its complete response letter, the FDA indicated its concern of a safety risk to patients. The FDA also expressed concerns regarding the uncertainty over the results of the primary endpoint of objective response rate at week 19 conducted by blinded independent central review.

“Our clinical and regulatory teams are disappointed by the complete response letter,” said Dr. Rudolf Kwan, chief medical officer of Athenex. “We plan to work with the agency to resolve the issues raised in the (complete response letter) and to obtain approval for oral paclitaxel plus encequidar in metastatic breast cancer.”

The FDA recommended that Athenex conduct a new adequate and well-conducted clinical trial in a patient population with metastatic breast cancerrepresentative of the population in the U.S. The agency determined that additional risk mitigation strategies to improve toxicity, which may involvedose optimization and/or exclusion of patients deemed to be at higher risk of toxicity, are required to support potential approval of the new drug approval.

Athenex plans to request a meeting with the FDA to discuss the agency’s response, engage in a dialogue on the design and scope of a clinical trial toaddress the FDA’s requirements and align on the next steps required to obtain approval.

“We remain committed to the breast cancer community and will explore the best pathforward to obtain regulatory approval,” Dr. Johnson Lau, chief executive officer of Athenex, said. “In the interim, we will identify and undertake the appropriate internal organizational adjustments accordingly.”

During the conference call on Monday morning, Lau noted company officials were “surprised and disappointed with the FDA decision. … We remain committed to exploring all options to unlock value from this asset.”

Jeff Yerdon, chief operating officer at Athenex, did touch base on the Dunkirk site during a conference call with investors. He said construction at the location is nearly complete. “The facility will serve the commercial needs of our specialty pharmaceutical business and ultimately, those of our proprietary products,” he said.

“Beginning in the second half of this year we plan to dedicate a portion of the facility to manufacturing of the 503B products.”

According to the FDA, 503B compounding pharmacies act as outsourcing facilities that may manufacture large batches with or without prescriptions to be sold to healthcare facilities for office use only. These pharmacies are allowed to use larger batches to lower their manufacturing costs, passing the savings onto consumers.

Overall, the company reported a loss of $49.5 million in its fourth quarter. On a per-share basis, the Buffalo-based company said it had a loss of 53 cents.

The results fell short of Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for a loss of 42 cents per share.

The biopharmaceutical company posted revenue of $21.8 million in the period, which topped Street forecasts. Three analysts surveyed by Zacks expected $19.5 million.

For the year, the company reported that its loss widened to $146.2 million, or $1.72 per share. Revenue was reported as $144.4 million.

Before Monday, Athenex shares climbed slightly more than 9% since the beginning of the year. The stock has increased roughly 2% in the last 12 months.

The Associated Press contributed to this report.