“However, these issues might be able to be resolved through FDA’s routine infant formula submission process. Given the nature of the infant formula supply challenges and the need to quickly address the shortage the FDA is deferring consideration of these specific requests at this time and prioritizing others for review.”
A2 Milk’s shares sank as much as 9 per cent early on Wednesday but ended the day 35¢, or 6.8 per cent, lower to $4.76 each.
Chief executive David Bortolussi was hoping to follow smaller rivals Bubs Australia and Bellamy’s Organic. Both those companies got permission to sell infant formula under the US government’s Operation Fly Formula.
Mr Bortolussi was unavailable for further comment on the FDA decision. It is not clear whether the company plans to keep pursuing this path to import tins via the agency’s routine infant formula submission process.
A2 Milk lodged its application with the FDA under an “enforcement discretion” policy in May. A2 Milk historically focused on the China market for its a2 Platinum formula and does not sell any tins in the US market, but does sell its fresh milk products.
The formula shortage occurred when a major US factory was shut down due to a contamination scare. This plant is now open again, but stock remains tight.
An FDA spokesman said earlier that it continued to work around the clock to address current supply challenges, including reviewing a number of requests as quickly as possible from other manufacturers seeking to import.
“This includes a review of information pertaining to nutritional adequacy and safety, including microbiological testing, labelling, and additional information about facility production and inspection history. The FDA will continue to use this information to consider on a case-by-case basis opportunities to exercise enforcement discretion.”
On August 5, Nestlé Health Science from the Netherlands was the last company to gain approval from the FDA to sell 37,500 cans (about 495,000 8-ounce bottles) of its hypoallergenic formula made for those babies with cow’s milk protein allergy or multiple food allergies. The product is expected to be available this month.
Wilson Advisory analyst James Ferrier said this was a disappointing outcome for a2 Milk given a possible short-term earnings bump and an opportunity to build brand awareness in the US.
He warned it also created some uncertainty for those players delivering tins now but seeking more permanent access beyond November 14, the proposed end date for such imports.
Mr Ferrier did not change any forecasts since he did not assume any sales contribution under the FDA’s temporary policy.