In a major blow to Cempra Inc, the U.S. Food and Drug Administration (FDA) decided not approve the antibiotic for community-acquired bacterial pneumonia called solithromycin without additional clinical safety information and the resolution of manufacturing issues.

The FDA sent the pharmaceutical company a Complete Response Letter (CRL) that essentially rejects Cempra’s new drug application (NDA) for solithromycin. As a result, stocks for Cempra fell sharply after the Thursday announcement but have recovered somewhat in recent days.

Solithromycin is a next-generation macrolide antibiotic used to treat acute bacterial infection of the lung tissue. It is descended from a controversial drug called Ketek that was approved by the FDA in 2004 before being discontinued for being linked to fatal liver problems.

Cempra designed the drug after Ketek but removed some of the elements thought to have caused the liver issues. Because of the damage caused by Ketek, the FDA is likely taking a cautious approach to solithromycin, which may be why the agency wants more data before approving the drug.

“Based on their review of the NDAs, the CRL stated that the FDA determined the risk of hepatotoxicity had not been adequately characterized,” said Cempra in a statement. “The FDA noted the size of the safety database is limited to 920 patients who received solithromycin at the proposed dose and duration, and is too small to adequately characterize the nature and frequency of serious hepatic adverse effects.”

Instead, the FDA recommends Cempra consider a study with around 9,000 patients exposed to solithromycin to allow for the exclusion of serious drug-induced liver injury events.

The FDA’s concerns with solithromycin’s relation to liver issues are not new. On Nov. 2, the agency posted a review that noted a significant signal for hepatotoxicity in the solithromycin development program.

Despite the issue, shareholders were still hopeful that the drug would be approved after an outside FDA advisory panel narrowly voted 7 to 6 for approval of the drug. In the Thursday CRL, the FDA did not side with the advisory panel.

FDA Also Seeks Resolution to Manufacturing Problems

Another reason the FDA did not approve the drug was due to overall manufacturing issues at certain facilities.

“The CRL also stated that during recent inspections of the Wockhardt Limited and Hospira, Inc. manufacturing facilities, the FDA field investigator conveyed deficiencies to representatives of the facilities,” said Cempra in its statement.

The Wockhardt manufacturing facility is based out of India, but Cempra has found an alternative manufacturer in India called Uquifia.

According to the FDA, the drug will not be approved until a satisfactory resolution of manufacturing deficiencies is reached. The details were not provided in the letter.

Cempra Will Likely Cease Development of Solithromycin

The future of Cempra and solithromycin is unclear, but experts say it’s likely that the pharmaceutical company will stop making the drug due to several hurdles.

Even if solithromycin is approved, it will likely carry a warning of the potential for liver issues and would be limited to certain patients.

Andrew Berens, an analyst with Morgan Stanley, said in a client note that the size and cost of the proposed study and restrictive labeling will cause Cempra to halt development of the drug.

Despite the pessimistic predictions, Cempra continues to stand by its development of the drug.

“As the rates of antibiotic resistance continue to rise, there is an unmet medical need for new antibiotics to treat patients with CABP and Cempra is committed to working with the FDA to achieve the approval of solithromycin as quickly as possible,” David Zaccardelli, acting chief executive officer of Cempra, said in a statement.