A2 Milk's share price drops after US FDA defers formula request

The US FDA has deferred a decision on whether to allow a2 Milk's formula into the US. Photo / File

A2 Milk's share price fell sharply after it said the US Food and Drug Administration had deferred the company's request to send infant formula to the United States to help alleviate the product shortage there.

In a statement to the NZX, a2 Milk said it received notification from the FDA deferring further consideration of the request for enforcement discretion to import infant milk formula products.

"The company has also subsequently been advised by the International Dairy Foods Association that equivalent letters have been sent to all pending enforcement discretion applicants, indicating that the FDA is deferring any further review at this time of all pending applications," a2 Milk said.

By late morning Milk's shares were down 58c or 10.3 per cent at $5.05.

The stock has been climbing sharply over the last month on the back of expectations that it would gain FDA approval, along similar lines to the approval given to its Australian competitor, ASX-listed Bubs.

Early this month, A2 Milk, whose products contain just the a2 beta protein and not the a1 beta protein, poured cold water on expectations that it would soon gain FDA approval.

The company said at the time that there was no certainty as to the outcome of the application or the timing of any approval.

A2 Milk's main infant formula market is China. Analysts have debated whether the ability to send stock to the US would be a help or a hindrance for the former high flier, whose earnings have come under pressure in recent years.

In February, America's biggest infant formula maker, Abbott, recalled product and stopped production at one of its facilities in Michigan after bacteria was found at the site, which led to a national shortage.

The US is still short of infant formula.

A2 Milk's share price has been gaining ground in recent weeks.

The stock last traded at $5.63, up almost a dollar from its late July level.

A2 Milk's result for the June year is expected on August 30.

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