Adds shares in paragraph 3, analyst comment in paragraphs 4 and 11, background in paragraphs 5, 6 and 8

By Siddhi Mahatole

June 2 (Reuters) - Drug developer Cingulate CING.O said on Tuesday the U.S. Food and Drug Administration declined to approve its treatment for attention deficit hyperactivity disorder, citing manufacturing-related concerns.

In its complete response letter, the FDA did not flag any concerns about the drug's safety or effectiveness, Cingulate said.

The decision follows Cingulate's March disclosure that its contract manufacturer had received FDA observations — including one tied to CTx-1301 — which the company said in May it was working to address.

Shares of the Kansas-based company, which have fallen about 70% since the March disclosure, rose nearly 17%.

Investors were reassured the FDA raised no concerns about the drug's efficacy or safety, Maxim Group analyst Naz Rahman said.

If approved, CTx-1301 will compete with several generic stimulants and branded drugs like Takeda Pharmaceutical's 4502.T Vyvanse and Johnson & Johnson's JNJ.N Concerta in a sector facing shortages since October 2022 due to manufacturing delays and surging demand.

In September 2024, the U.S. DEA increased the production limit for Takeda's Vyvanse and its generic versions by about 24% to address the ongoing shortages.

The once-daily tablet form of dexmethylphenidate, an ingredient used in several approved ADHD drugs, is designed to target ADHD symptoms, including persistent inattention, hyperactivity and impulsive behavior, often affecting children and continuing into adulthood.

Dexmethylphenidate boosts dopamine and norepinephrine — brain chemicals tied to attention and behavior — and is classified as a Schedule II controlled substance, requiring a prescription from a licensed healthcare provider.

Cingulate is aiming to address the midday wear-off seen with existing treatments and potentially improve adherence.

The company plans to promptly submit the requested information to the FDA, and has nearly $30 million in cash, which it expects will support the resubmission process and operations into 2027.

Zacks Small-Cap Research analyst John Vandemosten estimates peak sales of about $1 billion by 2043 if the drug is approved.