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Depomed Bear Case: FDA Panel Will Ding Serada

(Editor's note: The following column from contributor Aafia Chaudhry explains the bear case against Depomed and its "hot flash" drug Serada. All stocks have two sides, so read Chaudhry's column as a counter-argument to the Depomed bull thesis published by Jason Napodano, Zacks analyst and PropThink contributor on Jan. 30.)

NEW YORK ( TheStreet) -- I believe the FDA advisory panel will vote against Depomed's (DEPO - Get Report) Serada on March 4. The negative vote will subsequently convince FDA to reject Depomed's application for Serada on or before the decision date of May 31.

Serada is a proprietary, extended-release formulation of gabapentin, an analogue of the chemical transmitter GABA that is used to treat seizures and neuropathic pain. The role of gabapentin to treat vasomotor symptoms (VMS) of menopause -- more commonly known as hot flashes -- is tenuous at best. The results of Depomed's phase III study program for Serada do not support the drug's efficacy in this indication.

Depomed conducted two phase III studies of Serada in women with VMS, or hot flashes. BREEZE-1 and BREEZE-2 were randomized, double-blind, placebo-controlled studies of approximately 540 patients per study, receiving treatment with Serada 1200 mg or 1800 mg daily or placebo.

Total treatment duration in BREEZE-1 was six months, with primary efficacy endpoints assessed after four and 12 weeks of stable therapy. Persistence of efficacy was assessed at six months as a secondary endpoint. Treatment duration in BREEZE-2 was three months, also with assessment of efficacy at four and 12 weeks. Both BREEZE-1 and BREEZE-2 utilized primary endpoints measuring the mean change in frequency and severity of VMS from baseline to weeks four and 12.

Depomed reported the outcomes of the studies in 2009. Both BREEZE-1 and BREEZE-2 failed to meet any of the primary endpoints with statistical significance. There were many issues with the data reported, raising questions about the true clinical benefit of Serada in the VMS setting.

In BREEZE-1, 36% of patients receiving treatment at 1200 mg, and 30% of those receiving 1800 mg failed to complete the study. These are very high and concerning dropout rates for any clinical trial. Some menopausal women can experience VMS for years, so any treatment needs to be well tolerated, safe, and demonstrate persistent benefit.

Serada did not demonstrate persistence of effect for even 12 weeks let alone 24 weeks. The 24-week data were never reported fully reported but will hopefully surface in March at the FDA panel.

At best, the results of BREEZE-1 and BREEZE-2 seem to indicate treatment with Serada is associated with approximately one less hot flash per day compared with placebo treatment, and only for a short period of time. Given the 50% placebo response rate often seen in VMS trials, Serada's "benefit" seems clinically meaningless and hard to justify given gabapentin's adverse event profile. I expect the FDA's own analysis of the BREEZE-1 and BREEZE-2 data will support my bearish position on Serada.

Depomed bulls argue in favor of Serada's VMS benefit only by manipulating the statistics of the BREEZE-1 and BREEZE-2 trials. Well, as the old saying goes, "If you torture the data long enough, it will confess to anything." Thankfully, FDA reviewers are usually skeptical when presented with a plethora of post-hoc "statistically significant" results.
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