Somaxon: P&G Won't Wake Up Silenor Sales

SAN DIEGO (TheStreet) -- In the spirit of full accountability, I have to congratulate Somaxon Pharmaceuticals(SOMX) for landing Procter & Gamble(PG) as a marketing partner for the commercial launch of Somaxon's new sleeping pill Silenor. I didn't believe Somaxon would deliver a Silenor deal and said as much back in March, so I was wrong.

Unfortunately for Somaxon, even a consumer marketing giant like P&G is not going to help Silenor become anything more than a niche -- and likely unprofitable -- addition to the $2 billion insomnia drug market, now dominated by low-cost generics.

P&G's participation is essentially risk free. The company paid nothing to Somaxon for rights to sell Silenor and insisted both companies maintain (and pay for) separate sales forces. Somaxon has to pay P&G a fixed fee and royalties totaling about 15% of Silenor's net sales and must foot the bill for any other Silenor commercial costs, including expensive items like advertising.

Somaxon describes the P&G deal as a "co-promotion agreement" but that implies each party sharing some financial risk. From the way I see it, P&G isn't committing much to this project at all, other than perhaps finding something for its under-utilized prescription drug sales force to do during the day. [P&G sold off its branded drug business in 2009, so these remaining prescription drug sales reps have had little to promote.]

Moreover, P&G appears to have Silenor on a short leash. The agreement with Somaxon expires at the end of 2012. If Silenor fizzles, as I expect, P&G walks.

Silenor is a low-dose (3 mg and 6 mg) capsule formulation of the old and generic antidepressant doxepin. The drug works by blocking histamine, a neurotransmitter in the brain that promotes wakefulness. This sleep mechanism isn't unique to Silenor, however. Diphenhydramine, one of the active ingredients in over-the-counter medicines like Tylenol PM, Advil PM, Benadryl and Unisom, also makes people sleepy by blocking histamine.

Silenor is not a controlled substance, which could be an advantage over other branded insomnia pills like Sanofi Aventis'(SNY) Ambien CR and Sepracor's Lunesta. Somaxon says Silenor has a superior side effect profile compared to its competitors and does not carry the same risk of dependence or withdrawal.

True, but again, Silenor is not unique in this regard. Takeda launched the sleep pill Rozerem in 2005, also without the shackles of a controlled substance label from the government. That wasn't enough to turn Rozerem into a commercial success, especially after generic versions of Ambien reached the market in 2007. Takeda no longer actively promotes Rozerem.