BOSTON ( TheStreet) -- Louis N. writes, "Adam, this was a week for sleeping pill news with Somaxon Pharmaceuticals (SOMX) and Transcept Pharmaceuticals (TSPT). I follow your tweets and you seem not to like either. Can you explain in more detail and tell me if there's anything positive going on?"
I'll begin with Somaxon because it's the worst of the two sleeping pill stocks. The commercial launch of Somaxon's Silenor is a bust. The company all but gave up on the prescription market this week when it announced the dissolution of the contract sales force agreement with Procter & Gamble (PG) and the departure of its top marketing executive.
Somaxon could have pre-announced Silenor revenue for the third quarter if it wanted to send the message that the sleeping pill's performance was turning around for the better. The company chose not to do so, which sends the opposite message: Silenor sales are still in the crapper.
What Somaxon chose to do instead was to divert investor attention by once again raising the possibility of Silenor as an over-the-counter (no prescription required) sleep aid. Keep in mind that Somaxon and partner P&G have no commitment or agreed-upon regulatory plan from FDA that it would allow Silenor to go OTC. Somaxon merely claims that it "believes" there is an OTC path for the drug based on a meeting with FDA.Be wary when you see a company roll out the word "believes" in press release related to FDA regulatory stuff. "Believes" is one of those lawyer-safe words that give companies an excuse when the promises they make blow up. Regardless, Somaxon admits that it will take five to seven years (!!) to complete all the studies and paperwork necessary before FDA even makes an OTC decision on Silenor. Good luck and be patient because time is not on your side. In the meantime, an OTC sleep aid already exists -- it's called NyQuil. I have mixed views on Transcept Pharmaceuticals. For starters, let me say I did not expect this sudden turnaround following the FDA rejection of Intermezzo in July. I was part of the crowd who believed Transcept was basically cooked and wouldn't recover soon, if ever. I was wrong. Transcept not only submitted its response to FDA's concerns with alacrity, but received back from FDA a favorable Class 1 response that sets up the next Intermezzo approval decision date on Nov. 27.
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