The only conceivable problem I see that could cause FDA to reject Rayos would be an undisclosed manufacturing issue. Absent that, Rayos' clinical data look fine. Rayos is also already approved in Europe where it is sold under the brand name Lodotra.
Perhaps the biggest risk to Horizon going into tomorrow's FDA approval decision is the stock's run from $4 to $7.50 over the past six weeks. That's a big move ahead of a major catalyst and can often lead to a significant sell off once Rayos' approval is announced. We've seen that story play out before, most recently with Vivus (VVUS) and Arena Pharmaceuticals (ARNA).
Rayos is a delayed-release formulation of low-dose prednisone, a common steroid already well entrenched as a pain reliever used by patients with rheumatoid arthritis. Rayos is taken when a patient goes to bed. The drug's proprietary outer layer dissolves slowly in the gut, releasing the active prednisone after four hours when patients need more pain relief.Horizon's FDA submission included a study showing Rayos achieves the same blood levels of low-dose prednisone compared to immediate release prednisone, except for the planned four-hour time delay. Two phase III studies of Rayos were also submitted to FDA for approval review. The first study enrolled 288 rheumatoid arthritis patients, randomized to treatment with either Rayos (taken at bedtime) or immediate-release prednisone (taken in the morning) for 12 weeks. The study demonstrated that Rayos was superior to immediate-release prednisone in reducing the duration of morning stiffness associated with rheumatoid arthritis. The mean change in morning stiffness of joints from baseline was 23% in Rayos-treated patients compared to 0.4% for patients treated with immediate-release prednisone. The result was statistically significant. ACR20 response rates (percentage of patients achieving a 20% improvement in swollen joints) were reported to be similar between Rayos and immediate-release prednisone. The second, phase III study, enrolling 350 rheumatoid arthritis patients, showed a statistically significant improvement in ACR20 response rate favoring Rayos (48.5%) compared to a placebo (28.6%). Rayos' response rates were also superior to placebo when measured by more stringent ACR50 and ACR70 critieria, although only ACR50 was statistically significant. If approved, Horizons' challenge will be to convince doctors to prescribe Rayos instead of cheap, generic prednisone that costs pennies per pill. Lodotra sales in Europe have been slow although the drug is still in the early phases of its commercial launch. Zalicus (ZLCS) is also developing a special formulation of prednisone for rheumatoid arthritis pain relief. Results from a mid-stage study are expected this quarter. Also on Thursday, Amarin (AMRN) is expected to hear from FDA on an approval decision for its prescription fish-oil pill Vascepa. --Written by Adam Feuerstein in Boston.
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