Pozen Plunges on Migraine Drug's Setback

Pozen (POZN Quote - Cramer on POZN - Stock Picks) gave its investors a migraine Friday.

Posin' No More Stock plunges on testing order

Pozen's stock lost nearly half its value after the drug development company said it could face an 18-month delay in getting its lead drug for migraines to the market. The stock fell $6.37 to $6.62 after Pozen said the Food and Drug Administration required new tests to determine if the drug, called MT-100, caused cardiac problems.

The news was evidently a shock to Pozen, which assumed that since MT-100 combines two already approved generic drugs, approval would be routine. The drug was in the final stages of clinical development and some analysts hailed it as having "blockbuster potential."

"Both agents have been in clinical use for over 20 years in the United States and are approved for indications outside of migraine in the United States and countries around the world," said Pozen in a short statement.

Pozen's use of the two generic drugs, naproxen, a common painkiller, and metclopramide, a heartburn treatment, was explored by TheStreet.com in a Nov. 13 report. The article questioned the value of a company that essentially repackages generic drugs in new formulations.

Interactivity

Pozen said it asked the FDA for a waiver for cardiotoxicity tests. But analysts say the FDA is increasingly concerned about ill health effects from interactions in combinations of drugs and demanded more tests.

"The FDA is getting very picky about these things," says one analyst who asked to remain anonymous. "They probably did not assume they needed to have combination data."

The Pozen share shock comes four months after Pozen joined a spate of other biotech and drug companies in selling shares in initial public offerings. Pozen raised $86 million in its IPO underwritten by U.S. Bancorp Piper Jaffray, Prudential Vector and Pacific Growth Equities. Its shares hit a high of $21.87 in December.

"We hope to work with the FDA on a package of appropriate studies that will allow us to maintain our timeline for New Drug Application submission," said John R. Plachetka, Pozen CEO. "However, it may take a few months to learn if a package is feasible and if it is not, our time to market for MT 100 will be delayed by at least 18 months."