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Pozen Pounded on FDA's Trexima Delay

Shares sink 45% on a request for more data on its migraine drug.

Can

Pozen

(POZN)

do anything right?

The Chapel Hill, N.C.-based drug company has

tried three times to get three different migraine drugs approved in the U.S. Three times, the Food and Drug Administration has sent Pozen's products packing.

The first two Pozen drugs are dead; the third, Trexima, is still hanging on, but its fate remains uncertain. Thursday, the FDA said it would require Pozen and partner

GlaxoSmithKline

(GSK) - Get GlaxoSmithKline plc Sponsored ADR Report

to collect more safety data before the drug could be approved.

The bad news sent Pozen shares tumbling 45.6% to $9.49 in recent trading. Glaxo's were up 31 cents to $51.92.

Thursday, Pozen management said it would take all steps necessary -- and fast -- to satisfy the FDA's concerns so that Trexima can be resubmitted and eventually be approved. The problem is that the clock is ticking.

Trexima faces potential competition from cheaper generics entering the market toward the end of 2008. That's why an approval Thursday was so important to Trexima (and Pozen's stock price). Now, Trexima may not make it to market (if at all) before mid-2008, leaving little time for marketing partner Glaxo to get patients on the drug.

Trexima combines Imitrex, the leading migraine headache drug marketed by Glaxo, with naproxen, an over-the-counter pain reliever and anti-inflammatory drug. Naproxen, a so-called NSAID (nonsteroidal, anti-inflammatory drug), is probably best known by the brand name Aleve.

Imitrex and related product sales totaled $1.4 billion in 2006, but the blockbuster migraine drug franchise has begun to lose patent protection.

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Pozen filed Trexima for approval with the FDA in August 2005. In June 2006, the agency issued an approvable letter, requesting additional safety data on the drug before it could be approved.

Now, the FDA has issued a second approvable letter on Trexima, requesting yet more safety data.

The issue this time, according to Pozen, is a preclinical (nonhuman) test that revealed chromosomal or gene damage for the combination of Imitrex and naproxen, the two components of Trexima. Three other so-called genotoxicity tests were OK, the company said, but the negative safety signal from the single test was enough to cause the FDA to hold up Trexima's approval.

On a conference call Thursday, Pozen CEO John Plachetka tried to reassure investors that this issue was relatively minor and could be handled expeditiously. But in the best-case scenario, Plachetka said it would take two or three months for the company to conduct a new genotoxicity test and resubmit the data to the FDA.

When pressed, the CEO acknowledged that the company has not yet spoken with the FDA, and he's not entirely sure how long the process will take. Given Pozen's track record with regulatory matters and drug approvals, Plachetka's assurances ring hollow.

It's Going to Take Some Time

Forget about the fact that a new positive genotoxicity test is not a sure thing, but even if it is OK, it will still likely take Pozen until the end of the year, realistically, to submit new data to the FDA.

After that, there doesn't seem to be any reason why the agency will take less than six months to review and issue another approval decision.

With that sort of timeline, Trexima doesn't reach the market until the middle of 2008, which puts generic competition looming on the near horizon.

Sell-side analysts Wednesday were nearly unanimous in their opinion that Trexima would be approved. They were all wrong.

I spoke this morning with a hedge fund analyst who was short Pozen going into Thursday's decision because she believed safety concerns would hold up approval. Now, she wasn't counting on potential chromosome damage as being the direct cause for an FDA rejection, but she did believe that neither Pozen nor GlaxoSmithKline was completely transparent about the reasons for Trexima's first approvable letter in June 2006.

On top of that, checks she made with migraine specialists found lackluster support for Trexima. The most aggressive prescribers told her that they'd probably use Trexima in half their patients.

Overall, the analyst's survey checks found that doctors would generally prescribe Trexima to only about 25% of their patients, in part because payors were likely to saddle Trexima with a high copayment.

"Doctors are not seeing a huge need or demand for a drug like Trexima," she said, adding that after today, it seems clear that the FDA doesn't really seem to be in a rush to approve it either.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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