By Lisa Seachrist

Washington Editor

Avanir Pharmaceuticals' first product took a rather circuitous regulatory route to approval, but late Tuesday the company learned the FDA had approved docosanol 10 percent cream as an over-the-counter remedy for cold sores and fever blisters.

The approval comes almost two months after the agency told San Diego-based Avanir the drug was "approvable." The final approval marks the end of journey that saw the FDA deem the drug not approvable and Avanir take the unusual step of appealing the ruling before earning the right to market the drug.

"We heard late [Tuesday] that FDA had reviewed our NDA and determined the drug was effective and therefore approved it for sale as an over-the-counter product," said Gerald Yakatan, president and CEO of Avanir. "It is a significant milestone for this company and we hope this is just the beginning of success for this company."

The approval triggers a milestone payment from marketing partner SmithKline Beecham (SB), of London. Yakatan declined to give the exact value of that payment, but characterized it as "in the high single digit" seven figure amount. With the approval, all marketing responsibility falls on SB.

"If we could manufacture it instantly and distribute it instantly, we could sell it today," Yakatan said. "I hope that SmithKline can launch this product in six months or less. I'm expecting it to happen before the end of this year."

Yakatan said it was unlikely SB would launch a significant publicity campaign for the drug until it was close to launching docosanol, because it wouldn't want to risk people looking for the product before it was available.

Docosanol is a long-chain alcohol designed to interfere with herpes virus entry into target cells. Because about 80 percent of adults in the U.S. are carriers of herpes simplex 1 virus, the virus that causes cold sores, the drug could be widely used. The company estimates there are approximately 100 million to 130 million treatable episodes every year.

The price of the drug will be SB's decision, but it will likely be priced at the top of the range for OTC remedies.

"We have done pricing studies, as has SmithKline, and those studies really suggest people are willing to pay a significant premium for a product that works," Yakatan said. He also noted there could be pent-up demand for the product because currently marketed OTC drugs for cold sores aren't all that effective.

When Avanir originally filed an NDA for docosanol, the company sought approval for it as a prescription drug with the intention of turning it into an OTC product shortly thereafter. The agency, however, sent the company a not-approvable letter in December 1998. (See BioWorld Today, Dec. 28, 1998, p. 1.)

The company then took the unusual step of appealing that decision. The appeal proved a good gamble when the agency not only deemed the drug approvable but also decided to approve docosanol as an OTC therapy. (See BioWorld Today, June 2, 2000, p. 1.)

"It's a tribute to the safety of this product that FDA decided to give it an approval for OTC use," Yakatan said.

Avanir has a preclinical program for the development of therapies to treat allergy and asthma as well as a recently patented technology to create fully human antibodies. In addition, the company has a patented combination of dextromethrophan and an enzyme inhibitor for treating a condition associated with neurodegenerative diseases. Avanir has signed a letter of intent for the worldwide rights to the drug with a San Diego-based contract formulation company called IriSys Research and Development LLC.

Yakatan said the company would have additional announcements about some of these other product candidates over the coming weeks.

Avanir's stock (AMEX:AVN) closed Wednesday at $3.187, unchanged.