Assistant Managing Editor

Shares of Pozen Inc. fell 27.8 percent on a double dose of potentially troublesome news involving a delay in one of its investigational NSAID programs and a generic challenge to its recently approved migraine drug Treximet.

Its stock (NASDAQ:POZN) closed at $6.50 Friday, down $2.50.

The Chapel Hill, N.C.-based firm, which has two ongoing programs aimed at bringing safer NSAIDs (nonsteroidal anti-inflammatory drugs) to market, said it was informed that the FDA intended to review the use of endoscopic gastric ulcers as a primary endpoint in those studies. Pozen is using that endpoint in its ongoing trial of PN 400 (esomeprazole and naproxen) in patients with arthritis and also is planning on a similar trial design for its upcoming pivotal study of PA32540, which recently demonstrated bioequivalence to enteric-coated aspirin.

Company executives were quick to point out that no changes to the ongoing or planned studies have been made at this time, so "we feel it's prudent to continue the [PN 400] program as we have previously agreed with the FDA," Marshall Reese, executive vice president of product development, told investors on a conference call.

Pozen expects "little practical impact" to that program, Reese added, unless the FDA concluded that the gastric ulcer endpoint was inappropriate for the study. PN 400 is being tested under a special protocol assessment (SPA) with the FDA; "however, as is always the case, the FDA has the option to change key aspects of any trial and to change its mind if it sees fit," he warned.

Assuming no changes to the trial design, Pozen and partner London-based AstraZeneca plc expect top-line results from the pivotal PN 400 trial later this year, with an anticipated regulatory filing in mid-2009.

But the planned study of PA32540 vs. enteric-coated aspirin looks like it will have to wait.

The SPA process for that pivotal study is ongoing and will have to wait until the FDA completes its internal review on the primary endpoint. And Pozen has been told that the FDA does not expect the meeting to occur until the beginning of next year, "so we will be adjusting our timeline," Reese said.

That means the company's projected 2008 spending - operating expenses were estimated to fall in the range of $67 million to $71 million, according to its second-quarter earnings report - likely will be reduced due to the delay, which Chairman and CEO John Plachetka said is "not necessarily a bad thing, given the environment we're in today."

As of June 30, Pozen had a cash position of about $72 million.

As to why the FDA has decided to review the gastric ulcer endpoint at this time, that remains a mystery to Pozen, Reese said. But he added that the agency claimed the move wasn't "prompted by any new scientific data," and that drugs other than Pozen's were included in the review, "though we don't know" specifically which ones.

The goal of Pozen's PN and PA programs is to come up with NSAIDs that alleviate pain without causing the adverse gastrointestinal events associated with chronic use of the traditional painkillers.

Many in the industry thought the COX-2 inhibitors, such as Vioxx from Whitehouse Station, N.J.-based Merck & Co. Inc., would fill that gap, after studies showed they demonstrated a much safer GI profile compared to existing NSAIDs. But further trials linked COX-2 inhibitors to increased cardiovascular symptoms, and those drugs were either pulled off the market, like Vioxx, or given black-box warnings.

Other firms working on ways to improve the safety of NSAIDs include privately held Horizon Therapeutics Inc., which also is in Phase III testing with HZT-501, a drug that combines ibuprofen with H2 receptor antagonist famotidine.

Skokie, Ill.-based Horizon is conducting two trials of HZT-501 under an SPA. The primary endpoint in those trials is the reduction in the risk of ibuprofen-associated upper gastrointestinal ulcers.

And Logical Therapeutics Inc., of Waltham, Mass., is earlier in development with LT-NS001, a prodrug designed to convert in the bloodstream to naproxen. The firm recently started a double-blind, randomized study to assess gastrointestinal injury by endoscopy after seven days of therapy.

An NDA Filing for Generic Treximet

Pozen's marketed drug migraine drug Treximet (sumatriptan plus naproxen), which only was launched earlier this year by partner GlaxoSmithKline plc, of London, already is facing its first generic challenge.

Pozen received a letter stating that Par Pharmaceutical Inc., of Woodcliff Lake, N.J., submitted an abbreviated new drug application to market a generic version of Treximet prior to the expiration of Pozen's patents. Par is claiming that those patents are invalid and would not be infringed by a generic product entering the market.

"We had expected such an action by one or more generic companies," Plachetka told investors, adding that Pozen already had a plan in place.

The company has 45 days from receipt of Par's letter and Paragraph IV certification to file a patent infringement lawsuit against Par.

That filing would automatically ban the FDA from approving the generic drug for either 30 months or an adverse court ruling, whichever comes first, Plachetka said.

Defending intellectual property is "such a common part of pharma's business these days," he added, and Pozen will "vigorously defend its patents if infringed."

Treximet was launched in the middle of the second quarter. As of June 30, Pozen reported accrued revenue of $800,000 in royalties from GSK based on net sales estimates.