Assistant Managing Editor

Shares of Somaxon Pharmaceuticals Inc. more than doubled after the FDA approved its insomnia drug Silenor (doxepin), marking a major achievement for the San Diego-based firm, which entered 2010 with just over $5 million in the bank and a sole pipeline candidate that regulators had twice rejected.

Somaxon's stock (NASDAQ:SOMX) gained $5.27 Thursday to close at $9.21, a 133 percent climb.

But other challenges lie ahead. Besides its obvious financial needs, the company still is seeking a commercialization partner - a feat likely to become easier now that Silenor has gained the FDA's blessing - and will have to do some serious work to get its drug noticed in the growing sleep maintenance market already dominated by benzodiazepine drugs like Ambien CR (zolpidem, Sanofi-Aventis Group) and Lunesta (eszopiclone, Sepracor Inc.) and off-label generics.

Somaxon is counting on Silenor's mechanism as an H1 (histamine) antagonist to set it apart. While benzodiazepine-based drugs work by essentially shutting down the central nervous system, Silenor is designed to promote sleep by decreasing histamine levels.

And it's the first sleep maintenance therapy that isn't considered a controlled substance, Richard Pascoe, Somaxon's president and CEO, told investors on the firm's earnings call. That could make it attractive to patients who suffer from early waking but are wary of addiction or dependency risks.

Pasco described the final labeling for Silenor as "very broad" and said it was attractive "from safety and tolerability standpoint."

Somaxon initially had sought approval for both sleep onset and sleep maintenance but, after the FDA's first rejection, decided to drop the onset indication, especially since the firm's market research determined that the majority of insomniacs have trouble staying asleep through the night. (See BioWorld Today, April 9, 2009.)

Silenor's active ingredient is available in generic form for depression.

With plans to launch Silenor in the second half of this year, Somaxon is turning its full attention to finding a partner and "building our own organization capable of launching" the drug to a specialty audience, Pascoe said.

He estimated that about 44,000 doctors wrote more than half of sleep prescriptions, "and the psychiatry audience makes up about 30 percent of that market." Somaxon could reach those physicians with 50 to 100 sales reps, though the size and structure of the company's marketing efforts will depend on potential partnering discussions.

Somaxon reported a fourth-quarter net loss of $1.9 million, or 8 cents per share. As of Dec. 31, the firm had $5.2 million in cash, enough to last only to the second quarter. The company also owes a $1 million milestone payment to its Silenor licensor following FDA approval.

"We're currently evaluating financial options," Pascoe said.

Nevertheless, Somaxon is in a far better position than it was in late last year. The FDA issued a second complete response letter for Silenor in December, citing a somewhat vague "lack of robustness" in efficacy data and leaving investors to wonder whether additional clinical work would be required - not to mention whether Somaxon's dwindling cash balance would be able to cover costs related to new studies. (See BioWorld Today, Dec. 8, 2009.)

But in January, the FDA unexpectedly reversed course, asking Somaxon only for the resubmission of a pre-meeting briefing package and allowing the firm to resubmit the new drug application without any new data. That news sent shares shooting up 81.8 percent. (See BioWorld Today, Jan. 25, 2010.)

And it's not the first time the FDA has happily surprised biotech investors. In May, shares of Rockville, Md.-based Vanda Pharmaceuticals Inc. soared a whopping 626 percent after the agency cleared antipsychotic drug Fanapt (iloperidone) despite having issued a not approvable letter 10 months before. (See BioWorld Today, May 8, 2009.)