Pozen Inc. said it expects to fully address the third-party manufacturing issues raised in the FDA's complete response letter (CRL) for drug candidates PA8140/PA32540, but the latest delay for the gastrointestinal-friendly aspirin candidates opened the door for investor anxiety, including concerns that the company's strategy of combining two generic components might not make for a commercial success story.

Shares of Chapel Hill, N.C.-based Pozen (NASDAQ:POZN), trading at more than five times its average, dropped 10.4 percent, losing 95 cents to close Monday at $8.18.

Though details were scant, issues raised in the CRL sound manageable. The FDA noted that deficiencies were found during an inspection of the manufacturing facility of an unnamed active ingredient supplier for the products, which combine aspirin with proton pump inhibitor omeprazole in single-tablet formulations. Pozen said it believes those items can be addressed and said it will work with the manufacturer to "respond to the FDA as soon as possible."

CEO John R. Plachetka, furthermore, called the timing of the inspection "unfortunate" because it occurred too close to the PDUFA date to allow the company to address the issues ultimately raised in the CRL. Pozen isn't speculating on the time frame for a resubmission but expects to have an update for investors during its May 8 earnings call. The company could not be reached for additional comment as of press time.

According to Pozen, the CRL raised no concerns with clinical safety and efficacy data. That means that the phase I pharmacokinetic study requested by the FDA to compare the pharmacokinetics of PA8140, a lower dosage of aspirin (81 mg), with PA32540 (325 mg), likely were acceptable. Both products are manufactured using nearly identical procedures.

The pharmacokinetic trial, which enrolled about 30 subjects, pushed the PDUFA date for PA8140/PA32540 back from its original action date of Jan. 24 to April 25. That hiccup, however, barely registered with investors, unlike the CRL news, which indicated an increasing lack of shareholder confidence in management.

In an April 18 SEC filing, board member Kenneth Lee acknowledged that a proposed compensation increase for Pozen's management, namely CEO Plachetka, was approved by only 54 percent of shareholders in a proxy vote. While technically above the majority needed for passage, Lee wrote that it was "not a level of approval acceptable to us," and described in a letter to shareholders the rationale for the compensation proposal and the firm's efforts to align executive pay and shareholder return.

Add to that Pozen's history of regulatory hitches. In 2003, the FDA rejected MT 300, a formulation of dihydroergotamine mesylate in a prefilled syringe for migraines; the company reported two years later that work on that program had ceased. In 2004, Pozen received the second rejection for MT 100, another migraine candidate that combined naproxen sodium and metoclopramide. Work on that program proceeded until mid-2005, when an advisory panel convened to look at the risks of tardive dyskinesia associated with MT 100 asked for more data, prompting Pozen to finally throw in the towel in the U.S. Migraine drug Treximet, a formulation of sumatriptan plus naproxen sodium, was turned down by the FDA twice before finally gaining approval in 2008. (See BioWorld Today, Oct. 21, 2003, and June 2, 2004.)

Pozen had better luck with nonsteroidal inflammatory drug candidate Vimovo, enteric-coated naproxen combined with immediate-release esomeprazole, which gained approval in 2010 for use in osteoarthritis, rheumatoid arthritis and ankylosing spondylitis. Originally partnered with Astrazeneca plc, the London-based big pharma transferred U.S. commercialization rights to Horizon Pharma USA Inc., a move that guarantees Pozen minimum royalty payments and is aimed at boosting sales with Horizon's specialty and rheumatology sales forces. (See BioWorld Today, March 3, 2010, and Nov. 20, 2013.)

IS COMGINING GENERICS INNOVATIVE ENOUGH?

But its spotty regulatory past might not be the biggest uncertainty for Pozen and its investors. At a time when even innovative drugs – i.e. new molecular entities such as Sovaldi (sofosbuvir), Gilead Sciences Inc.'s new interferon-free hepatitis C therapy – are being criticized for their high costs, payers may be less receptive to Pozen's products, preferring that physicians simply prescribe the two likely cheaper generic products separately.

That's essentially what happened several years ago to Bidil, a one-pill combination of isosorbide dinitrate and hydralazine hydrochloride. Approved in 2005 with much fanfare for being the first heart failure drug targeted to a specific patient population – African-Americans – Bidil failed to live up to its expectations, in part because developer Nitromed Inc. couldn't persuade enough doctors to prescribe the single tablet instead of the two generic components. (See BioWorld Today, Oct. 24, 2008.)

Pozen, however, is banking on its integrated aspirin therapy platform, also known as the PA platform, to prove innovative enough in terms of formulation and predicts a modest cost. In past presentations, Pozen estimated peak sales could reach $400 million annually, even if patients are charged only $1 per day for treatment.

The company's strategy is to provide aspirin-based products that significantly reduce gastrointestinal (GI) ulcers and other GI complications linked to enteric-coated or plain aspirin. Lead candidate PA32540, aimed for daily aspirin use in patients to prevent cardiovascular events, is designed to deliver immediate-release omeprazole in the outside layer, with the pH-sensitive aspirin underneath.

The drug met its endpoints in two phase III pivotal trials, showing that PA32540 resulted in a significant reduction in gastric ulcers compared to enteric-coated aspirin. Pozen added the PA8140 product after the FDA the drug's use might be limited without a lower aspirin dose available. (See BioWorld Today, March 23, 2012.)

Also in its favor is the fact that Pozen has picked up some big pharma muscle. Sanofi SA picked up exclusive U.S. commercialization rights to PA8140/PA32540 in September in exchange for $15 million up front to Pozen, which also is eligible for pre-commercial milestone payments of up to $20 million and other payments and royalties on product sales. Full responsibility will transfer to Paris-based Sanofi upon FDA approval.

Also in the PA pipeline is PA10040, which combines omeprazole with a 100-mg dose of aspirin, the dosage most commonly used in Europe and other ex-U.S. regions. That product demonstrated comparable bioavailability to European Union reference listed enteric-coated aspirin in a phase I study reported last year.

As of Dec. 31, Pozen had about $32.8 million in cash.