Washington Editor

Shares of NeurogesX Inc. plunged Thursday after the firm said a confirmatory Phase III study of its capsaicin dermal patch NGX-4010 missed its primary endpoint of providing statistically significant benefit in treating peripheral neuropathic pain in patients with HIV infection.

Shares of the San Mateo, Calif.-based firm (NASDAQ:NGSX) closed at $4.20 Thursday, down $1.77, or 30 percent.

NeurogesX said there was a 29.5 percent reduction in pain in the NGX-4010 treatment group, a result that was consistent with what had been seen in other NGX-4010 studies.

However, that result did not differ statistically from the 24.6 percent of patients in the active control group.

The disappointing results in the Phase III study, known as C119, "stems not from how NGX-4010 performed," said CEO Anthony DiTonno. "The disappointment stems from an unexpectedly high control group response," he told investors and analysts during a conference call.

Jeffrey Tobias, chief medical officer, noted that the results are preliminary and in the early stages of analysis.

"We unblinded the data only a few days ago," he said. "The full analysis of the study is a process that will go on for the next couple of months."

C119 examined 494 patients with HIV infection with distal sensory polyneurophy (HIV-DSP) enrolled at study centers in the U.S., Canada, Australia and the UK. Nearly 80 percent of the patients were from North America. More than 85 percent of participants were men older than 50, and nearly 70 percent were on other neuropathic pain medications.

DiTonno emphasized that the results of C119 will not take NeurogesX off-track for filing its U.S. approval application later this year for NGX-4010 as a treatment for postherpetic neuralgia (PHN), a painful nerve complication-related shingles, a second outbreak of the varicella-zoster virus, which initially causes chickenpox.

The company has successfully completed two Phase III trials in PHN, he noted. "Working with our clinical and regulatory advisors, we intend to evaluate the best path forward to support filing for approval for HIV," DiTonno said.

Analyst Angela Larson of Susquehanna Financial Group LLLP said the failure of NGX-4010 to meet its endpoints in the confirmatory HIV-DSP trial may not be "worth much discussion."

"While the news is disappointing, it is not a gating factor for filing or launch, but represents a hurdle that will take a bit more examination and research to continue expanding the product indications over time," she said in a research note.

Analyst Andrew Vaino of Roth Capital Partners LLC said that while the failed C119 study is a setback, "there will still be substantial off-label use of NGX-4010 not only in HIV-DSP, but also in diabetic neuropathic pain," another indication the firm has sought approval for in Europe as part of its marketing application submission there.

"We continue to believe the benefits of a 12-week reduction in pain, together with an enticing adverse effect profile renders this a favorable treatment," Vaino said.

He set the odds of NGX-4010 onto the market at 85 percent for the PHN indication.

Analyst Gregory R. Wade, of Pacific Growth Equities, said he continues to anticipate that NGX-4010 will receive approval, although with a label potentially limited to the PHN setting.

However, he said in a research note, based on the consistent pain relief for the NGX-4010 groups in the two HIV-DSP studies, there is at least a 50-50 chance that the label will include HIV-DSP.

"Importantly, we do not anticipate these study results will impact the market opportunity for NGX-4010 in either the PHN or HIV-DSP settings and note that a significant number of drugs in the neuropathic pain setting are used off-label," he added.

Patients in study C119 were randomized to receive a single 30- or 60-minute application of NGX-4010, a dermal patch containing capsaicin, a selective TRPV1 agonist, or a low-concentration control patch in a 2-to-1 ratio for each treatment duration, Tobias explained.

A total of 332 patients were assigned to the NGX-4010 treatment group, with 167 in the 30-minute group and 165 in the 60-minute group.

There were 162 patients in the control group, with 73 in the 30-minute group and 89 in the 60-minute group.

All patients received a 60-minute application of a topical anesthetic of 4 percent lidocaine cream before applying the active or control patch. The primary study endpoint was the percent reduction in pain scores from baseline over weeks 2 to 12.

The primary endpoint was an overall analysis that measured each active arm against its related control group and then combined them for an overall result, Tobias said.

For example, he explained, the 30-minute NGX-4010 group was compared with the 30-minute control group, the 60-minute NGX-4010 group was compared with the 60-minute control group and then those results were combined to achieve the overall result.

Baseline pain scores were similar across all groups, Tobias said. The preliminary analysis of the data from study C119 "is consistent with the safety data we have obtained from our previous studies," he noted.

The primary adverse effects were related to the expected local action of capsaicin, such as application site pain and erythema.

"No indication of other safety issues, including cardiac-related events, has been seen during our initial evaluations," Tobias said. "We believe that these results support our conclusion that NGX-4010 has a favorable safety profile."

Pain trials, DiTonno contended, are "hard to predict."

"Because we use an active comparator to ensure adequate blinding, we believe that ours may be harder to predict than others," he maintained. "If the control group had come in where it did in the first Phase III HIV-DSP study, we would be exceptionally happy with how NGX-4010 performed."

NeurogesX, DiTonno said, has not yet dug deeply enough into the data to know for sure why the 60-minute control arm behaved the way it did. "But I have to tell you, I have been in this industry long enough, and I am sure you all have invested in enough pain companies to know that we may never find the answer," he said.

"As you know, pain perception is subjective, and there are many variables that can affect a subjective assessment such as one's perceived level of pain," DiTonno added.