West Coast Editor

Despite the likelihood that its drug for attention deficit hyperactivity disorder might fall into the same federal abuse category as competitors' therapies, New River Pharmaceuticals Inc. enjoyed another stock boost Tuesday.

Credit for the rise goes partly to enthusiasm left over from Friday's favorable FDA word regarding NRP104, and to an SEC filing that put wider smiles on the faces of New River's investors.

The company's shares (NASDAQ:NRPH) closed Tuesday at $47.02, up $5.50, or 13 percent, after recording a gain of more than 60 percent Monday, closing at $42.32.

Regulators are calling once-daily NRP104 capsules approvable for children ages 6 to 12, based on data from the 52-patient Phase II trial and the 290-patient Phase III trial, and New River aims to launch the drug in the second quarter of next year.

Some thought the FDA would demand more work, as the agency did with Sparlon (modafinil), Frazier, Pa.-based Cephalon Inc.'s new formulation of the sleep drug Provigil. Sparlon for ADHD once worried New River and partner Shire Pharmaceuticals Group plc, but not since Cephalon's decision in August to drop the compound rather than keep doing trials. (See BioWorld Today, Aug. 11, 2006.)

New River and Shire hope to put NRP104 up against such stimulants as Ritalin (methylphenidate), from Novartis AG, of Basel, Switzerland, and Concerta (a different formulation of methylphenidate), from Madison, N.J.-based Johnson & Johnson, which take a major share of the ADHD market.

Both are classed in the same category as cocaine and morphine: Schedule II, one of five slots established by the Controlled Substance Act of 1970. Schedule II also includes Adderall XR, the top-selling ADHD drug in the U.S. from Shire - and Schedule II is where the FDA's abuse experts recommend putting NRP104, as well.

The DEA accepts most of the FDA's guidance, Krish Krishnan, chief financial officer and chief operating officer for Radford, Va.-based New River, acknowledged. Company officials first will try to sway the FDA, he told BioWorld Today, "but not at the cost of delaying the launch."

If the FDA doesn't budge and the DEA puts NRP104 in Schedule II, New River and Shire will keep seeking a more favorable classification after the launch. Category changes have happened before, Krishnan said. "We did submit a risk-management program, and we'll keep monitoring for abuse," he added.

In the unlikely event that NRP104 wins favorable scheduling by launch, New River gets a $300 million milestone payment from Shire. If better scheduling happens within a year of launch, the payment would be $200 million. If it happens by the third anniversary, $100 million.

The firms had hoped that by binding dextroamphetamine (which also is an ingredient in Adderall XR) to lysine, thus making it inactive until converted in the body, they could win a more lenient classification for the resulting new chemical entity, lisdexamfetamine dimesylate.

Trials have shown potential for abuse, with a "limited degree" of physical or psychological dependence, New River noted in SEC paperwork, but the firm cited "a number of critical and significant differences between lisdexamfetamine and dextroamphetamine across a wide range of properties."

What's more, an abuse liability study that compared NRP104 with dextroamphetamine and diethylpropion, a Schedule IV substance, in adult volunteers with histories of stimulant abuse, found that NRP104's abuse potential more closely matched the criteria for Schedule IV, New River said.

Experts at the FDA didn't buy it, and NRP104 probably is stuck with Schedule II - which calls up the reason for New River's Tuesday climb. An 8-K filing disclosed previously confidential details about the firm's arrangement made last year with UK-based Shire. The deal was valued at up to $505 million, but profit-sharing specifics were kept out of the public eye. (See BioWorld Today, Feb. 1, 2005.)

The 8-K, made part of SEC records Tuesday morning, showed that Schedule II status would not hurt New River as much as investors might have feared. In fact, the terms are good enough to get investors buzzing about a possible takeover by Shire.

New River stands to gain at least 25 percent of profits from NRP104 during the first 24 months on the market, and at least 50 percent afterward, but the percentages would rise if sales exceed $32 million in 2007, $61 million in 2008, $95 million in 2009 and $125 million in 2010.

Analysts at Friedman, Billings, Ramsey & Co. estimated NRP104's sales could reach $950 million by 2010. First Albany projected that New River would seize as much as 66 percent of profits from the drug after the first two years - disheartening news for Shire, whose depositary receipts (NASDAQ:SHPGY) sank Tuesday $4.06 to close at $53.10, after surging more than 15 percent the day before.

Low profit share or not, Shire needs NRP104. Adderall XR (a timed-release version of Adderall, which hit the market in 1996) will face generic competition in 2009 from Barr Pharmaceuticals Inc., of Woodcliff Lake, N.J., if the FDA fails to accept the arguments in Shire's citizen's petition. The agency rejects most of them.