Casting a dark cloud over Memorial Day weekend for Pozen Inc. was word the Friday before from the FDA that its second migraine drug is not approvable. But Wall Street's thunder was not heard until Tuesday, when Pozen disclosed the news and saw more than 37 percent of its stock value wash away.
What's the lesson? Maybe something about all your figurative eggs in one basket, but smaller companies don't have much choice, said Douglas Adams, analyst with Davenport & Co.
"It's nice if they have lots of money and can do lots of things, but they don't," he said. "I tend to think you ought to be working in an area where you have some knowledge." For Pozen, he said, that's migraine - even if some might now suspect otherwise.
The drug at issue this time around is MT 100, an oral combination of naproxen sodium and metoclopramide, which, in the FDA's view, failed to show superiority over naproxen for sustained pain relief. There were safety issues, too, including risk of tardive dyskinesia (TD), a side effect that causes involuntary movement of the face and tongue. (See BioWorld Financial Watch, Oct. 14, 2002.)
In October, the FDA nixed Pozen's intravenous MT 300 for migraine, a new formulation of dihydroergotamine mesylate in a pre-filled syringe, which did not reach statistical significance in relief of secondary symptoms, including nausea, sensitivity to light and sensitivity to sound at two hours.
"People have to question management," allowed Adams, who owns Pozen stock. His firm also makes a market in Pozen. "However, I'd point out that I like management. I think they have real expertise in the migraine area, despite not getting MT 100 or MT 300 approved."
Although it's a common reaction to non-approvable letters, Pozen officials expressed surprise at the FDA's decision on the oral drug, for which the new drug application was filed last summer, with rat carcinogenicity data added to the package early this year.
"Maybe they changed their criteria after looking at the drug in the landscape of anti-migraine agents that are currently available, but that wasn't communicated to us until this letter," CEO John Plachetka said.
Specifically, the FDA in its letter allowed that MT 100 in one study showed statistically significant superiority over a control in measuring pain and the symptoms of nausea, photophobia and phonophobia, but failed (by the agency's analysis) to do so in a second study and did not prove to be better than naproxen for pain.
As for the issue of TD, no cases were detected in the 300 patients given MT 100 for at least one year, but those numbers work out to be "consistent with a true rate of TD of about 1 percent, an unacceptably high risk," the agency said, given that the drug does not beat its potential competitors otherwise. A study with several hundred more patients would be necessary to satisfy the rate is below 1 percent, according to the FDA.
"It's a well-known side effect of metoclopramide," Adams noted. "The difference is, it appears when it's been used chronically at a 30-mg to 40-mg per day dose. [MT 100] was a drug that was perceived to be used intermittently." Risk of TD with MT 100 had not been a contended matter before - but carcinogenicity was, and the FDA raised that question again in its letter.
A major problem is that MT 100 did not always show a response or symptom relief at two hours after treatment, which is the typical endpoint for migraine drugs. Plachetka, who also is Pozen's chairman and president, said the company is "shocked" that the FDA allowed no latitude on that point. MT 100 showed a response at 2.5 hours in some cases and 1.75 hours in other cases. Plachetka said he believed the company had some wiggle room on that point.
"That's always difficult to assess," Adams said. "Obviously, this isn't the first company who thought they had an understanding [with the FDA]."
Pozen's third pipeline drug, Trexima (formerly MT 400), entered a Phase III migraine program last month, which meant a $15 million milestone payment from partner GlaxoSmithKline plc. MT 100's ultimate approval is "a long shot," and the outlook for Trexima does not look especially encouraging, either, said Jason Zhang, a senior biotech analyst at Independent Research Group. GSK has control of the migraine market now, with its marketed drug Imitrex (sumatriptan succinate, also known as Imigran).
Zhang wrote in a research note that the FDA might require Pozen to show clear-cut superiority of Trexima over its components - naproxen and Imitrex - in the proposed Phase III studies, with an endpoint of sustained freedom from pain. So far, Trexima has proved better than the components in two-hour pain response and sustained pain response, but data for sustained pain freedom and symptom control are lacking.
Adams' rating for Pozen is "buy," which he lowered from "strong buy" on the recent bad news.
"The reason I lowered my rating is not because I have any different opinion about the investment opportunity," he told BioWorld Financial Watch - he had not included any revenues from MT 100 in earnings estimates. Pozen got a non-approvable letter in Europe, but "the question that was raised there was the dosing of the components" - an issue that might be resolved, he added.
Adams is more optimistic about Trexima, though "I don't think we'll see Phase III data until early next year, and the stock is likely to languish" in the meantime. "They only have one shot left at the moment, and I think a pretty good shot."