By Jim Shrine

Avanir Pharmaceuticals Inc. suffered another setback for docosanol cream when the FDA deemed the oral-facial herpes treatment "not approvable" without additional studies, causing the company's stock to tumble 65 percent.

Avanir's shares (NASDAQ:AVNR) closed Wednesday at $0.718, down $1.375.

The FDA's decision surprised Avanir officials, who said they believe efficacy was clearly shown in the pivotal study on which the new drug application was based. San Diego-based Avanir, formerly known as Lidak Pharmaceuticals Inc., plans first to try persuading FDA officials to see the data in a new light.

"My experience is [that] it won't work, but I think there is logic behind our argument," Gerald Yakatan, Avanir's president and CEO, told BioWorld Today. "And we had no communication with the clinical reviewer, not for the whole year this sat down there. We're pretty upset about that. If we had been able to talk to that person, maybe he could have looked at this a little differently, and agreed with us there was enough evidence of effectiveness. We hope we can get another person to look at our story before a lot of money and time are spent to fix the issue."

Yakatan estimated another pivotal trial would take about one year and $4 million. Financing options are available to the company, he said, and Avanir would consider running another study if talks with the FDA are unsuccessful.

Avanir reported in August 1997 that its double-blind, 743-patient Phase III study demonstrated statistical significance in reducing the healing time for oral herpes, or herpes simplex virus 1, which causes cold sores and fever blisters. It also showed significance in secondary endpoints of reducing symptoms and aborting episodes. The company filed a new drug application with the FDA in December of that year. (See BioWorld Today, Aug. 18, 1998, p. 1, and Dec. 29, 1997, p. 1.)

That study initially was designed as two identical pivotal trials. They later were combined into one study in what the company believed, after discussions with FDA personnel, was a move to add power to the trial. The decision to combine was made before any results were known, Yakatan said. Afterward, the product was moved from the antivirals to the dermatology group at the FDA, and that group wanted to see results of each study as well as the combined data.

One of the studies showed significance but the other did not, Yakatan said, because of more variability in the results. Trends of data in both studies tended in the same direction, however, and Avanir believed — even after the learning the studies would be examined separately — that the data not reaching significance was strong enough.

The FDA also considered an earlier 648-patient Phase III study that failed when data released in 1996 showed the drug worked, but the placebo did, too. The drug, formerly called Lidakol, is a long-chained alcohol designed to interfere with viral entry into target cells. The placebo in that trial replaced the C-22 acid in docosanol with a C-18 acid, which was done to make the placebo resemble the drug cream. (See BioWorld Today, March 18, 1996, p. 1.)

Some investors participating in a conference call with company officials Wednesday urged Avanir to circumvent the FDA by taking the product to Europe or selling it over the counter. Company officials, however, said their first move will be to try meeting with the FDA.

"In a sense, we feel this is one person's view of the data, and we'd like an opportunity to have it addressed by other people," Yakatan said. "I don't see the benefit to anyone — patients, the company, shareholders, the FDA — in keeping this from being marketed. I'm still waiting for somebody [at the FDA] to look at the data and look me in the eye and tell me the drug doesn't work," he said.

Approval of docosanol is an integral part of Avanir's plan to build the company. A second part involves in-licensing products already in the clinic, and a third entails developing some early-stage products, the most prominent of which is a program focused on lowering levels of immunoglobulin E (IgE) which, in high levels, is associated with allergies. Avanir hopes to identify a candidate in 1999 to take into the clinic, Yakatan said.

The company had $6.5 million in cash at the end of its fiscal year on Sept. 30, and a net loss for the year of $8.2 million. *

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