Event - Acura and Pain hoping luck will change

Two Pfizer-partnered abuse-resistant pain drugs that had a rough first go with the FDA are due new regulatory opinions within a week of each other in June, and expectations are building for approval. Shares in Pain Therapeutics, developer of Remoxy, have risen by nearly one-third to $8.92 since the beginning of the year, whilst Acurox maker Acura Pharmaceuticals are up a similar amount, to $4.24.

Both reformulations of the commonly abused drug oxycodone fell at the first hurdle because of the agency’s doubts over their abuse-resistance mechanisms, and the companies have taken steps to strengthen their applications. However given mixed signals from the FDA – an interest in tamping down addiction risk while setting high approval standards at the same time – success this time round is far from guaranteed.

Product Acurox Remoxy
Company Acura Pharmaceuticals Pain Therapeutics
Market cap $189m $393m
Product NPV n/a $545m
% of market cap n/a 139%
Event type PDUFA date PDUFA date
Indication Moderate to severe pain Moderate to severe pain 
Date June 17, 2011 June 23, 2011

Abuse resistance

Originally licensed to pain specialist King Pharmaceuticals before its acquisition by Pfizer, Acurox and Remoxy apply similar strategies to reducing abuse risk. In both cases, the oxycodone is resistant to crushing so it cannot be inhaled and turns into a thick gel when put in water or other solvents, to prevent it being injected.

In its original submission to US regulators, Acurox also contained niacin to induce uncomfortable flushing if too many pills are ingested, but that part of the abuse-resistance strategy has been dropped (Acura’s blushes cause it to lose adcom backing, April 23, 2010). Pain has beefed up its submission by conducting trials testing its resistance to abuse in patients with a history of abuse; that study found the patients liked Remoxy significantly less than oxycodone when chewed or ingested whole.

Analysts believe Remoxy will be the bigger seller. Sales are projected to peak at $450m in 2015, the year before patent expires, according to EvaluatePharma data. Pain is forecast to receive $69m in royalties in 2015 and Durect, which provided the extended release gel formulation technology, is projected to earn $51m in the same year. The product is not particularly significant for Pfizer, but the income gives Remoxy a net present value of $545m for Pain, nearly 40% more than its market capitalisation; the product is also worth $282m to Durect, equal to the company's total value.

Acurox is forecast to sell $63m in 2016, although there are few forecasts for the royalties that Acura will receive. The original agreement with King for Acurox and Acura’s range of pain products called for royalties ranging from 5-25% and the possibility of a $50m payoff should combined sales exceed $750m.

Success wanted

Both Pain and Acura need these approvals, given the respective products represent lead pipeline candidates - a flow of milestone and royalty revenue would therefore be useful to help push other products through their pipelines. In the case of Illinois-based Acura, the group had just $21.6m in cash at March 31, 2011. Operating expenses were $16m in 2010; the company’s remaining products are listed as pre-clinical.

California-based Pain is in a better position, with $54.9m in cash at March 31. Management has stated the firm’s cash needs for 2011 will be $5m in the absence of a Remoxy approval. Rejection of Remoxy would leave it with three products in the clinic, all in phase I.

Failure at this stage would leave both groups years from having any products in the market. Having licensed a significant share of their pipelines to King – Acura three other products and Pain two others – and limited near-term newsflow, the loss of these late-stage candidates would cause investors to flee.

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