Poor Pozen

It's not often that you see a drug developer release data from two positive phase 3 trials for its lead pipeline compound and see its shares fall more than 4%, but that's what happened to Pozen (Nasdaq: POZN  ) yesterday.

The good news is that the company's painkiller, PN 400, which is being developed with AstraZeneca (NYSE: AZN  ) , met its primary endpoint of fewer "endoscopically confirmed gastric ulcers." Drugs like Roche's EC-Naprosyn, which PN 400 was compared to, or other non-steroidal anti-inflammatory drugs (NSAIDs) -- like Wyeth's (NYSE: WYE  ) Advil and Pfizer's (NYSE: PFE  ) Celebrex -- are rather hard on the stomach. PN 400 is designed to alleviate that problem and reduce the ulcers by combining EC-Naprosyn, which is available as a generic, with the active ingredient in AstraZeneca's heartburn medication, Nexium.

The only problem is that the Food and Drug Administration isn't so sure that "endoscopically confirmed gastric ulcers" are the right endpoint. Back in October the FDA notified Pozen that it's trying to decide if the endpoint is clinically relevant. Showing that a drug changes something in the body isn't good enough for the agency; the FDA wants to know that the change results in a real benefit for patients.

Changes in the use of surrogate endpoints also killed the chances of Merck's (NYSE: MRK  ) MK-0524A and Isis Pharmaceuticals' (Nasdaq: ISIS  ) and Genzyme's (Nasdaq: GENZ  ) mipomersen from making an early entry onto the cholesterol-drug market. The agency has decided that cholesterol levels aren't a good endpoint for the average Joe and that it would rather see data on whether the drugs reduce the number of cardiac events, such as heart attacks.

Pozen isn't expecting to hear back from the agency until the first quarter of next year, so investors will have to wait a while to see if Pozen and AstraZeneca will be able to file their marketing application in the middle of next year or if an additional trial will be necessary. With the way the FDA has been tightening up standards, investors should probably plan for the worst.