This Biotech's on the NuPathe to Success

It hasn't been an easy path for NuPathe (UNKNOWN: PATH.DL  ) shareholders with the company going public in 2010 and losing more than 60% of its value. But, today it's time to break out those champagne glasses because the Food and Drug Administration approved Zecuity, the once-daily transdermal migraine medication, after the closing bell yesterday.

Zecuity is a combination of sumatriptin, a generic version of the long-acting migraine medication originally developed by GlaxoSmithKline (NYSE: GSK  ) and marketed as Imitrex, and NuPathe's proprietary SmartRelief technology, which uses electronic pulses to deliver medication subcutaneously. In clinical trials, there was an undeniable benefit compared to the placebo. Zecuity induced freedom from headache pain in 18% of patients, partial headache relief in 53% of patients, and 84% of patients were nausea-free -- all after two hours. Comparatively, the placebo produced results of 9%, 29%, and 63%, respectively, based on those same questions. 

In 2011, Zecuity (formerly NP101) appeared like a sure lock for approval based on this data, but was denied approval by the FDA due to safety concerns associated with its electronic pulse delivery (e.g., far too many instances of patient discomfort). NuPathe has now completely reworked its delivery system and is set to begin commercial production of the drug in the fourth quarter.

The two big questions left unanswered now are:

  • Who will partner up with NuPathe?
  • Can Zecuity compete with Zogenix's (NASDAQ: ZGNX  ) Sumavel DosePro migraine delivery system?

Trying to guess who NuPathe will select as its commercial partner is like trying to find a needle in a haystack because there are just so many big pharmaceutical companies struggling to find new revenue streams at the moment. However, one company that would make a lot of sense to me would be Merck (NYSE: MRK  ) . Merck's in the process of trying to replace revenue lost from asthma blockbuster Singulair, but it also lost exclusivity on migraine medication Maxalt last year. Also, a non-triptan-based migraine therapy it was working on for years, known as MK-0974 and later as Teclagepant, was discontinued in 2011 because of liver complications. Merck has ample cash and a well-trained sales force that could easily handle Zecuity's launch, and, without anything else coming down its pipeline, this seems like an easy way for it to get back into the acute migraine market.

Whether Zecuity can compete with Zogenix's needle-free delivery system is a whole different ballgame. Zogenix's commercial partner, a unit of Covidien (NYSE: COV  ) , helps co-promote Sumavel DosePro with Zogenix, and, based on its 26% year-over-year growth to 145,000 units sold, it's doing a respectable job. In trials, Sumavel was tested on 1,104 patients, of which 16% achieved pain relief within just 10 minutes (compared to just 4% for the placebo) and 70% had some relief in pain within the first hour (compared to 22% for the placebo). Although Zecuity and Sumavel DosePro haven't faced off in a head-to-head trial, and there's a statistical difference between "pain relief" and "pain-free," there are clearly benefits to both drugs. It's going to be crucial for NuPathe to find an experienced marketing partner if it's going to succeed.

NuPathe CEO Armando Anido wouldn't let investors in on the specifics of Zecuity's pricing, but noted it would be comparable to the $95 cost of a similar injection. Proprietary costs could be a drawback relative to injectable medications, but undercutting Zogenix's Sumavel DosePro in price could be just as interesting of a move.

Considering that NuPathe was valued around $9 per share when Zecuity first went in front of the FDA, I'm hopeful it will head higher from here, but I'm anxiously waiting to hear who'll be its commercial marketing partner.

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