Developmental biotechnology company Zogenix (NASDAQ: ZGNX ) has had a surprisingly successful regulatory run with its single-ingredient hydrocodone painkiller candidate, Zohydro ER. Earlier this year, against an 11-2 vote by an advisory panel opposed to its significant abuse potential, the Food and Drug Administration approved Zohydro for treatment of uncontrolled pain.
The approval of the product has brought about significant criticism from law enforcement and medical practitioner alike – Zohydro would be the first ever hydrocodone product on the US domestic market not combined with a dose-limiting second ingredient. Furthermore, Zohydro capsules are not formulated in a way that prevents their abuse when opened, broken, or dissolved.
In a nod to its potential danger, Zohydro is subject to the FDA's Risk Evaluation and Mitigation Stategies program for long acting morphine-based painkillers. This program requires close monitoring of Zohydro use and prescribing among other strict controls; Zogenix has further agreed to conduct a number of post-marketing studies further weigh in on Zohydro's safety.
However, that may not be enough for many critics. In a recent letter to the FDA, 28 state attorneys general demanded the FDA reconsider their approval of the painkiller citing skyrocketing prescription abuse trends and Zohydro's uniquely high abuse potential. A move on the part of the FDA should be a signal to investors of big moves in Zogenix stock price ahead.
A new breed of painkiller
Zohydro is certainly not the first pain medication to come under close scrutiny. Brand name Vicodin, made by AbbVie (NYSE: ABBV ) , along with generic hydrocodone/acetaminophen combinations, produced by generic drug manufacturers including Actavis (NYSE: ACT ) and Endo Health Solutions (NASDAQ: ENDP ) , are widely distributed.
More than 130 million U.S. hydrocodone-containing prescriptions are written annually, which are subject to numerous state and federal prescription drug monitoring programs designed to identify worrying trends that may indicate diversion or improper prescribing.
However, the greater concern is not necessarily with another painkiller joining the market. While hydrocodone-contain medications are already consistently the most highly prescribed medications year over year, the greater worries are rooted in how Zohydro capsules are made.
Presently available hydrocodone products usually contain a second ingredient that makes it difficult for prescribers and patients to overuse -- a feature that pure hydrocodone Zohydro capsules do not include. Even more worrying, Zohydro capsules are not chemically designed to stop abusers from getting a stronger-than-intended effect from the normally long acting medication.
Popular Purdue Pharmaceutical painkiller Oxycontin famously came a hair's distance from becoming banned before Purdue agreed to fund extensive drug monitoring programs in addition to reformulating the product to defeat attempts to abuse it. New generation Oxycontin tablets are difficult to crush and resist dissolution among other chemical safeguards. Early in 2013, the FDA made a final move to formally ban the original formulation from the market.
Zogenix's next plays
Zohydro's trajectory may very well mirror that of Oxycontin over the next few months. As an alternative to outright rollback of Zohydro's approval, state attorneys hailing from major painkiller markets like Texas and Florida have strongly recommended that the FDA hold Zogenix to a "rigorous" timeframe in which Zohydro must be reformulated to reduce its risk potential.
Fortunately, Zogenix has already contracted a third party, Altus Formulation, to assist its team with a redesign of the Zohydro capsule and capsule ingredients that could potentially satisfy critics. That being said, this new relationship does not prevent the FDA from reconsidering Zohydro's appropriateness for market and certainly does not prevent its critics from raising distribution hurdles within state boundaries.
A recall of Zohydro's approval would at least temporarily sink Zogenix's flagship product, and stricter controls or outright bans within individual states could seriously hamper its marketability. Zogenix will need to play its newest set of obstacles wisely if its wants to ensure patient safety and Zohydro's success.
A top stock for the new year
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.