Last week, King Pharmaceuticals (NYSE: KG ) made another bet on abuse-resistant painkillers. It signed a development deal with small Acura Pharmaceuticals (OTC BB: ACUR.OB).
Abuse-resistant drugs are compounds made to be tamper-resistant to crushing, dissolving in liquid, or injecting. King and other drug developers like Alpharma (NYSE: ALO ) , tiny Elite Pharmaceuticals (AMEX: ELI ) , and privately held Purdue Pharma have taken a stab at developing abuse-resistant drugs with hopes that doctors will prescribe tamper-resistant painkillers instead of the more easily abused versions.
King's deal with Acura -- which is soon to be listed on the Nasdaq or AMEX -- is a cheap bet on abuse-resistant opioids. In exchange for $30 million up front, $28 million in potential milestone payments, development costs, and a 5% to 25% royalty rate, King has the rights to market Acura's immediate-release oxycodone compound. More important, it also has a chance to license any future drugs using Acura's deterrent technology.
Acura's lead drug, ACUROX, is an oxycodone compound currently in phase 3 testing. ACUROX has a simple clinical and regulatory pathway toward approval. The drug only has to show superiority over placebo in one phase 3 study, and then Acura can file for marketing approval with the FDA.
Approval is relatively easier for ACUROX than other drugs because the active ingredient in oxycodone has been marketed for many years in easy-to-abuse forms. So, Acura and King can file for regulatory approval via a 505(b)2 marketing application that is similar to a generic-drug regulatory filing (the FDA has all the exciting details of 505(b)2 applications here).
This arrangement with Acura isn't King's first foray into abuse-resistant drugs. King signed a deal with Pain Therapeutics (Nasdaq: PTIE ) in 2005 for a controlled-release version of oxycodone and up to three other compounds using a different deterrent technology.
The Acura deal is a smart hedge by King in case Purdue Pharma, which still has patent protection on its branded, controlled-release oxycodone, tries to delay King and Pain's drug with an infringement suit. Immediate-release oxycodone is already a genericized drug, so Acura will not have to worry about such patent issues.
King has built itself around in-licensing marketed drugs and late-stage pipeline candidates. This deal with Acura is a low-risk bet by King on abuse-resistant drugs. It certainly doesn't answer the question whether insurers will be willing to pay a premium price for abuse-resistant drugs, but if they do, King will be the best-positioned pharma to capitalize on it.
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