Food and Drug Administration rejections are depressing to watch. The only thing worse is to watch two companies affected by a rejection. Salix Pharmaceuticals
Relistor has languished since it was approved in 2008 to treat opioid-induced constipation in patients with advanced illness who are receiving palliative care. Wyeth, Progenics' original partner, handed back the rights to the drug just before Pfizer took over.
Expanding Relistor's use into less-serious patients could have increased sales substantially. But Progenics and its new partner Salix said the FDA wants more clinical data before it can approve the drug. The companies didn't go into more detail, but I think investors are probably worried there's a safety issue. The FDA is likely to be more concerned about side effects in a population that just has a chronic pain issue than the current indication where patients have serious medical issues and the goal is to make them comfortable.
More depressing for investors who don't even own either company, the rejection came after the FDA extended the review of the drug by three months. Investors generally view extensions as a good sign, because if the FDA had already decided to reject the drug, it seems logical that it would just reject the drug rather than continue with the review. There are certainly a lot of examples of drugs that got approved after an extension, most recently VIVUS'
But Relistor's rejection should serve as a reminder -- as depressing as it is -- that the theory doesn't work all the time. It's not even the first time it's happened. Both Merck KGaA's multiple sclerosis drug cladribine and XenoPort
That's drug development for you. The highs are high, the lows are low. And sometimes it's hard to tell them apart.
The biggest binary event, the presidential election, is around the corner. Check out the Fool's new free report, "These Stocks Could Skyrocket After the 2012 Presidential Election," where you'll get ideas for companies that can benefit from each candidate's platform. Get your free copy.