Having one drug on the market is generally not enough to keep a biotech or its investors happy. That's especially true for Zalicus (Nasdaq: ZLCS ) , which out-licensed its pain drug Exalgo to Covidien (NYSE: COV ) and receives only a royalty on the sales of Exalgo, which hasn't really taken off. Another drug is a must.
Zalicus is getting there. The company moved one step closer to having another revenue-bearing drug by starting a phase 2a trial for another pain medication, Z160, which Zalicus is testing in chronic neuropathic pain associated with lumbosacral radiculopathy, a compression or irritation of the nerve roots exiting the lumbar region of the spine.
The biotech expects to start another phase 2a trial in the fourth quarter in patients who have nerve pain from shingles. Data from both trials should be available in the second half of next year, at which point Zalicus can make a decision about whether to move into phase 3 development.
Nerve pain isn't exactly an unmet need. Pfizer (NYSE: PFE ) recently gained approval to market Lyrica for neuropathic pain associated with spinal-cord injury. Eli Lilly's (NYSE: LLY ) Cymbalta is approved to treat diabetic nerve pain. And NeurogesX has a patch called Qutenza for treating nerve pain from shingles.
According to Zalicus, there aren't any treatments for neuropathic pain associated with lumbosacral radiculopathy, but that doesn't mean those patients aren't getting treatment. While nerve pain from different sources is technically separate indications, doctors use the nerve-pain drugs off-label for different indications. Cymbalta is commonly used to treat nerve pain from shingles, for instance.
Zalicus won't be allowed to market the drug for any indication that Z160 hasn't been tested in -- and that the FDA signs off on -- so doctors are left on their own to decide whether to experiment. If Zalicus hopes to gain a wide audience for Z160, the safety profile of the drug will probably be as important as, if not more important than, the efficacy in the clinical trials.
Investors should be happy Zalicus is taking steps forward. Just make sure you watch those steps to ensure that the company is maximizing the potential value of its next drug.
Many investors are attracted to Zalicus and biotechs like it since they hold the allure of substantial short-term gains. But there is more than one approach to building long-term wealth and retiring well. In our free report "3 Stocks That Will Help You Retire Rich," we reveal some stocks that could help you as well as some winning wealth-building strategies. Read more.