Ouch! It didn't come as a surprise to me, but it's painful to watch nonetheless.
The Food and Drug Administration smacked down King Pharmaceuticals (NYSE: KG ) and Pain Therapeutics (Nasdaq: PTIE ) today with a complete response letter for their application to market Remoxy, an abuse-resistant controlled-release form of oxycodone. Shares are trading down over 6% and nearly 19%, respectively, as I write.
The good news is that the companies, which designed the drug using DURECT's (Nasdaq: DRRX ) delivery system, aren’t being required to do more clinical studies. (DURECT is down almost 21% so far today.) Anything the FDA needs should be able to be carried out in the lab, which will likely be faster than a clinical trial.
The companies didn't say what data the agency was looking for, but it almost certainly has to do with the "abuse-resistant" part of Remoxy. From the documents provided to the FDA advisory panel that reviewed Remoxy, it's pretty clear that the FDA has no idea how hard a drug abuser would work to get the active ingredient out of Remoxy and into a form that can be abused (in case you're wondering, I haven't a clue either). Pain Therapuetics showed that very little of the active ingredient was extracted by leaving the pills in solvents for an hour, but the FDA likely thinks that longer tests are needed.
Alpharma (NYSE: ALO ) , which is being acquired by King, also has an abuse-resistant drug, Embeda, up for review by the agency. King could get a double whammy if the FDA has decided to take a hard line on the definition of abuse resistance. Companies farther behind in development of "tamper-resistant" and abuse-deterrent methodologies, like Cephalon (Nasdaq: CEPH ) and Flamel Technologies (Nasdaq: FLML ) , should have plenty of time to get their acts together once the FDA finally decides what it takes to be "abuse-resistant."
Are today's huge drops in Pain and DURECT justified? Somewhat, but until we know more about how long it will take the companies to respond to the FDA, it's difficult to know how much lower the value should be today than it was yesterday. Hang in there, investors; I know it's painful, but Remoxy should get on the market, eventually.