Pozen stock tumbles as patent challenge announced

Shares of Pozen Inc. shed nearly 28 percent of their value Friday, after the drug developer announced a generic challenge for one of its products and possible regulatory delays for two other compounds.

The company's stock fell $2.50, or 27.8 percent, to $6.50. The day's low of $5.75 was the stock's lowest price since June 2006.

Robert W. Baird & Co. said Friday it reduced its rating on the company's stock to "Underperform" from "Neutral."

"Two significant announcements of negative news make it unlikely that (Pozen) will match or outperform the market in the next 12 months," analyst Lawrence H. Neibor said in a research note. He trimmed his target price on the stock to $6 from $10.

Pozen said Par Pharmaceutical Inc. has filed an application with the Food and Drug Administration to make a generic version of Treximet, a migraine treatment Pozen developed with GlaxoSmithKline PLC.

The FDA approved Treximet in April following years of delays.

Pozen also announced Friday the FDA is reviewing the acceptability of using endoscopic gastric ulcers as the focus of a clinical study goal, which could affect two drugs the company is developing.

The FDA told Pozen it was conducting the review as part of discussions between the company and agency over trial parameters for PA32540 and a statistical analysis plan for PN 400.

Pozen investor relations director Fran Barsky said she had no information on why the FDA was conducting the review.

PA32540 is designed to have the cardiovascular benefits of aspirin with a lower rate of patient ulcers. Another compound, PN 400, is a combination of the pain reliever naproxen and the acid reflux drug Nexium, and is being developed with Nexium maker AstraZeneca PLC.

If the FDA determines that endoscopic gastric ulcers aren't acceptable for the goal, Pozen may have to conduct more trials, which could add costs and delay regulatory approval.

The FDA told Pozen it may hold a meeting to discuss the issue by the first quarter of 2009.

RBC Capital Markets analyst Ken Trbovich said in a research note he expects investors to shy away from Pozen shares until they learn the outcome of this meeting.