U.S. regulators have delayed approval of an experimental two-in-one migraine drug from GlaxoSmithKline and Pozen yet again, sending Pozen stock down 45 percent on Thursday.
Glaxo said the Food and Drug Administration had asked Pozen to address the potential implications of a preclinical study into chromosomal risks, in which genotoxicity was seen with Trexima, but not with either of the components on their own.
Analysts said the problem could delay the drug's launch until mid-2008 and reduce significantly its sales potential.
Trexima combines Glaxo's popular migraine drug Imitrex -- known generically as sumatriptan -- with the older painkiller naproxen sodium. It attacks different pathways in the brain and is designed to act faster and last longer.
The product has faced several previous delays in getting to market and many investors had been hoping the FDA would give it a green light this time.
In the event, the agency issued a second "approvable letter" -- an official notification containing conditions that must be satisfied prior to obtaining final U.S. marketing approval. Glaxo and Pozen intend to request a meeting with the FDA as quickly as possible to discuss the necessary steps to address its concerns.
Industry analysts said there would be uncertainty until Pozen lets investors know definitively what steps are needed.
"There is a cloud that will hang over the stock for at least 30 or 60 days, until Pozen gets back to us," Angela Larson, an analyst with Susquehanna Financial Group, said.
If approved, she believes Trexima could eventually capture at least 70 percent of the market for treating patients now taking Imitrex, because it provides pain relief more quickly.
Sales Forecast Cut
The problem is the delay reduces the time that Glaxo and Pozen have to switch patients to the new drug before cheap generic copies of Imitrex hit the U.S. market.
"At this stage it is impossible to say how long the delay will be. However, assuming that launch does not take place until May/June 2008 reduces the window to switch patients from Imitrex to Trexima ahead of the launch of Imitrex generics late November 2O08 to just six to seven months," Marck Purcell of Deutsche Bank said.
Purcell said he was cutting his 2012 Trexima sales forecast to 352 million pounds ($715 million) from 556 million.
Earlier FDA concerns had centred on the cardiovascular safety of Trexima. No additional information was requested on this aspect of the product on Thursday but both companies agreed to conduct a study on its effects on blood pressure after approval.
The multibillion-dollar market for prescription migraine drugs is dominated by a class know as triptans, of which Glaxo's Imitrex is the most widely used.
Triptans are used to stop but not prevent migraines. The drugs aim to relieve pain by allowing better blood flow. Adding naproxen, an older non-steroidal anti-inflammatory drug, helps extend the relief.
Pozen shares traded at $9.58 by 1510 GMT, down 45 percent on Wednesday's close of $17.45. Glaxo was off its day's high but still up 1.8 percent on the day at 12.78 pounds.
Shares in Europe's biggest drugmaker have rallied this week on relief its diabetes pill Avandia is set to remain on the U.S. market, despite a report in May linking it to heart-attack risk.