FDA Approval of Migraine Drug Could Mean Many Big Paydays for Pozen

Chapel Hill, N.C. — Pozen Pharmaceuticals' stock soared Wednesday following news that the U.S. Food and Drug Administration had approved Pozen's migraine drug Treximet, developed in partnership with GlaxoSmithKline.

Its shares climbed $2.92, or nearly 28 percent, in trading Wednesday afternoon at $13.45. Shares finally closed the day with a final uptick to $13.50, and more paydays are ahead for Pozen (Nasdaq: POZN), too.

Not only will Pozen receive royalties when the drug goes on sale in May, it also will receive a $20 million milestone payment from GSK, according to Jefferies analyst Eun Yang. Plus, The Associated Press reported Yang as saying, Pozen could receive as much as $200 million in royalties on an annual basis.

In 2007, Pozen reported a $4.7 million profit based largely in part on a $30 million milestone payment from AstraZeneca for another pain reliever that is under development.

Pozen has already received more than $35 million from GSK.

The road to FDA approval was a long one for Pozen, which Chairman and Chief Executive Officer John Plachetka founded in 1996. The regulator rejected two other Pozen drug candidates, and Treximet, which had first been called Trexima, was not a guaranteed success.

The FDA approved the drug Tuesday after having rejected it three times. The news led analyst firm Citi to maintain its “Buy” rating on Pozen stock and raised the target price to $19 from $15.

“We expect Treximet to gain significant market share in the $2 billion migraine market, as [GSK] intends to aggressively convert its Imitrex sales (55 percent of the migraine market) to Treximet,” Citi reported, according to media accounts.

Treximet includes Imitrex in combination with an anti-inflammatory pain reliever. Pozen’s proprietary technology is used to combine the drugs. It also is working with AstraZeneca on a pain reliever that includes AstraZeneca’s Nexium product. The proposed drug, PN 400, could be a big seller in a $3 billion market for a product to lower the risk of cardiovascular disease while avoiding the side effects of chronic aspirin abuse, Citi said.

Treximet is expected to be good news for the more than 29 million Americans who suffered from migraines. The FDA approved the drug after a review of data that showed Treximet had “a significantly greater percentage of patients migraine relief at two hours” compared with being treated by the drugs in Treximet separately.

Pozen recently submitted data to address FDA concerns about genotoxic “aberrations” in human volunteers. The FDA rejected the drug in 2007, citing genotoxic impact on hamsters that had been used in tests.

Pozen had been trying to win approval for the drug since 2005. The FDA expressed concerns about genotoxicity, or damage to DNA, that was “seen for the combination of naproxen sodium and sumatriptan,” Pozen said in a letter in August. Those are the ingredients Pozen has combined in one pill. The genotoxicity was observed in one of four studies, Pozen said.

In an earlier review of the drug, the FDA expressed concern about cardiovascular side effects.