Persistence has paid off for development-stage biotech company Somaxon Pharmaceuticals Inc. (SOMX). The company's insomnia drug candidate Silenor, which has been thrice at the FDA altar, finally won the regulatory approval Thursday, sending the stock skyrocketing as much as 154% in intraday trading.
Somaxon originally submitted its New Drug Application for Silenor seeking FDA approval in January 2008. The regulatory agency, which accepted the filing of the application in March of 2008, was expected to make a final decision on the drug by December of that year. However, the decision date was extended by three additional months, resulting in a new decision date of February 28, 2009.
But much to the dismay of the company, the FDA issued a complete response letter for Silenor last February and again rejected the company's response last December.
Somaxon resubmitted its application on January 21, 2010, which was considered as Class 1 resubmission with a two-month review cycle resulting in a decision date by March 21, 2010.
Thus after several delays, on Thursday, March 18, Somaxon received the much-awaited FDA approval for Silenor for the treatment of both transient (short term) and chronic (long term) insomnia characterized by difficulty with sleep maintenance in both adults and elderly patients. The drug will hit the market shelves in the second half of 2010.
Somaxon will be required to make a $1.0 million milestone payment to its licensor for Silenor pursuant to its existing license agreement.
Silenor has not been designated as a controlled substance by the U.S. Drug Enforcement Administration because of its demonstrated lack of abuse potential. According to the company, abuse potential/risk of dependence was one of the most common safety concerns cited by patients as a reason for not seeking prescription treatment for insomnia, switching medications or discontinuing treatment. But no withdrawal effects or other adverse events have been found to be associated with Silenor in clinical trials.
Silenor works by selectively blocking histamine that assists people in staying awake. The drug's ability to treat sleep maintenance insomnia into the final hours of the night without meaningful next-day residual effects and without abuse potential uniquely positions Silenor for commercial success, noted the company. Silenor becomes the first and only prescription sleep aid to provide a full night's sleep without abuse potential.
According to the American Psychiatric Association, about 70 million adult Americans are affected by insomnia. The insomnia market accounted for more than $2.0 billion in sales in 2008 despite the introduction in April 2007 of generic versions of Sanofi-Aventis (SNY)' Ambien, the market leader at that time.
King Pharmaceuticals Inc.'s (KG) Sonata, Sepracor Inc.'s (SEPR) Lunesta and Takeda Pharmaceuticals' Rozerem are some of the other FDA-approved insomnia drugs.
According to Somaxon, an independent third party analysis has found that Silenor could peak annual sales exceeding $500 million. Being a development stage company, Somaxon has not derived any revenue from product sales to date.
In other company related news, Somaxon announced that it has significantly shrunk its fourth-quarter net loss to $1.92 million or $0.08 per share from $9.45 million or $0.52 per share in the year-ago quarter.
Now that Somaxon has received FDA approval for its first drug and is seeking a U.S. commercial partnership, 2010 is expected to be transformational year for the company.
SOMX hit a new 52-week high of $10.01 on Thursday before closing the day's trading at $9.21, an increase of nearly 134%, on a volume of 47 million shares.
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