FDA seeking more data on Avanir drug
Biotech's share price plunges after request
By Penni Crabtree
UNION-TRIBUNE STAFF WRITER
November 1, 2006
Shares of Avanir Pharmaceuticals lost almost half their value yesterday after U.S. regulators said they would need more data to approve a drug to treat emotional outbursts.
The San Diego biotechnology company received a so-called “approvable” letter from the Food and Drug Administration for Neurodex, which the company is renaming Zenvia. But Avanir indicated that additional clinical studies might be needed before the drug could reach the market.
Avanir also cautioned that it couldn't be certain it would choose to continue development of Zenvia once it had met with the FDA to discuss the approvable letter.
Avanir's stock fell 46 percent, or $3.42, to close at $3.98.
Some Wall Street analysts didn't hold out much hope yesterday for Zenvia, a drug that was designed to treat involuntary emotional expression disorder, or IEED. It is the money-losing biotech's only advanced drug candidate.
“The potential need for further efficacy data is surprising, given that the Phase 3 studies with Zenvia were highly statistically significant,” said Elemer Piros, an analyst with Rodman & Renshaw, who downgraded Avanir's stock to market perform. “Either the FDA is moving the goal posts or management didn't hear the FDA correctly.
“Until we see evidence to the contrary, we are assuming that Zenvia may never obtain FDA approval and therefore no longer ascribe value to this product candidate,” Piros said in a research note.
Avanir also is testing Zenvia in a late-stage Phase 3 study for treatment of painful diabetic neuropathy. Given the FDA's stance on the drug, some analysts predict that Avanir will halt that study and try to conserve its dwindling cash.
As of June, Avanir had about $38 million in cash and securities. The company employs about 75 people.
IEED, also known as emotional lability, is a neurologic disorder that causes unpredictable emotional displays, including uncontrollable crying and laughing, according to the company.
Some drug industry observers have criticized Avanir's development of Zenvia, dismissing it as an uninspired drug in search of a disease.
"There are a lot of good companies tackling important disease indications – Avanir is not among them,” said Harry M. Tracy, publisher of Cardiff-based NeuroInvestment, a drug industry newsletter that tracks the development of neurological drugs. “The company had a drug and they were searching for something they could treat.”
Tracy said emotional outbursts are a symptom of a number of diseases, but that in most cases they are the least of a patient's problems. Zenvia was tested in patients with Lou Gehrig's disease and multiple sclerosis to relieve bouts of unwanted crying and laughing.
“In Lou Gehrig's disease, you have the gradual loss of muscular control, the brain is functioning but you can't move muscles, and you die, usually because of respiratory failure,” Tracy said. “Now, whether or not you have a brief episode of teariness, in the vast realm of things, Zenvia is not a critical need.”
Avanir chief executive Eric Brandt said the company would work closely with the FDA to determine the next steps required to receive marketing approval for Zenvia.
“We believe Zenvia can significantly improve the lives of patients, their families and their caregivers by reducing the emotional and social toll taken by involuntary emotional expression disorder,” Brandt said in a written statement.
In May, Avanir announced it would move its headquarters to Orange County by the end of the year but would maintain a research unit in San Diego. Avanir sells one medication, a little-prescribed schizophrenia drug called FazaClo, which it obtained this year in the acquisition of a private Beverly Hills firm.
Avanir, founded as Lidak Pharmaceuticals in 1988, successfully developed the over-the-counter cold sore cream Abreva, but marketing partner GlaxoSmithKline reaps most of the revenue.
Avanir also has licensed a compound to reduce fatty deposits in blood vessels to AstraZeneca. The drug entered early Phase 1 studies in January.
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Penni Crabtree: (619) 293-1237;
penni.crabtree@uniontrib.com
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