Reprint from

 

By Heather Chambers Monday, April 26, 2010

 

Last year’s recession forced many local life sciences companies to find innovative ways of cutting costs, regulatory rejections aside.

But for some, the strained economic environment, coupled with adverse regulatory rulings, resulted in an especially difficult year. Such was the case for Solana Beach-based specialty pharmaceutical company Somaxon Pharmaceuticals Inc.

The U.S. Food and Drug Administration twice rejected its insomnia drug, Silenor, and the company reduced its work force from 45 to six full-time employees. Running low on cash, the company conserved resources and soon clinched an FDA approval in March, just three months after meeting with regulatory officials.

“We’re pretty proud of navigating some pretty turbulent waters,” Somaxon CEO Rich Pascoe said last week. “We had to really work hard to persevere in our ability to get this drug approved and we made some tough decisions in doing it.”

Shares of Somaxon, traded under the symbol SOMX on Nasdaq, closed up 57 percent at $9.21 on March 18, after the drug won approval. Its shares have been trading around $7 ever since. In the last 52 weeks, as of last week, shares have hit a 32-cent low and a high of $10.60.

“You look out there and see a lot of failures — companies and teams that just weren’t able to keep it together,” Pascoe said. “It’s been nice to put a win on the scoreboard.”

Rejected Twice in 2009

The FDA first turned down the company’s application in February 2009, requesting that it address the possibility that Silenor may slow a person’s heart rate, although no adverse events were reported in its clinical trials. Somaxon officials met with the FDA in April 2009, and the company resubmitted the drug after showing it had no effect on heart rate when administered at doses of 6 milligrams or exaggerated doses of 50 milligrams.

In December, the agency again rejected the company’s application, saying the drug did not meet efficacy standards in adults who suffer from primary insomnia. The letter did not raise any safety concerns.

Shares of Somaxon lost more than two-thirds of their value on the news.

Moving ahead, the company must overcome a few more challenges. Namely, it will introduce its drug onto a market that’s been moving toward generic insomnia drugs in recent years.

Silenor could compete against big-name sleeping pills such as Ambien and Lunesta, along with generic versions that hit the market three years ago. In the United States alone, there were 35 million prescriptions dispensed last year for generic Ambien, according to health care information and consulting company IMS Health Inc. It captured 59.6 percent of the market for insomnia drugs of its kind.

Somaxon has estimated that it could capture peak annual sales of $500 million for Silenor. By comparison, Ambien CR reported sales of nearly $1 billion last year, according to IMS Health.

Additionally, many over-the-counter sleep aids work by acting on histamine receptors, similar to Silenor. Examples include Tylenol PM and Advil PM, which contain the antihistamine diphenhydramine, or Benadryl.

New Option

“It’s always nice to have a new option,” said Dr. Gary Levinson, co-owner of the San Diego Center for Sleep Medicine.

Levinson said he’s treated patients with higher doses of Silenor’s drug in the past, for conditions such as fibromyalgia. But a low-dose version of the drug never existed.

Unlike many of the prescription sleep aids on the market today, Somaxon’s drug works by acting more selectively, Pascoe said. He said the drug has also been proven to minimize next-day drowsiness. Silenor is a low-dose version of a drug first marketed as an antidepressant in 1969.

But Levinson said many of the underlying problems associated with chronic sleep disorders require a more thorough evaluation.

“A lot of these drugs are sort of given to these patients by their primary care physicians as an afterthought,” he said. Those patients often end up in his sleep center, with more serious underlying problems such as sleep-related anxiety.

Firm’s First Drug

Somaxon, a seven-year-old company that had a net loss of $14.4 million in its 2009 fiscal year, compared with a net loss of $37.2 million in its previous year, said it anticipates introducing Silenor as its first drug by the second half of the year. The drug is approved for treating short-term and chronic insomnia in adults and the elderly.

Pascoe said the company will focus on specialty markets, such as the psychiatrists and neurologists who tend to write large numbers of prescriptions for sleeping aids.

“For Silenor, it drives probably 30 percent of the prescription volume in the sleep market,” he said. Somaxon will target the health care providers with an internal sales force of roughly 75 people, which Pascoe said he expects to hire six weeks before the summer launch.

Somaxon will leave the much bigger primary care markets up to a partner with a larger sales force, perhaps 300 or 400 people, Pascoe said.

“We want the partner to do the heavy lifting in areas where we’re just not looking to build those capabilities right now,” he said.

 

April 26, 2010