Pozen's Trexima Begins Six Month FDA Review

Pozen (POZN) develops of products for the treatment of acute and chronic pain, and other pain-related conditions. Its principal product candidate, Trexima, is being developed in collaboration with GlaxoSmithKline (GSK) for the acute treatment of migraine. Trexima is a single tablet containing sumatriptan succinate (Imitrex, also sold by GSK) and naproxen sodium (contained in Aleve amongst other non-steroidal anti-inflammatories (NSAID)).

Recently the company published data which showed Trexima provided superior sustained pain-free results compared to sumatriptan or naproxen alone. On June 9, 2006 the company announced that the FDA had issued an approvable letter for Trexima and the company saw more than half of its market cap erased. The FDA had determined that Trexima was effective as an acute treatment for migraine headaches, but requested additional safety information. There were fears that Trexima might require new studies.

In November 2006, the company submitted further data as required but the FDA indicated that the reply was incomplete. However, in March 2007 POZN announced its amended response to the approvable letter had been accepted for review by the FDA. According to company the FDA plans a six-month Class II review that could result in an August 1, 2007 decision date on the drug. Pozen said the product could be available to patients in the second half of 2007, contingent on FDA approval.

It is clear from data that Trexima is more effective and faster acting than Imitrex alone. Imitrex which goes off patent in 2009 has annual sales of over $1 billion. Assuming approval in August, which is likely, POZN could receive milestone payments from GSK and a healthy royalty on future sales of Trexima. Eventual sales of Trexima should exceed current sales of Imitrex. We expect the stock to rise significantly from its current level of approximately $14 to well over $26 within the next twelve months based on an expected EPS of approximately $1.5 in 2010.

In addition to Trexima, the company is developing a number of pain medications using the methodology of combining in a proprietary fashion two existing drugs. These therapies will be used for the management of pain associated with osteoarthritis and other such diseases. Clinical milestones in these earlier products will also support the stock over the next year. We think the valuation of POZN should be very attractive to investors at current levels considering the potential size of the migraine market, and the fact that the FDA has accepted their response for review thus lowering the risk that they will not approve the product in 2007.

POZN 1-yr chart

Disclosure: none