Federal regulators on Friday approved Pozen's arthritis drug Vimovo, the culmination of a decade of development and tens of millions of dollars invested by the Chapel Hill company and its corporate partner.
It's not unusual for such efforts to end with a rejection by the FDA or a demand for costly new tests, which makes Pozen's achievement all the sweeter.
"It's just a great endorsement of the people who are here," co-founder and CEO John Plachetka said in an interview. "Sometimes you can do a lot with ... a small group of determined people."
Indeed, Pozen, which was founded in 1996 and has about 30 employees, is one of the few small pharmaceutical companies in the Triangle to successfully shepherd multiple prescription drugs through the regulatory gantlet. Its migraine drug Treximet, which is marketed by GlaxoSmithKline, first hit pharmacists' shelves in May 2008.
This week, Plachetka called the prospect of Vimovo's winning marketing approval "a game-changing event for us."
Plachetka was eating peach cobbler, a lunch leftover, about 5 p.m. Friday when the company got word from the FDA - via e-mail - that Vimovo had been approved for marketing.
"From this point forward, every time I dish up a peach cobbler, I'm going to expect to get a drug approved," he joked.
Vimovo, which is expected to be ready for sale this summer by Pozen's other corporate partner, AstraZeneca, has the potential to be a much bigger success in the marketplace than Treximet. Studies have shown that Vimovo, which combines an over-the-counter pain reliever, naproxen, and AstraZeneca's gastrointestinal treatment Nexium, leads to significantly fewer gastric ulcers than rival medication.
"It's a potentially great drug for people with arthritis," Plachetka said. "It's everything that I designed it to be."
Annual worldwide sales of Vimovo could peak at $800 million, which would generate about $80 million in royalty revenue for Pozen, according to projections by analyst Jonathan Aschoff of Brean Murray, Carret & Co. Neither Pozen nor AstraZeneca has disclosed sales expectations, nor has either revealed pricing for the medicine.
Through Thursday, Pozen shares had doubled since the beginning of March, driven largely by anticipation of a positive outcome for Vimovo. But investors apparently got nervous Friday, with shares falling 10 percent to close at $10.85. Trading volume was 20 times greater than normal.
In after-hours trading Friday, the stock climbed as high as $13.25.
Plachetka conceived of what is now Vimovo 10 years ago and did some early "proof of concept" work in the early years of the decade. But finding a corporate partner with the deep pockets to finance continued development required some fortitude.
"I can remember going to several [potential] partners who told me we were nuts," Plachetka said. "'It wasn't going to work' was the most common phrase."
But AstraZeneca came aboard in 2006, and the first clinical trials of Vimovo were initiated in April 2007. Pozen and AstraZeneca to date have spent $95.7 million to develop Vimovo and other, similar experimental drugs, according to documents filed with the Securities and Exchange Commission.
Money, more money
Vimovo's approval opens up two potent revenue streams for Pozen.
First, it will receive a 10 percent royalty on U.S. sales and varying royalty rates in foreign markets.
It also is in line for payments from AstraZeneca for achieving certain milestones, the first being $20 million for winning FDA approval. Next up is a $25 million payment for winning government approval in a major foreign market, which could happen as soon as the second half of this year. Pozen also could receive up to $260 million for achieving sales performance milestones.
Pozen posted a $3 million loss in the first quarter on revenue of $6.9 million, including $3.8 million in royalties from Treximet sales.
Although Plachetka praised AstraZeneca for being a stellar corporate partner this week, the company has changed its strategy going forward and is going it alone in developing other drugs in its pipeline.
That course involves greater risk - it will no longer share the considerable costs of development - but also has the potential for greater rewards, because Pozen won't have to share revenue, either.
Now, with the approval of Vimovo, Pozen should be able to afford the upfront investment.
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