Delay for drug costly to Pozen

Worker incentives tied to Trexima

The Food and Drug Administration's decision to delay approval of Pozen's migraine pill Trexima could cost employees at the Chapel Hill drug company more than $2 million.

At stake are stock options available to all 35 employees and cash bonuses of two top executives -- all tied to Trexima incentive programs.

The stock options and the cash bonuses will be forfeited if Trexima isn't cleared for sale by the end of the year, filings with the Securities and Exchange Commission show.

Pozen's board of directors has "clearly tied compensation to approval," said Ken Trbovich, a pharmaceutical analyst with RBC Capital Markets. It's a common practice at smaller companies, Trbovich said.

Trexima is Pozen's third attempt to get a drug to market. The company and its partner GlaxoSmithKline, a British drug maker with a U.S. headquarters in Research Triangle Park, have spent more than four years testing the migraine medicine.

Fourteen months ago, the FDA found that Trexima works, but requested more data about the drug's potential to cause heart attacks, stroke and genetic damage.

Follow-up lab work and additional data eased FDA concerns about Trexima's cardiovascular risks. But a week ago, regulators told Pozen and GSK that they still had questions about a lab test that suggested the pill's two ingredients are toxic when taken in large doses together. The drug combines the painkiller sumatriptan and naproxen, an anti-inflammatory that is in the over-the-counter medicine Aleve.

The FDA decision was a setback for Pozen and GSK, which is trying to find new medicines that can offset slowing sales of other products such as the asthma treatment Advair and the controversial Avandia diabetes pill. GSK had planned to start selling Trexima by the end of September.

Pozen scientists are checking whether the lab test result is a fluke, said Bill Hodges, Pozen's chief financial officer. They also expect to meet with the FDA in about four to six weeks to find out whether another study is required.

"We're taking parallel paths to do this as quickly as possible," Hodges said.

Analysts have projected that the regulatory review could last another six to 12 months.

The delays have already cost Pozen employees 25 percent of the stock options they bought, SEC filings show. On Dec. 31, another 261,000 stock options could be in jeopardy. Pozen employees paid about $1.84 million to get a chance at turning a Trexima success into a personal gain.

At $8.55 per share at the close of trading Tuesday, the stock options were worth about $2.2 million.

John Plachetka, Pozen's chief executive, and Marshall Reese, the company's executive vice president of product development, have portions of their 2006 cash bonus on the line, according to SEC filings.

If the drug isn't approved by Dec. 31, Plachetka stands to lose about $75,000. Reese has about $48,000 at risk.