Pozen posts big gains as painkiller gets earlier testing

After its experimental migraine treatment fell short of regulatory approval a second time last month, Pozen needed some good news.

The Chapel Hill drug development company got it Friday with the announcement that late-stage testing of a new pain pill would start earlier than expected.

Pozen has been working on the painkiller -- called PN 400 -- with British partner AstraZeneca for about a year. Advancing the drug to tests involving about 800 patients triggers a $30 million payment from AstraZeneca and puts Pozen closer to another $315 million for developmental, regulatory and sales milestones.

Pozen shares surged nearly 28 percent Friday, adding $2.78 to $12.76. It was Pozen's biggest percentage gain since August 2006 but still left the shares down about 15 percent for the year as the company tries to recover from the Aug. 2 regulatory disappointment of the the migraine drug Trexima.

"Investors are saying, 'There's a setback with Trexima, but there's still an opportunity with PN 400,' " said Ken Trebovich, a pharmaceutical analyst with RBC Capital Markets who tracks Pozen.

PN 400 combines an over-the-counter pain reliever, naproxen, and AstraZeneca's gastrointestinal treatment Nexium. The resulting tablet promises to relieve pain from, say, arthritis, but causes fewer stomach ulcers than rival drugs.

The first patients are expected to enroll in the PN 400 tests next week.

About 70 million Americans are estimated to be at risk of developing osteoarthritis over the next 20 years, according to the National Institutes of Health. About 20 million already suffer from the disease. Vioxx generated $2.5 billion in annual sales worldwide before safety concerns resulted in the popular arthritis treatment being pulled from the market three years ago.

Preliminary study results that Pozen released in July showed PN 400 worked well. But many investors didn't expect a decision on a continuation of the drug's development before final study results were available at the end of the year, Trebovich said. Moving ahead sooner signals that existing PN 400 test results are strong, he said.

Deal renegotiated

AstraZeneca and Pozen also renegotiated the financial details of their partnership, primarily changing when certain payments will be made. AstraZeneca also agreed to increase the first payment from $20 million to $30 million, bolstering Pozen's cash reserves to about $70 million.

"There's no longer any doubt that we're moving along with PN 400," John Plachetka, Pozen's chief executive, told analysts Friday in a conference call. "It's been a good news day for us."

Pozen had hoped to win regulatory approval for Trexima on Aug. 2 and bring its first drug to market by the end of September. But federal regulators requested additional safety testing of the migraine drug that Pozen is developing with British partner GlaxoSmithKline.