The Food and Drug Administration has notified Zogenix Inc. (NASDAQ: ZGNX) that it won’t reach a final decision on the company’s powerful new painkiller, Zohydro, until this summer.
“To our knowledge this sort of delay is unprecedented,” Roger Hawley, CEO of Zogenix, said during a conference call announcing the company’s first quarter results.
The FDA had already informed Zogenix in late February that it would be unable to reach a decision by a March 1 target date. The agency gave no explanation for the added delay.
“We recently had an update call with the FDA regarding the status of the Zohydro ER new drug application (NDA). On the call, the FDA indicated that they are preparing to take action on the Zohydro NDA in the summer 2013. While they declined to provide any specific reasons for the delay, we have concluded the FDA are working on several broader opioid-related issues that need to be addressed,” Hawley said.
If approved, Zohydro would be the first pure hydrocodone painkiller sold in the U.S. Combination versions of hydrocodone, such as Vicodin, typically contain acetaminophen and require dosing every 4 to 6 hours. Extended release Zohydro could be taken just twice a day. About 47 million patients received prescriptions for hydrocodone products last year, according to the FDA.
Late last year a panel of pain experts advised the FDA to reject Zohydro because of potential abuse of the opioid painkiller. The vote was 11-2 with one abstention.
“If approved and marketed, Zohydro ER will be abused, possibly at a rate greater than that of currently available hydrocodone combination products,” FDA staff reviewers wrote in a report.
The FDA is not obligated to accept the findings of its advisory committees or staff. The fact that a final decision was delayed beyond March 1 is being interpreted by some as a sign that FDA may still approve Zohydro to treat moderate to severe pain.
If approved, Zohydro ER would be classified as a Schedule II drug, making it subject to stricter prescribing and dispensing rules. All hydrocodone products are currently classified as Schedule III drugs, although the FDA is considering reclassification of hydrocodone as a Schedule II controlled substance.
“We are quite happy to be on the Schedule II. If the other products are rescheduled, we would certainly hope that patients have adequate resources to gain access to physicians who could prescribe their products,” Hawley told analysts according to a transcript on Seeking Alpha.
“There are literally hundreds of thousands if not millions of patients that would be affected. So I don’t know the outcome there, but we don’t see a legitimate reason why that factor is a cause to continue a delay where we have no known issues with the review division.”
While “disappointed” with the delay, Hawley said Zogenix would be prepared to launch Zohydro three to four months after its potential approval.
“Although FDA action on Zohydro ER is uncertain, we view the risk/reward profile on ZGNX shares as favorable,” Wells Fargo analyst Michael Tong said in a note to clients.
Tong rates the stock “outperform” with a target price of $3.00 to $3.50, nearly double its current share price. He says the company will need to raise more cash – possibly by selling more shares — by the end of the year.
“The delay in FDA action on Zohydro ER is a double-edged sword. An early approval could have allowed an equity offering that is less dilutive. The delay makes the equity option less appealing. However, it also permits the company to delay pre-launch and commercialization expenses for Zohydro, thus conserving cash,” Tong said.
Zogenix reported a net loss of $21.1 million, or $0.21 per share, compared to a net loss of $10.3 million, or $0.16 per share, for the first quarter 2012. Revenue declined by over 60% to $7 million from a year earlier.