Shares of specialty pharmaceutical company DURECT Corporation (NASDAQ:DRRX) were hammered 31.76% to $1.16 after news broke that the U.S. Food and Drug Administration (FDA) had rejected licencee Pain Therapeutics (Nasdaq: PTIE)’s New Drug Application (NDA) for REMOXY ER (oxycodone) extended-release capsules.
Pain Therapeutics received a Complete Response Letter from the FDA denying approval to the NDA in its present form and requiring further actions and data.
“These actions may take approximately a year to conduct and may cost approximately $5MM, pending discussions with the FDA and outside clinical/regulatory consultants,” licensee Pain Therapeutics said in a press release.
Remoxy is an opioid analgesic that has inbuilt technology to prevent its abuse by opium addicts, and the FDA was primarily concerned about the deficiencies in the drug’s abuse deterrence data.
Sellers stampede out of DURECT Corporation (NASDAQ:DRRX)
Such was the rush to get to the exits that Durect recorded volume of 11.38 million shares. Investors did not spare Pain Therapeutics, Inc. (NASDAQ:PTIE) either – that stock was down 51.28% to $1.33.
Durect licensed the rights to develop and commercialize REMOXY ER to Pain Therapeutics in 2002. This was Pain’s third attempt at obtaining FDA approval.
Unfortunately, the FDA action raises serious doubts about the development and regulatory payment milestones that Durect expects from the licensing agreement. Had the drug made it to market, Durect would have scooped up royalties of 6.0% to 11.5% of net sales, depending on sales volumes.
According to Durect’s estimates, the extended release oxycodone market is greater than $2 billion in the U.S. alone.
All that is now in limbo, and comes on top of Durect’s lack luster Q2 EPS of -$0.07, which missed by $0.01, and revenue of $3.2 million, which was off estimates by $0.49 million.
Durect is down 45.54% over the past year, and 57.04% below its 52-week high of $2.70.