Somaxon Pharmaceuticals, Inc. (SOMX)

[ToysInTheAttic]

Fm SeekingAlpha 3/17...Analyzing the Upcoming FDA Decision on Somaxon's Insomnia Drug

By March 21, 2010, the U.S. Food and Drug Administration (FDA) is expected to decide on the marketing approval of Somaxon Pharmaceuticals, Inc.'s (SOMX) drug Silenor, designed for the treatment of insomnia, which is the inability of an individual to fall asleep or remain asleep for an adequate period of time. The stock is currently trading at $4.05, with a market cap of $95.7 million.


Silenor represents one of the most promising new treatment options for insomnia. The existing approved insomnia treatments suffer from several limitations including abuse potential, limited efficacy and side effects like next-day residual effects (hangover), memory loss and addiction potential, thus driving a need for safer and more effective treatment options for the condition.

Driven by its encouraging safety and impressive efficacy profile coupled with a lack of abuse potential, Silenor could emerge as an important treatment option for insomnia. If cleared for marketing, drug is expected to generate peak revenues of approximately $500 million, or 522% of the company’s current market capitalization.

On January 31, 2008, SOMX shad ubmitted the New Drug Application (NDA) of Silenor to the U.S. FDA. The U.S. FDA had accepted the NDA of Silenor and had set a review date of December 1, 2008. But, on November 24, 2008, the U.S. FDA informed the company that it would require three more months to complete the review of Silenor, thus extending the approval timeline to February 28, 2009. Thereafter, on February 25, 2009, the U.S. FDA issued a Complete Response Letter (CRL) to Silenor, in which the agency asked SOMX to address the potential cardiovascular safety issues associated with the drug. In the CRL, the U.S. FDA also mentioned certain problems regarding the interpretation of the efficacy data of Silenor submitted by the company in the NDA filing. This drove SOMX to perform an additional analysis of Silenor’s clinical trial data and then resubmit its NDA to the U.S. FDA on June 4, 2009.

Consequently, the U.S. FDA was expected to take a decision regarding Silenor by December 4, 2009. Unfortunately, on December 7, 2009, the U.S. FDA issued ayet nother CRL to Silenor, which questioned the robustness of the submitted efficacy data of the drug. The CRL also required the submission of a revised risk management plan. Since no concerns regarding the safety of Silenor were raised, it prompted SOMX to submit its response and a revised risk management plan to the U.S. FDA on January 21, 2010.


Although this drug has been plagued by setbacks by the FDA, we believe that this time around SOMX has been able to successfully resolve all the concerns raised in the CRL. We based this on the fact that Silenor has achieved the primary endpoint in all the four of their Phase 3 clinical trials without demonstrating any serious safety problems. Its also important to note that the FDA had designated their last CRL as a Class I resubmission, which essentially implies minor application deficiencies, such as labeling issues, commitments to perform post-marketing studies, safety updates and other minor clarifying information.

Silenor belongs to the H1 antagonist class of drugs. The following is a brief explanation on how the drug works:

Both sleep and wakefulness are governed by a particular area of the brain called hypothalamus. During wakefulness, the nerve cells in specific regions of the hypothalamus (posterior hypothalamus) release a chemical called histamine, which helps the individuals to stay awake. During sleep, the histamine-releasing activity of the hypothalamus gets naturally reduced.

In healthy people, the release of histamine in the brain is balanced. However, in insomnia patients, this balance is lost and people have high levels of histamine in the brain. Excessive histamine promotes wakefulness and reduces sleep.

Histamine promotes wakefulness by binding with specific cell surface proteins in the brain called H1 receptors. The H1 antagonist class of drugs works by binding with and blocking the H1 receptors, preventing the binding of histamine with its receptors. This inhibits histamine’s activity and histamine cannot perform its wakefulness-promoting function, which in turn, promotes sleep.

Silenor offers two distinct advantages over the existing insomnia drugs in the market:


No Abuse Potential: Unlike most of the existing insomnia drugs including Ambien and Ambien CR from SNY and Lunesta from SEPR, which are classified as Schedule IV drugs by the DEA due to the abuse potential and tolerance problems associated with them, Silenor appears to be safe, without any abuse potential and is likely to be categorized as a non-scheduled drug by the DEA.
Sleep Onset and Sleep Maintenance Activity: Rozerem from TKPHF.PK, an approved insomnia drug, has been classified as a non-scheduled drug. However, this drug is only approved for patients who have difficulty in getting sleep and not for the maintenance of sleep. On the other hand, Silenor is expected to be classified as a non-scheduled insomnia drug for the maintenance of sleep.
A more detailed report on the disease, how the drug works, the market size, the competitors and their products, different mechanisms of action etc., is available here.


Disclosure: No positions in stocks mentioned
About the author: Kaushik Paul Kaushik Paul has over 10 years of experience in the Healthcare/Biotech investment sector. Currently, he is the Managing Director of New BioMedicine LLC (http://www.newbiomedicine.com), which is based out of San Francisco, CA. The company provides research and trading ideas on small to mid-cap... More