A.P. Pharma Anticipates FDA Decision On APF530

| About: Heron Therapeutics, (HRTX)

Specialty pharmaceutical company A.P. Pharma (APPA.OB), which develops products off its Biochronomer platform, is seeing increased interest from the market ahead of a PDUFA action date for its product APF530. Given an FDA approval, A.P Pharma would be able to bring its very first product to market and could generate much-needed sales revenue possibly before the end of the year.

Biochronomer technology is the product of years of research and development of bioerodible drug delivery technologies and, according to the company's statements, offers a number of advantages over traditional delivery systems. The delivery platform itself is a family of polymers that erode in the body at a particular rate, which releases the active ingredient of any drug into the body at a very specific speed. This allows for very cheap development costs from the simplicity of polymer expansion, as well as flexibility in terms of where Biochronomer can be applied and how quickly (or slowly) it will release an active ingredient into patients' bodies.

The capacity for A.P. Pharma to tweak the "release rate" of a drug through the Biochronomer platform is made possible by the stability of the Biochronomer polymer itself at neutral pH conditions. The introduction of water causes a reaction with the bonds of the polymer, causing molecular instability due to an increase in acidity. The erosion of the polymer itself will result in controlled release of a drug into a patient's bodily fluids.

Since A.P. Pharma has developed multiple forms of polymers for the Biochronomer platform, it allows the company to adjust the release rate of an active ingredient through the acidic erosion of the polymer, and allows for placing it in virtually any part of a patient's body. The company's statements suggest that the Biochronomer platform can provide continuous delivery of a drug for several months without needing replacement. Clearly, Biochronomer could make the delivery of certain compounds much easier and more cost effective.

A.P. Pharma's flagship product, APF530, will be the company's first attempt to attain FDA approval. The PDUFA date mentioned earlier is March 27, 2013. APF530 contains a generic drug (since 2007) for chemotherapy induced nausea and vomiting (CINV) called granisetron, which is an antagonist of the 5-HT3 receptor. In phase III trials, A.P. Pharma compared and demonstrated statistically non-inferior efficacy for its product relative to Aloxi (palonosetron) - often considered the most effective 5-HT3 antagonist for CINV.

Having said this, A.P. Pharma carries some significant risks that investors should be aware of. Note that the company did receive a complete response letter from the FDA in March 2010, responding to the submission of APF530's first NDA. This makes the current NDA a resubmission, although there is reason to believe that A.P. Pharma has addressed the handful of safety issues brought up in the complete response letter in 2010 regarding the safety of the product itself as well as deficiencies at its contract manufacturing facilities.

Despite the company's exposure to risk, we saw major interest from institutional investors. Recall that in July 2012, Standard Pacific Capital Holdings LLLP purchased 76.2 million shares for $40 million. This enforces the notion that A.P. Pharma will receive FDA approval for APF530 in 2013, and may hit the market in time to generate revenue before 2014. For now, it's just a matter of waiting to see if this actually happens.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.