Novadel Worries May Create Investor Opportunity

 |  Includes: HNAB, NVD
by: Andrew Vaino

I wrote about Novadel (NVD) back in November (@ $1.34).
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Novadel had received FDA approval for a spray form of nitroglycerin (the drug is absorbed through the mucous membranes), and were anticipating a decision on a similar formulation of GSK’s (NYSE:GSK) anti-nausea drug Zofran (NVD’s version is called Zensana) by April 30.

NVD took a big hit in after hours trading yesterday after their partner in developing Zensana, Hana Biosciences (HNAB), announced they had found precipitated materials in batches of the drug that had been stored in the cold. Batches that were stored at room temperature did not have any precipitate even after a year. This will delay the product launch.
I listened to Hana’s conference call discussing this result. The company seems very confident this is simply a solubility issue and not a problem with the stability of the drug itself. Based on the structure of the drug—a modified indole with an imidazole hanging off one end—I would be very surprised if there were any stability issues with the drug itself, and I believe the solubility explanation. Just the same, it would have taken about ten minutes to collect some of this precipitate and shoot it into a mass spectrometer to be certain, and I do wish they had done that (if they did I did not hear it in the CC).

This type of issue, a problem with chemical manufacturing controls [CMC], is typically much easier to fix than issues with having a bad drug. As this is a small molecule, as opposed to the surfactants that have caused Discovery Labs [DSCO] so much CMC grief, this really should be a simple problem to fix.

It was revealed in the CC that batches formulated on a small scale were stable for up to a year at low temperatures. As the batch size increased, time to precipitation decreased. This type of issue is not uncommon in scaling up, and I would hope they are looking at the morphology of the compound subject to the various formulation conditions.

Depending on how much of a change to the formulation they have to do they may have to perform another bioequivalence study in humans. The change could be as simple as altering when they mix the various components, which would not require further study. With the time to reformulate, which shouldn’t take that long, and the likely time for another study in a best case, the launch will only be delayed six months.

Novadel is also looking to submit NDAs for a spray version of Ambien and of migraine treatment Imitrex this year. So, while this Zensana news is a setback, I don’t think it’s a huge setback. I wouldn’t sell this stock now (I’ll change my mind if it dips below $1.30), and depending how the next few days go it may well be a buying opportunity.

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NVD vs. HNAB 1-yr chart

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