Next Thursday, July 14, is the PDUFA date for Transcept’s (TSPT) most advanced product candidate, Intermezzo for insomnia. Already interest is increasing in the stock as the volume the past two days was 4x average daily volume. Intermezzo is positioned to be the first commercially available sleep aid specifically for use in the middle of the night when patients awaken and have difficulty returning to sleep.
Intermezzo is a low dose sublingual formulation of zolpidem that Transcept is developing for use in the middle of the night at the time a patient awakens and has difficulty returning to sleep. In January 2011, the company resubmitted an NDA for Intermezzo to the FDA and the FDA assigned a PDUFA of July 14, 2011 for completion of its review. The resubmission was filed in response to issues raised in an October 2009 FDA Complete Response Letter (CRL) that indicated its original Intermezzo NDA was not approved.
In its October 2009 CRL, the FDA stated that there was substantial evidence of the effectiveness of Intermezzo for its proposed indication. However, the FDA also stated that the intended use of Intermezzo in the middle of the night represents a unique insomnia indication and dosing strategy for which safety has not been previously established and that Transcept had not adequately demonstrated to the FDA that Intermezzo can be reliably used safely.
The proposed label for Intermezzo indicates that it should only be taken when patients have at least four hours of bedtime remaining before being active again. In the CRL, the FDA requested additional data demonstrating that Intermezzo would not present an unacceptable risk of next day residual effects when used according to its proposed label, with particular reference to driving ability. The FDA also expressed two concerns regarding the possibility of patient dosing errors in the middle of the night that the FDA stated could lead to unacceptable next day residual effects, with particular reference to driving ability. Specifically, the FDA asked the company to address methods to avoid inadvertent re-dosing in a single night and inadvertent dosing with less than four hours of bedtime remaining.
To address FDA concerns, the resubmitted Intermezzo NDA includes results from a highway driving study conducted to assess the effect of Intermezzo on subjects’ next day driving ability. To characterize next day effects if Intermezzo were dosed as permitted by proposed label instructions, the company assessed subjects’ driving ability beginning at four hours after dosing Intermezzo in the middle of the night. In the four-hour treatment condition, the primary analysis used to determine the capacity of Intermezzo to impair driving showed no statistically significant difference between Intermezzo and placebo. In a secondary analysis, mean effects on driving ability four hours after dosing were statistically different from placebo, but were below the level considered in the literature to define the threshold of potential driving impairment.
To characterize the risk profile of Intermezzo on next day residual effects if Intermezzo were mis-dosed, Transcept also assessed subjects’ driving ability beginning at three hours after dosing Intermezzo in the middle of the night. In drives that started three hours after dosing, Intermezzo was associated with statistically significant effects in the primary analysis, and one drive was discontinued due to excessive driver drowsiness. In a secondary analysis, mean effects on driving ability three hours after dosing were also statistically different from placebo, but were below the level considered in the literature to define the threshold of potential driving impairment.
The market opportunity for Intermezzo is large. According to Wolters Kluwer, an independent market research firm, the number of prescriptions filled in the United States to treat insomnia grew to approximately 78 million in 2010. Data from a major study conducted by the Stanford Sleep Epidemiology Center indicate that middle of the night awakening is the most common form of insomnia in the United States and affects approximately one-third of the population at least three times each week.
The company has an agreement with Purdue which provides Purdue with an exclusive license to commercialize Intermezzo in the United States. Transcept retained an option to co-promote Intermezzo to psychiatrists in the United States after the first year of the product’s launch.
Transcept also has another product candidate, TO-2061, a low dose ondansetron augmentation therapy for patients with obsessive compulsive disorder (OCD) who have not adequately responded to treatment with approved first-line pharmacotherapy. OCD affects 1-2% of the United States adult population and can significantly impair the lives of patients and their families. Approximately 50% of patients do not respond adequately to standard first-line treatment with approved OCD medications, including the selective serotonin re-uptake inhibitors (SSRIs) and the tricyclic agent, clomipramine. There is no FDA approved augmentation therapy for these treatment resistant patients. The product candidate is currently in a Phase 2 trial.
Although the company is still not profitable, the cash balance looks healthy. Transcept ended Q1 with $63.3 million of cash on the books. Cash use during the quarter ended averaged $1.6 million per month. For Q1, the company reported revenue of $3.1 million vs. $3.1 million a year ago; EPS was ($0.14) vs. ($0.14) a year ago.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.