Transcept: Management Confident as FDA Decision Nears

With Transcept’s (TSPT) PDUFA near, I thought it would be a good time to speak with company management. Last week, I had the pleasure of speaking with the company’s CEO and President Glenn Oclassen and the company’s Director of Corporate Communications Greg Mann. We spoke in depth about Intermezzo and the key driving safety study the FDA required the company to do to resubmit its NDA. Notes from the interview are below.

FDA’s Concern on Driving The FDA was concerned about patients making good dosing decisions in the middle of the night and having enough time remaining to sleep off the tablet before they get active. If the subject took a tablet and then drove four hours later, the results were completely clean of any residual effects. There was no effect at all different from placebo. If the subject took a tablet and then drove three hours later, there was a small effect on driving but quite small compared to other drugs. The amount of weaving in the three hour study was about half of the amount of weaving on the BAC level of .05 (smallest European DUI level) and about one-fourth of the amount of weaving on the BAC level of .08 (smallest U.S. DUI level). The company feels pretty good that it satisfied FDA requirements with the three and four hour studies.

Driving Study The goal of the study was to measure how much the subject weaves down the road and how much he or she deviates from the white line. It is a very rigorous test developed in Europe. The duration of the test is a one hour drive on the expressway. The car is a small VW packed with $30k of electronics to measure deviations from placebo. The FDA interest in the study was the problem of accidental misuse in case the patient makes a mistake in the middle of the night, not the problem of intentional misuse.

Competition – There is no direct competitor because this will be the first product, if approved, to be on the market for a sleep drug in the middle of the night. It will be a smaller dose of a regular sleeping drug, about one-third of a dose of Ambien, and a person will not have to use it every night, only when necessary. It will also help patients put less drugs in their system.

Manufacturing – Purdue (the partner) will be ready to launch quickly but it has not announced a specific date yet. Purdue is a very large private company and its primary product is Oxycontin. The company had sales north of $2.5 billion in 2010 and has more than 500 sales reps in the field. Transcept management also added that it picked Purdue because it will be able to commit Intermezzo and Transcept will not be competing with five other products.

Marketing and Educating Doctors - Purdue will have a substantial sales team and it will handle getting managed care coverage and the launch to primary care physicians, pain specialists and psychiatrists. Purdue will be the sole marketer for about a year. Transcept has the option to become the marketer to psychiatrists. The message to physicians is you have a very fast acting form of a very low dose form of a product that has a unique way of treating people who wake up in the middle of the night. The tablet goes under the tongue and dissolves in the mouth. This changes the PH level of the mouth from 6.5 to 9.5 and converts the drug to a freebase form. Intermezzo is fat soluble and gets penetration through tissues of the mouth. There is very rapid penetration and the dose is very low.

Sales Start – The company expects sales to start in a matter of months, if approved. Transcept will have a specific announcement at the time of approval. Purdue has been working hard to get ready to launch the product. It typically takes six months to one year after launch to begin seeing product obtain traction in the market. Transcept noted that you don’t usually convince the doctor to prescribe the drug on the first visit.

Target market – A Stanford Study said that something like one-third of all Americans will have middle of the night awakenings three times a week. Management said that there are 3-4 million people visiting doctors with insomnia. Glenn said that the potential market is big, in excess of $1 billion a year.

Pricing – Transcept expects to price Intermezzo with the current basket of goods, of about $5/$6 a tablet. A dose is one tablet.

Transcept’s Other Product Candidate TO-2061 – Management said the critical trial is underway. It is used for patients with obsessive compulsive disorder (OCD) for products which are not working. The company noted that many OCD patients don’t to get well and this will help people on current therapies. Transcept said that there will be some data in 2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.