The history of aspirin (also known as acetylsalicylic acid or ASA) goes back to antiquity. Although pure ASA has only been manufactured and marketed since 1899, medicines derived from willow and other salicylate-rich plants appear in Egyptian pharonic pharmacology papyri from the second millennium BC. Hippocrates referred to the use of salicylic tea to reduce fevers around 400 BC. Willow bark extract became recognized for its beneficial effects on fever, pain and inflammation in the mid-18th century. Lewis and Clark are reported to have used willow bark tea from 1803 to 1806 as a remedy for fever during their famous expedition. In 1899, scientists at the drug and dye firm, Bayer, formulated the drug Aspirin and sold it around the world as a pain reliever.
While Aspirin was the mainstay pain killing drug during the first half of the 20th century, aspirin's popularity declined after the development of acetaminophen/paracetamol in 1956 and ibuprofen in 1962. Although aspirin's effects on blood clotting and its effectiveness as an antiplatelet agent were first noticed in 1950, it was not until 1980 that statistician Richard Peto convinced the United States Food and Drug Administration (FDA) and much of the medical community that aspirin was an effective drug for the prevention of heart attacks.
By the early 1980's, Bayer Aspirin's pain relief market share had plummeted to around 6% of the US market. Bayer's partner in the United States, Sterling Drugs, saw a way to rebrand its product as a potent weapon in the war against heart attacks. In 1983, Sterling lobbied the FDA for permission to advertise aspirin's cardiovascular benefits on bayer Aspirin labels. The FDA approved and Sterling rebranded Bayer Aspirin. It was no longer just a pain killer but also a life saver.
From the 1980's to the present, numerous studies have suggested that an aspirin a day could prevent the occurrence of a heart attack and an aspirin taken during a heart attack could increase a person's chance of survival. Other researchers found that aspirin could prevent strokes.
Bayer's sales and profits skyrocketed. In 1994, the German branch of Bayer bought Sterling for $1 billion, uniting the company for the first time since World War One. In 2011, the company nearly doubled its profits from the previous year, to $3.3 billion.
Now Pozen Inc. (NASDAQ:POZN), a tiny Chapel Hill, North Carolina-based pharmaceutical company is creating a safer form of aspirin intended to significantly reduce GI ulcers and other GI complications compared to taking aspirin alone.
The company is proud to have two drugs approved by the FDA in two years, a remarkable accomplishment for a micro cap firm with a market cap of 170.68M.
Those two drugs, Treximet and Vimovo, are marketed through partnerships with pharma giants GlaxoSmithKline (NYSE:GSK) and AstraZeneca (NYSE:AZN). Pozen's agreements with GSK to market Treximet and with AZN to market Vimovo was driven by the company's need to find a partner who could finance costly phase three clinical trials to test the safety and efficacy of the drugs.
Treximet (sumatriptan/naproxen sodium) was approved by the FDA in April 2008 for the acute treatment of migraine attacks in adults. Treximet contains 85 mg of sumatriptan and 500 mg of naproxen. The drug targets the nerve and blood vessels believed to trigger a migraine and is thought to reduce the inflammation associated with migraine pain.
Migraine is a major public health problem that affects up to 12% of the population in the United States and Europe. According to the National Headache Foundation, approximately 30 million people in the United States suffer from this common, debilitating neurological disorder. The economic burden of migraine remains substantial despite existing treatments, with the direct and indirect costs of migraine in the United States estimated at over $20 billion annually. According to Global Industry Analysts, the US and European markets for anti-migraine drugs are projected to exceed $3.2 billion and $734 million, respectively, by 2015.
In October 2012, the US Court of Appeals affirmed a lower court decision that upheld Pozen's patent for Triximet and ruled that Par Pharmaceutical (NYSE:PRX), Alphapharm, a subsidiary of Mylan Inc. (NASDAQ:MYL), and Dr. Reddy's Laboratories (DRL) could not market generic copies of Triximet until 2025 or in Alphapharm's case until 2017. In 2011, Pozen also initiated litigation against Dr. Reddy's, Lupin Ltd. (LUPIN.NS) and Anchen Pharmaceutical (acquired by PRX in November 2011) to stop them from making generic versions of Pozen's other FDA approved drug, Vimovo.
Treximet is Pozen's top seller. GSK reported $92 million in 2011 Treximet sales, which brought Pozen $12.2 million in 2011 royalties. In 2011, Pozen sold future royalty and milestone payments for sales of Treximet in the United States to the Canadian pension fund, CPPIB Investment Board for $75 million (net proceeds of $71.9 million). Pozen retained rights to 20% of all royalty payments after the first quarter of 2018. Pozen also received royalties royalties on net sales of $33.8 million on sales from its other marketed drug, Vimovo, marketed by AZN.
MT 400 is Pozen's proprietary combination of sumatriptan and naproxen sodium, the first multiple mechanism triptan therapy for the treatment of migraine headaches developed. In a phase two clinical trial involving 972 patients, MT 400, which uses a marketed triptan and an NSAID, provided a 65 percent improvement for sustained pain relief over triptan monotherapy with a similar side effect profile. Sustained pain relief was defined as patients who achieved pain relief within two hours of dosing and then neither relapsed nor used rescue medicine over the next 22 hours.
In March 2011, Pozen announced a license agreement with Cilag GmbH International, a division of Johnson & Johnson (NYSE:JNJ), for the development and commercialization of MT 400 in Brazil, Colombia, Ecuador and Peru.
In May 2012, Pozen announced that it had entered into a license agreement with Desitin Arzneimittel GmbH, for the development and commercialization of MT 400 for the 27 countries of the European Union, as well as Switzerland and Norway.
Pozen has licensed U.S.-only rights to MT 400 to GSK, who markets a different dose of MT 400 as Treximet.
Pozen is actively seeking other licensing partners for available territories.
Vimovo (naproxen/esomeprazole magnesium) offers a fixed-dose combination of enteric-coated naproxen, a pain-relieving non-steroidal anti-inflammatory drug (NSAID), and immediate release esomeprazole, a proton pump inhibitor (PPI). Many patients with osteoarthritis treat their symptoms with NSAIDS. Adverse gastrointestinal events affect 25% to 50% of chronic NSAID users. In August 2006, Pozen licensed worldwide rights for the commercialization of Vimovo, except for Japan, to AZN. In May 2010, the. FDA approved Vimovo for the relief of signs and symptoms of osteoarthritis, rheumatoid arthritis, ankylosing spondylitis, and to decrease the risk of developing gastric ulcers in patients at risk for NSAID-associated gastric ulcers.
During a February 2012 earnings call with investors, Pozen CEO John Plachetka blasted AZN for poor Vimovo sales and characterized Pozen's partnership with the pharma giant as a "nightmare scenario." Plachetka claimed that during July and August 2011, Pozen shareholders lost more than $100 million in enterprise value, causing Pozen shares to plummet to the iowest levels in the company's history. Plachetka was clearly frustrated with AZN's "complete control over both the commercialization strategy and the execution" of Vimovo, and also contended that AZN set the price of the drug too high.
PA32540 and PA8140
Most Pozen investors are excited about the company's GI-safer form of aspirin product candidates called the "PA product platform." These drugs were designed to enable the full power of aspirin by reducing its potential gastrointestinal damaging elements. The "P" in the PA platform stands for "proton pump inhibitor", which reduces the gastric acid-causing stomach irritation and ulcers. "A" stands for "aspirin.".Pozen contends that these drug candidates are more than just a combination of the compounds because their delayed-release delivery mechanism is the component that is essential to minimize GI irritation.
Aspirin has become the standard treatment for reducing an individual's risk of a second heart attack. Studies have found that a daily aspirin regimen for people who have experienced a previous heart attack reduces the risk of a second heart attack by about one-third. Aspirin has been incorporated into the American Heart Association's clinical guidelines for the secondary prevention of cardiovascular events. Approximately 50 million Americans now use aspirin regularly for cardiovascular disease prevention.
Although the cardiovascular disease benefits of aspirin are well established, the use of aspirin is associated with a 2- to 4-fold increased risk of upper gastrointestinal bleeding (UGIB). In addition, aspirin use for CVD is an important cause of gastrointestinal bleeding-related death.
Pozen has developed PA32540, containing 325 mg of aspirin, and PA8140, containing 81 mg of aspirin. Both products are a coordinated-delivery tablet combining immediate-release omeprazole (40 mg), a proton pump inhibitor, layered around pH-sensitive aspirin. Pozen has developed these drugs for the secondary prevention of cardiovascular disease in patients at risk for aspirin-induced ulcers.
Pozen has completed two pivotal phase three trials for these drug candidates. A long-term, open-label safety trial for secondary cardiovascular disease prevention was completed in 2011. Top-line results were announced in March 2012, and presented at the American College of Gastroenterology annual meeting in October 2012 and at the American Heart Association annual meeting in November 2012.
The two phase three pivotal trials were composed of 1,049 subjects at risk for developing aspirin-associated ulcers and already taking aspirin at a dose of 325mg once daily for at least three months for the secondary prevention of cardiovascular events. Trial participants were randomly assigned to treatment with either PA32540 or 325 mg enteric-coated aspirin once daily. The primary endpoint, a significant reduction in the cumulative incidence of gastric ulcers following administration of PA32540 versus 32 mg enteric-coated aspirin over six months, was met in both studies.
PA32540 also met key secondary endpoints, including a reduction in gastroduodenal ulceration as well as a reduction in discontinuation due to upper gastrointestinal adverse events in subjects taking PA32540 compared to 325mg enteric-coated aspirin.
Reported adverse events were consistent with the trial population and the known adverse event profile of aspirin and omeprazole.
Pozen is currently preparing the New Drug Application (NDA) and is planning to seek approval for PA32540 and PA8140. After the FDA's preliminary assessment of the bioequivalence study data, the agency informed Pozen that, based on the information available, it did not agree that bioequivalence of PA32540 to enteric-coated aspirin 325 mg was demonstrated in the study. Pozen's PA8140 clinical data could provide the information the FDA wants. PA8140 is a product that contains aspirin at the 81 mg dose combined with 40 mg of omeprazole. Pozen plans to file this data along with other information as part of its NDA filing to the FDA. Pozen made a similar data submission to the FDA when the company was seeking regulatory approval for Vimovo. That drug, which uses the same delayed-release technology as PA32540, did not need another phase three clinical trial to secure FDA approval at a lower dose formulation. Pozen anticipates filing the NDA for both products in the first half of 2013.
The European Union Medical Evaluation Board agreed that no phase three clinical trials would be necessary for PA10040 to demonstrate the reduction of gastric ulcers versus EC aspirin. Instead, a phase one pharmacodynamic study demonstrating appropriate gastric pH control with PA10040 would be required. In addition, a study to demonstrate bioequivalence of PA10040 to a currently marketed EC aspirin product using aspirin pharmacokinetics has been requested. The company plans to further discuss the bioequivalence study design with the EU Board.
Pozen is considering investigating PA32540 for the secondary prevention of colorectal neoplasias (secondary recurrence of colonic polyps). PA32540 may improve the risk/benefit of aspirin therapy in this population and could provide an important agent for the chemoprevention of colon neoplasias.
A 2010 University of Oxford study looked at the combined results of four clinical trials that randomly assigned more than 14,000 people to take daily aspirin or a placebo for periods of about 3 to 7 years, depending on the trial.
After 20 years of follow-up, researchers found that colon cancer cases were reduced by 24% and colon cancer deaths by 35% in the group assigned to take aspirin compared to the placebo group. However, the American Cancer Society does not recommend taking aspirin as a colon cancer prevention measure because aspirin, even at low doses, substantially increases the risk of serious, occasionally fatal, gastrointestinal bleeding. Perhaps a safer form of aspirin could change that.
For the third quarter of 2012, Pozen reported a net loss of $19.2 million, or 64 cents per share on a diluted basis for the nine month period ended September 30, 2012. At September 30, 2012, cash, cash equivalents and short-term investments totaled $92.3 million. Pozen had an accounts receivable balance of $0.9 million from AZN at September 30, 2012.
The company continues to estimate that cash and cash investments will exceed $85 million at December 31, 2012. Pozen 's typical burn rate has run between $30 million and $40 million per year.
Conclusion: A Good Opportunity
By having its products marketed by financially strong commercial partners, Pozen has been able to devote virtually all of their resources developing new products while avoiding the high costs associated with the manufacturing, sales and marketing of a new drug. By receiving substantial initial upfront and milestone payments, as well as ongoing royalties from partnerships, Pozen has been self-funded since their Initial Public Offering (IPO) in 2000.
Pozen's PA product pipeline is especially attractive. By focusing on designing cost-effective aspirin therapies that enable the full power of aspirin by reducing its potential gastrointestinal damage, these products may benefit millions of people who use daily aspirin to treat cardiovascular disease, osteoarthritis and other illnesses.
Disclosure: I am long POZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.