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FDA Accepts New Drug Application On AP Pharma's Resubmission For Lead Product APF530

|Includes:Heron Therapeutics, Inc. (HRTX)

There are several types of cancer drugs on the market today and unfortunately for the patients taking chemotherapy, nausea and vomiting are some of the serious side effects of a cancer therapy regiment.

Nausea is a very unpleasant feeling that may lead to vomiting for many treatment patients. Vomiting is throwing up the contents of the stomach through the mouth, and retching is the movement of the stomach and esophagus without vomiting causing dry heaves. As cancer research develops new drugs, so do the products used with the prescriptions that are suppose to make patients get better. So, although treatments have improved over time, nausea and vomiting are still serious side effects of cancer treatments found in the market today. Doctors will tell you that some patients are bothered more by nausea than by vomiting.

A nausea and vomiting product is currently in the works from AP Pharma (APPA.OB) in Redwood City, California (formerly known as Advanced Polymer Systems) who today announced that they received FDA acceptance on their recently announced "resubmission" filing on September 28, 2012 for its New Drug Application (NDA) lead product candidate called APF530, to be used for the prevention of acute and delayed onset chemotherapy-induced nausea and vomiting or CINV.

Investor Significance:

Investors have been patiently waiting for the next step with AP Pharma to move forward with this NDA, and today it was reported by the company that the resubmission was accepted. This is good news in a series of hurdles that the company must overcome in the following several months.

Stock Ownership:
We always like to see who the major stock holders are in any company. It is reported that the insiders own approximately 61% of the stock, and 12% of the float is held by some very strong institutions as well. This shows very good confidence.

FDA Acceptance:
Now that we have the FDA letter of acceptance of the resubmission, the company has established a Prescription Drug User Fee Act (PDUFA) "goal date" within the next 60 days or so. After speaking to the company, the company anticipates a six-month review by FDA which would result in a PDUFA date and an FDA decision on approval in late March 2013 or early April 2013. Usually, after the FDA acceptance letter announcement, biotech stocks can experience a "run up" into the PDUFA date, whereby some investors may look to take profits and others who may have a greater risk tolerance tend to stay until a drug gets "full FDA Approval."

Competition:
Aloxi (palonosetron) is the only other 5-HT3 receptor blocker on the market. A 5-HT3 receptor blocker works by blocking the action of serotonin in certain parts of the brain and nervous system, which helps reduce or prevent nausea and vomiting. It is currently used to prevent nausea and vomiting caused by cancer chemotherapy, as well as, being frequently used to prevent nausea and vomiting after surgery. Critics say that the longer the patient is on this particular drug, the less effective it is for CINV vs. the claims that APF530 may actually work better the longer the patient uses this product. So, there is a lot of interest in getting APF530 approved by the FDA as another product to at least offer patients an alternative choice if Aloxi isn't successfully working for them.

Stock Analysis:
As with any biotech that gets FDA acceptance into a PDUFA date, we might expect that APPA will run up on this news it gets more attention in the media. Clearly, with the announcement today, more risk has been taken out of this stock. The last time the company went into a PDUFA date with the APF530 the stock went to $2.00. Given an FDA approval in 2013 this could very well be a $4.00 - $5.00 stock, so please stay tuned here as the company works on getting their product approved and to market.

OK, so why is AP Pharma's lead product so important?

During chemo therapy, it is very important to prevent and control nausea and vomiting in patients with cancer so that they can continue on the path to their treatment and perform activities of daily life with few interruptions.

Uncontrolled nausea and vomiting can cause the following side effects:

  • Malnutrition from loss of appetite
  • Chemical changes in the body
  • Dehydration
  • Mental changes
  • A torn esophagus
  • Some broken bones
  • Reopening of surgical wounds

There are four types of nausea and vomiting that are caused by cancer therapy:

  • Anticipatory
  • Acute
  • Delayed
  • Chronic

Anticipatory nausea and vomiting:
If a patient has had nausea and vomiting after the previous three or four chemotherapy treatments, he or she may have anticipatory nausea and vomiting.

Acute nausea and vomiting:
This usually happen within 24 hours after beginning chemotherapy

Delayed nausea and vomiting:
This occurs more than 24 hours after chemotherapy. Also called late nausea and vomiting.

Chronic nausea and vomiting:
Occurs in patients with advanced cancer, chronic nausea and vomiting may be caused by the following:

  • Brain tumors or pressure on the brain.
  • Colon tumors
  • Dehydration
  • High or low levels of certain substances found in the blood
  • Medicines
  • Radiation therapy
  • Stomach ulcers

Summary: I really like the AP Pharma story, the strong management team involved, the prospect of their lead product APF530, the large insider and institutional ownership, and of course the unmet need for another effective product to help patients with CINV. I am currently long this stock prior to today's announcement, and into the PDUFA date and will make a determination in the future as to the risk/reward benefits of holding all of my position into final approval. It might be prudent to sell some shares going into final approval depending on the price rise which is undetermined at this time. Please be aware that biotech stocks are very risky and volatile. Each investor should make their own risk tolerance determination with the help of their financial advisor. I may also buy shares on any dips in the coming months if it makes sense?

Disclosure: I am long APPA.OB. 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.

Stocks: HRTX