Durata Therapeutics Inc. (NASDAQ: DRTX) recently announced that the FDA has accepted its application for priority review of its investigational drug, Dalvance. If the FDA approves the drug, then it would be used for treating patients with acute bacterial skin and skin structure infection (ABSSSI). The acceptance for priority review should speed up the review process to within six months instead of the usual 10 month review.
ABSSSI is caused by susceptible gram-positive microorganisms, including MRSA (methicillin resistant Staphylococcus aureus). ABSSSI is a sub-category of skin and skin structure infections (SSSIs). According to Durata Therapeutics, this category of SSSIs increased by 176 percent between 1997 and 2009, most of which were caused by MRSA. The company also said that, of about 9.2 million patients that were treated in U.S. hospitals between January and June 2010, 17 percent were diagnosed of SSCIs. This shows that there is a huge potential for drug makers who can do things differently.
In addition, various papers by medical practitioners have established that there has been increased antimicrobial resistance among both gram-positive and gram-negative bacteria. It's also been established that this increase in antimicrobial resistance has led to treatment failure, which in the end led to increase in cost of treatment. Hence, there is a need for a drug that's effective and cheap. Here is where Dalvance comes into the picture.
To state the obvious, that the FDA has placed Dalvance on priority review suggests that the drug offers something new. During two late-stage trials, Dalvance was paired up against the drug of choice, Vancomycin, a product from Hospira, Inc. (NYSE: HSP) and it was found not inferior to Vancomycin. Unlike Vancomycin (that's administered more frequently) Dalvance would be administered once weekly. In addition, it can be administered at home. This would reduce the length of hospital stay, which in the end should lead to reduced cost of treatment. Moreover, you should note that the fact that Dalvance has a once-weekly dosage which would make it more acceptable by patients. The reason for this is that patients would prefer to go for a medication that could cure an illness in as little dosages as possible.
Since the announcement was made, DRTX has gone up over 14 percent, gradually approaching its 52-week high of $12.96 a share. With such an impressive product in the pipeline, this is a good time to buy into this company. I believe that the odds that the FDA will approve this potential game changer are high, considering the impressive trials against Vancomycin.