Somnus Seeks Buyer For Insomnia Drug that Treats Midnight Awakenings

6/15/11Follow @arleneweintraub

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proving that patients can take the drug before they go to bed, fall asleep naturally, and then stay asleep when the medicine goes to work a couple of hours later. “We want to have drug on board only when the patient needs it,” Cupit says.

The first paper, which Somnus presented on June 13 at the Sleep conference in Minneapolis, shows that three different doses of SKP-1041 properly delayed the release of the drug over the expected time period, regardless of the patient’s age or gender, or the time of administration. This afternoon, the company will release further data showing that the patients in the study who took the two higher doses of the drug experienced a significant reduction in middle-of-the-night awakenings, as well as an increased total sleep time during hours three-seven in a normal eight-hour slumber period, compared to patients on placebo. The researchers saw no evidence of cognitive side effects the next day in patients taking the drug.

But Cupit’s biggest test will come in a couple of weeks at the FDA, where he is likely to face some tough questions. That’s because over the past few years, the FDA has been cracking down on safety, demanding extra data from companies seeking approval for “lifestyle drugs,” or medicines that patients take on a regular basis to treat non-life-threatening conditions. And manufacturers of sleep drugs have had to slap extra warnings on their products about the potential for bizarre side effects, like sleep eating.

Thus, the pharmaceutical industry is littered with insomnia drugs that have been massively delayed—or rejected all together—by the FDA. In 2006, the FDA declined to approve an insomnia drug developed by San Diego-based Neurocrine Biosciences (NASDAQ: NBIX), prompting Pfizer (NYSE: PFE) to pull out of a $400 million development deal and forcing Neurocrine into a top-to-bottom makeover. More recently, San Diego-based Somaxon (NASDAQ: SOMX) suffered through three FDA delays on its insomnia treatment, doxepin (Silenor), before finally winning approval in March 2010.

On July 14, the FDA is expected to rule on another insomnia drug, a short-acting dissolving form of zolpidem developed by Transcept Pharmaceuticals of Richmond, CA. Transcept hopes to win approval to market the product as a sleep aid that insomniacs can leave next to their beds, and then just slip under their tongues if they wake up in the middle of the night. Transcept’s approval was delayed in 2009, when the FDA asked for additional data showing that the drug wouldn’t impair patients’ ability to drive. And the agency was concerned about what the company would do to lessen the risk that patients might accidentally take too many pills or that they would take them too close to the time when they’d have to get up.

Cupit believes the FDA will be a little easier on SKP-1041 because it’s meant to be taken at bedtime, and its main ingredient has a longstanding and well-known reputation for safety. The company will propose two Phase 3 studies, each of which will include 500 patients. He estimates the studies will take 12 to 16 months to complete and will cost about $35 million. “Pretty cheap,” Cupit contends, in light of his prediction that the drug could bring in annual sales of $500 million a year.

Cupit’s ability to find a buyer will be a major test for the company’s top investors: Princeton, NJ-based Care Capital, which seeded Somnus, and CTI Life Sciences of Canada, which led a $15 million Series A in February 2010. Cupit says the company has employed an extremely lean virtual model—employing only seven people and outsourcing R&D to contract research organizations. Somnus is now on a “slow burn,” he says, and doesn’t plan to raise another venture round before finding an acquirer.

With all the regulatory challenges, it hasn’t been easy developing a sleep drug on a limited budget, but Cupit’s conversations with patients have convinced him Somnus has a decent chance of succeeding. “Many patients have told us if they can get as little as 25 minutes to an hour of sleep extra a night it changes their entire life,” Cupit says. “The virtual model is challenging, but this drug is worth developing.”

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