Somaxon Shares Tumble as Insomnia Drug Rejected by FDA
San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX) took one on the chin this morning. The company said the FDA, for the second time this year, has rejected its application to market a new insomnia medicine. Shares of the company lost about two-thirds of their value on the news.
The second letter from the FDA says that doxepin (Silenor) wasn’t effective enough to meet the agency’s standard for approval, according to a statement from the company. The FDA’s letter didn’t raise any safety issues with the drug, according to the company.
The FDA letter didn’t provide any guidance on what it will take for Somaxon to satisfy the agency, so Somaxon said it will ask for a meeting to discuss the next steps. But Somaxon won’t have much time to figure out its next steps. Somaxon’s first application was shot down by the FDA back in February, and it turned in the revised application in June. The company only had $5.4 million in cash left in the bank when it reported financial statements from the end of September, and told shareholders that was probably enough to run the company until the end of the second quarter in 2010.
“We are disappointed in the decision because we believed that our June NDA resubmission adequately addressed the concerns raised by the FDA in its February Complete Response Letter,” said Richard Pascoe, Somaxon’s CEO, in a statement.
Shares of Somaxon fell 61 percent to $1.36 at 10:52 am Eastern time.