Business hasn’t gotten any easier over the past six months for San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX), which says it has hired the investment banking firm Stifel Nicolaus Weisel to help the company assess its strategic options. The company also laid off 60 percent of its employees who aren’t out in the field.

The company has struggled to establish itself against lower-cost generics in the sleeping pill market. Somaxon began selling doxepin (Silenor), its prescription drug for insomnia in September 2010. In June, Somaxon filed patent infringement lawsuits against four generic drugmakers that are challenging its patents.

The banking firm was hired to help Somoxon identify alternative strategies, according to Somaxon CEO Richard Pascoe in a statement issued yesterday. That could include “one or more of a sale of the company or assets relating to Silenor, or partnering or other collaboration transactions relating to U.S. or ex-U.S. prescription or over-the-counter rights to Silenor,” Pascoe says.

While the company didn’t say yesterday how many employees were laid off, Somaxon reported in its third-quarter financial results that it had terminated 14 employees in November, after the quarter had ended.

Somaxon reported sales of just $3.7 million for the third quarter that ended Sept. 30, compared with sales of $38,000 in the same quarter last year, when Somaxon began Silenor sales. The company lost $17 million, or 36 cents a share, compared with $12.9 million, or 37 cents a share). Somaxon says it had $34 million in cash and cash equivalents at the end of September.

Somaxon says it intends to allocate significantly more marketing resources to direct-to-consumer marketing in 2012, concentrating in regions where there is a potential for sales growth based on managed care coverage, favorable insomnia demographics, feasible media costs, and in areas where the company has sales representatives. Somaxon says it plans to hire 30 sales reps by the end of the year.

Comments | Reprints | Share:          

When Somnus Therapeutics was started up in Bedminster, NJ, in 2007, its founders had an unusual business model. They planned to develop just one drug—SKP-1041 for insomnia—through Phase 2 clinical trials, and then sell the company to a deep-pocketed investor that would fund the final pivotal Phase 3 trials required for FDA approval. Ask CEO and co-founder Gary Cupit if the company has a pipeline of drugs behind SKP-1041, in case the master plan fails, and he’ll give you a frank answer. “Nope,” he says. “It’s one shot. All or none.”

In other words, SKP-1041 is Somnus’ only asset. “The asset is the company,” Cupit says. “The intent is to sell the company.”

That being the case, Somnus has just entered the single most important month of its short history. Cupit is spending this week at the annual Sleep conference, which is the largest gathering of insomnia specialists in the nation. Somnus is presenting two sets of data from its Phase 2 program. Then, on July 6, Cupit and his top managers will travel to the FDA to get the agency’s feedback on the company’s Phase 3 research plan—the very program that Somnus is hoping an acquirer will want to bankroll.

The conference and the FDA meeting together will provide a rich packet of information to any company that may be thinking about buying Somnus. “We’ll be talking to some people at the Sleep meeting,” Cupit says. “But I imagine most of them would like to see what the FDA says about our program.”

Somnus originally licensed SKP-1041 from London-based SkyePharma. The drug is a modified version of zaleplon, a drug that was only moderately successful when it was introduced in 1999 under the brand name Sonata. The drug was approved to be taken at bedtime, but it cleared out of the body so fast that many patients woke up in the middle of the night and couldn’t get back to sleep. The product, now generic, was ultimately overtaken in the market by longer-acting medicines like zolpidem (Ambien).

Somnus’ version of zaleplon is encased in a tablet that delays the release of the drug for about two hours. The company is studying it for “sleep maintenance”—meaning it’s specially designed for patients who can fall asleep on their own, but who often wake up in the middle of the night and can’t get back to sleep. Somnus’ research plan is centered around … Next Page »

Comments (1) | Reprints | Share:          

San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX), said today it completed a private placement of nearly 2.2 million shares of its common stock to Paladin Labs, raising a total of $5 million. The company said the deal was part of its collaboration with Paladin, which has exclusive rights to commercialize Somaxon’s doxepin (Silenor) in Canada, South America, and Africa.

Comments | Reprints | Share:          

Marlborough, MA-based drugmaker Sunovion Pharmaceuticals has announced that the FDA approved its once-daily, oral tablet for treating schizophrenia. The drug, Latuda (lurasidone HCl), is expected to be available in the U.S. early next year, Sunovion said. The drug company has six other FDA-approved drugs, including the insomnia treatment Lunesta; Omnaris, a nasal spray for treating allergy symptoms; and a number of inhalant drugs for treating asthma.

Comments | Reprints | Share:          

This week I traveled here for Xconomy’s big event on the 20-year future for San Diego’s life sciences cluster. My wrap-up on that event is probably going to have to wait until Friday, but there was plenty of other news from San Diego biotech to keep the site buzzing.

—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS) struck a big deal this week with GlaxoSmithKline. Isis will pocket $35 million upfront, and could stand to rake in as much as $1.5 billion if it hits every milestone for all six drug development programs covered under the deal. Of course, that’s unlikely, but even in “biodollars” that’s no small deal.

—San Diego-based Orexigen Therapeutics (NASDAQ: OREX) has formally asked the FDA to clear its first product for sale in the U.S. Orexigen’s new drug application is for a combination of bupropion and naltrexone (Contrave), which it says has been studied in more than 4,500 people. If Orexigen wins FDA approval, it could be following fast behind a couple other rivals—San Diego-based Arena Pharmaceuticals, and Mountain View, CA-based Vivus.

—San Diego-based Somaxon Pharmaceuticals (NASDAQ: SOMX) has been riding a wave of enthusiasm since it won FDA approval for its insomnia drug, but as Denise points out in this follow-up story, the hard job of commercialization begins now.

—A couple of small venture financings crossed our biotech desk this week. Biocept, a San Diego biotech company developing cell separation technology, has raised $3.6 million out of a $4 million round, according to a regulatory filing. The SEC filings also showed that Cyntellect, a San Diego-based company working on technologies to analyze, purify and process cells, raised $3 million from the sale of debt, equity and options or warrants.

—Richard Pops, the CEO of Waltham, MA-based Alkermes (NASDAQ: ALKS), offered up a guest editorial on a relevant issue for biotechies all over the country—the renewal of the Prescription User Fee Act that governs relations between drugmakers and the FDA. Pops’s company has a major connection to San Diego, because it provides key enabling technology to Amylin Pharmaceuticals‘ exenatide once-weekly treatment for diabetes.

—”Cost-effectiveness” is a term we’re all going to hear more in years to come because of healthcare reform, and Denise nailed a timely profile of a San Diego company that is looking to seize on that trend. NextImage Medical is seeking to increase the efficiency of radiology exams, which is one of the culprits driving up the cost of worker’s compensation premiums in California.

Comments | Reprints | Share:          

Somaxon Pharmaceuticals overcame two regulatory delays to win FDA approval to market its insomnia drug doxepin (Silenor). Now comes the hard part.

San Diego-based Somaxon (NASDAQ: SOMX) is entering a prescription sleeping pill market in which name-brand products have been steadily losing ground to the lower-cost generics preferred by managed care plans. So right out of the gate, doxepin will at best be the No. 2 prescription drug choice for treating insomnia, next to zolpidem, the generic version of Ambien.

That wouldn’t be so bad, except that Somaxon’s doxepin also can expect competition from over-the-counter sleep aids. Doxepin promotes sleep by acting on histamine receptors, as do Tylenol PM and Advil PM, which contain the antihistamine diphenhydramine. This means doxepin will need a competitive copay if it wants to convert regular users of OTC sleep products. Somaxon must also find a way to motivate these consumers to go see their doctors (and fork over an additional copay).

San Diego’s biotech community is well-populated with people familiar with the sleeping pill market—it wasn’t so long ago that Neurocrine Biosciences’ indiplon was supposed to be the next big sleep drug. So when I was in town recently, I took a very informal survey about doxepin’s chances for commercial success.

The local buzz is that doxepin could generate $250 million in annual sales—some optimists say $500 million is possible—but Somaxon needs to do everything right. I’m told it will be critical for the company to get its drug on managed care formularies with copays that compare favorably to the prices of OTC drugs.

Word-of-mouth also will be important because advertising is expensive and treacherous. When a generic option is available, name-brand advertising is less effective. That’s why the once-ubiquitous TV commercials depicting luminous butterflies and weird-dream talking beavers all but disappeared when generic zolpidem became available in 2007.

Somaxon talked a little bit about its commercial strategy on a conference call in mid-March right after doxepin received FDA approval. (Just one analyst posed questions on the call, which might give you a sense of Wall Street’s enthusiasm for the company.) I’m sure Somaxon watchers know all the details, but for those who don’t follow … Next Page »

Comments | Reprints | Share:          

Regulatory and funding headlines dominated a light week. It’s summarized for you here.

—Torrey Pines Investment raised $30 million for a second venture fund that aims to raise a total of $150 million. The money will be used to finance acquisitions and development or co-development of drug candidates from pharmaceutical or biotech companies.

—Connect, a nonprofit group supporting technology and entrepreneurship, reported indications of life in San Diego’s innovation economy. It found 13 percent more startups were formed in 2009 than in 2008, among other encouraging signs.

—After two discouraging regulatory delays, Somaxon Pharmaceuticals (NASDAQ: SOMX) received FDA approval for its insomnia drug doxepin (Silenor).

—Tina Nova, CEO of Carlsbad, CA-based Gentopix (NASDAQ: GXDX), played to a nearly fully house at the Roth Capital Partners Growth Stock Conference in Laguna Niguel, CA. The company specializes in diagnostic services to hematologists and oncologists and was the fifteenth fastest-growing company in the North America last year according to the accounting firm Deloitte.

—Elcelyx Therapeutics raised $1.2 million of a planned $2.2 million equity offering. The company’s president is Alain D. Baron, entrepreneur in residence at Morgenthaler Ventures in Menlo Park.

Comments | Reprints | Share:          

After three tries, Somaxon Pharmaceuticals has won FDA approval for its insomnia drug.

The San Diego-based biotech company said today it has gotten clearance to start selling doxepin (Silenor) in the U.S. for patients with short term and chronic insomnia. The news sent shares of the company (NASDAQ: SOMX) up by 60 percent to $6.20 at 1:20 pm Eastern time.

This is the first FDA-approved product for Somaxon, which was founded in 2003. Somaxon persisted after its application was turned down by the FDA in February and December 2009. The approval means that Somaxon, or whoever it might form a partnership with, will seek to differentiate the new drug from competitors like Sanofi-Aventis’ zolpidem (Ambien and Ambien CR), King Pharmaceuticals’ zaleplon (Sonata), Dainippon Sumitomo’s eszopiclone (Lunesta).

Somaxon’s drug has a different way of working than others, as I described in this feature story earlier in the week. The Somaxon product is designed to block histamine, a neurotransmitter in the brain that’s believed to help keep people awake. Clinical trials have shown that the drug can help people get a full night’s sleep including sleep into the 7th and 8th hour, the company says.

Somaxon says its market research suggests that patients often decide not to use other drugs because of the potential for abuse and dependence. Somaxon hopes to take advantage of that market desire, pointing out that there were no indications of dependence in its clinical trials that enrolled more than 1,000 patients.

The company didn’t say how much the drug will cost in its statement. The company hopes to introduce the product to the U.S. market in the second half of 2010, CEO Richard Pascoe said in a statement.

Comments (1) | Reprints | Share:          

[Updated: 11:45 am Eastern, 3/17/10] Who was it that once said ‘if at first you don’t succeed, try, try again?’ This Friday, San Diego-based Somaxon expects find out from the FDA whether its persistence has paid off, and whether its insomnia drug is finally ready to be cleared for sale on the U.S. market.

The FDA has a deadline of Sunday, March 21 to complete its review of Somaxon’s application to market doxepin (Silenor) to help people get a better night’s sleep. Since the statutory deadline falls on a weekend, it’s likely the FDA will send its letter to the company before the end of the day Friday. For all you antsy traders out there, it’s entirely possible investors will have to wait until Monday to hear the news (but please don’t call to ask me to speculate on the exact timing).

It’s hard to imagine Somaxon (NASDAQ: SOMX) has much steam left in its engine, but it’s still in business while awaiting this latest FDA ruling. The company’s application was delayed in November 2008, formally shot down in February 2009, and rejected one more time in December. Somaxon has burned through more than $176 million of investors’ money since it was founded in 2003, and had just $5.4 million left in cash and investments as of its most recent quarterly report, current through September 30. Still, investors haven’t given up all hope—the company’s stock has rebounded after the FDA setback in December, boosting the company’s stock to $4.05 at yesterday’s close.

I have to say this optimism struck me as kind of odd, given what the company itself said in its quarterly report about its regulatory dealings.

“The regulatory approval process is inherently complex, and clinical and non-clinical data is subject to varying interpretations. As a result, as of September 30, 2009, the Company does not consider FDA approval of the NDA for Silenor to be probable in accordance with the criteria used for accounting purposes,” the company said.

[Updated with comment from sleep researcher.] Somaxon declined a request to comment on why it thinks Silenor deserves a place on the market. But Dr. Thomas Roth, a sleep researcher at Henry Ford Hospital in Detroit and a consultant to Somaxon, explained why … Next Page »

Comments (10) | Reprints | Share:          

From Adamis to Zogenix, we’ve got the A to Z in San Diego life sciences news. Here’s your chance to catch up now.

—Zogenix said it has raised a total of $71 million for the anticipated launch in January of its needle-free, drug-and-device delivery system for migraine and cluster headaches. The San Diego life sciences company, which said it had raised $51 million three months ago, disclosed that it had raised an additional $20 million from Chicago Growth Partners.

—Nexus Biosystems, a life sciences tools company based near San Diego in Poway, CA, announced plans to acquire Aurora Biotechnologies of Carlsbad, CA, for an undisclosed price. Both companies specialize in the storage and management of biological samples used to study genetic traits and human disease, among other things.

—The FDA’s rejection of an insomnia drug for the second time this year must be keeping some executives awake at night at San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX)). The FDA says that Somaxon’s doxepin (Silenor) wasn’t effective enough to meet the agency’s standard for approval.

—Luke profiled Scott Forrest, the 32-year-old director of business and technology development (i.e. tech transfer) at The Scripps Research Institute. Since joining Scripps 10 months ago, Forrest says his goal is to do a better job of spinning out its renowned biomedical science into startup companies, as well as its potential drug candidates that might someday be commercialized.

—There’s a new biotech in town, Pfēnex, which was spun out by Dow Chemical with venture backing from Signet Healthcare Partners. The San Diego biotech specializes in developing a variety of protein-based drugs, vaccines, diagnostic reagents, and biosimilars using technology derived from a bacteria that secretes a fluorescent pigment.

—Adamis Pharmaceuticals of Del Mar, CA, has agreed to a merger with San Diego’s La Jolla Pharmaceutical, which recently dropped efforts to get its shareholders to approve its liquidation plan. Under a reverse merger by the boards of both companies, La Jolla Pharmaceutical shareholders will get as much as a 30 percent ownership of the combined company.

—Luke described the work of Tony Manning to develop “bispecific” antibodies at Biogen-Idec, which is based in Cambridge, MA, and operates a San Diego research facility. Manning spearheads a group that is engineering a new class of antibodies to hit two disease targets on cells, not just one.

Comments | Reprints | Share:          

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.

Comments (1) | Reprints | Share:          

San Diego’s Somaxon Pharmaceuticals (Nasdaq: SOMX) says it has submitted a revised new drug application for its insomnia drug doxepin (Silenor), and the biotech raised about $6 million in a private stock placement to see it through the NDA process.

As I noted in February, the U.S. Food and Drug Administration turned down Somaxon’s initial application, asking the drug developer to address concerns about prolonging the heart’s QT interval—a key measure of the heart’s electrical rhythm. Somaxon said it intended to regroup and try again, and it met with FDA officials in April to gain a better understanding of the regulators’ concerns.

The company also spent some time on a financial makeover. Somaxon said in May it had erased $15 million in debt, although the company also had depleted its available cash from $14.3 million at the end of December to $3.8 million at the end of March. The company also reduced its operating costs. Somaxon reported a loss of $4.5 million for the first quarter that ended March 31, down from a loss of $7.1 million during the same quarter in 2008. As a development stage pharma, the company had no revenues.

The company also said in May it’s continuing to look for a Big Pharma partner to help further development of doxepin, and it signaled its intent to raise cash for another go at FDA approval. Several of the company’s existing investors are participating in the financing, including MPM Capital, Montreux Equity Partners, Scale Venture Partners, Prospect Venture Partners and Domain Associates, as well as Tavistock Life Sciences and other new investors.

In a statement today, Somaxon CEO Richard W. Pasco says, “We expect that the cash raised in this financing, together with our existing resources, will allow us to operate our business through the FDA review cycle of the NDA resubmission and extend our cash runway through the second quarter of 2010.”

Comments | Reprints | Share:          

Arena Pharmaceuticals is scrapping development of its experimental insomnia medicine, after it failed to reach its primary and secondary goals in a clinical trial of more than 700 patients. The San Diego-based biotech company (NASDAQ: ARNA) didn’t have much more to say than that, other than it’s in a hurry to turn the page and look forward to results next year for another treatment in the works for obesity.

Arena has been eagerly anticipating a positive finding for this drug, APD125, so it could become a viable second candidate behind its lead horse, lorcaserin for obesity. The insomnia medicine was not a generalized sedative like Sanofi-Aventis’ zolpidem (Ambien) so it was hoped the newer medicine could help people stay asleep at night, without having the morning grogginess of other meds.

Now investors in Arena will turn their attention again to an even bigger event for the company. It expects to unveil a two-year analysis in March from a clinical trial of lorcaserin. The trial, called Bloom, enrolled almost 3,200 patients seeking to lose weight. The medicine is meant to stimulate a protein in the brain that makes people feel full, without triggering a similar protein that caused Wyeth’s fen-phen drug combination to damage patients’ heart valves before it was pulled off the market in 1997. If Arena can show its drug passes the safety test, and helps people shed pounds, then it expects to file an application with the FDA for permission to sell the drug by the end of 2009.

The company is planning to discuss the next steps for lorcaserin, and other drugs in development, at its R&D day with analysts on Dec. 15.

Comments (1) | Reprints | Share:          

Arena Pharmaceuticals is known on Wall Street for one thing—obesity. The San Diego biotech company has a modified form of the fen-phen combination drug that’s supposed to help people lose weight without causing the heart damage that killed that Wyeth product a decade ago.

But Arena (NASDAQ: ARNA) has a sleeper in pipeline— a novel drug for insomnia. The company is planning to unveil results within a couple weeks from a clinical trial of 700 patients that will give it a good idea of the drug’s prospects. I got the rundown on it from CEO Jack Lief on a visit to Arena’s headquarters last week.

Sleep, of course, is one of those essential biological functions that’s a casualty of this frenetic digital age. Something like 70 million Americans have some form of insomnia, and it’s a chronic problem for one in 10 people in the U.S., according to the National Institutes of Health. The nation spends an estimated $14 billion a year on direct costs of this disorder, including drugs, healthcare services, and hospital and nursing home care, according to the National Sleep Foundation. Existing drugs generated sales of more than $3.5 billion in 2006, Arena says. The best known drugs for this disorder are sedatives like Sanofi-Aventis’ zolpidem (Ambien), which tend to leave people groggy in the morning, and occasionally cause creepy side effects like sleepwalking or sleepeating. Anything better could be a very big seller.

Arena’s drug, APD-125, is designed to block a specific receptor on cells in the brain, called 5-HT2a, that’s blocked by some antipsychotic drugs, but not specifically by other insomnia meds. The Arena drug is not made to be a generalized sedative, so it ought to help prevent people from waking up multiple times in the night, without the groggy “hangover” effect in the morning, Lief says. The treatment should help people sleep more deeply, and get more high-quality rest.

“A lot of people have tried Ambien and don’t take it anymore because of the next-day hangover effect,” Lief says. “People want to feel more rested in the morning.”

Arena isn’t the only company that has been working on this idea. Sanofi-Aventis has two other drugs in development that block the same receptor, called eplivanserin and volinanserin, Lief says. Those drugs are less selective for the receptor that Arena blocks, and were originally designed for other uses, but they are closer to reaching the marketplace than Arena, he says. … Next Page »

Comments (1) | Reprints | Share: