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DRRX: Favorable FDA Decision on POSIMIR Would Likely Mean Significant Upside to Our Model

By Brian Marckx, CFA



POSIMIR CRL Response Made. Favorable Decision Would Likely Mean Significant Upside to Our Model
This morning, Durect (DRRX) announced that they submitted a full response to FDA’s Complete Response Letter for POSIMIR, which Durect received in February 2014. POSIMIR is the company’s investigational post-operative pain relief depot that utilizes the company’s patented SABER technology and is intended to deliver bupivacaine to provide three days of pain relief after surgery.

As a reminder DRRX submitted an NDA ((via 505(b)(2) pathway)) to FDA for POSIMIR in April 2013. FDA responded in February 2014 with a Complete Response Letter. Following interaction with the agency, Durect conducted and completed a Phase 3 clinical trial of POSIMIR (PERSIST trial). As reported in October 2017, while results favored POSIMIR, the trial failed to meet its primary endpoint of a statistically significant reduction in pain on movement over the first 48 hours after surgery as compared to standard bupivacaine HCI. To-date Durect has completed a total of 16 clinical studies with POSIMIR.

DRRX recently engaged Dr. Lee S. Simon, a physician and previous (2001 – 2003) Director of FDA’s Analgesic, Anti-inflammatory and Ophthalmologic Drug Products division, to evaluate potential next-steps with POSIMIR. The decision to submit a response to the CRL was based on Dr. Simon’s review of the PERSIST data – which presumably means that he believes the package that they compiled and submitted was sufficient (based on his insight and experience with FDA’s Analgesic division, particularly in terms of what they need as support) to warrant eventual approval of the POSIMIR NDA. Per Dr. Simon’s comment in this morning’s press release, "We believe that the submitted response to the CRL includes multiple positive adequate and well controlled trials and addresses the issues raised in the FDA's Complete Response Letter."

Importantly, it is our understanding that approval largely hinges on demonstration of sufficient safety and that failure to meet the efficacy endpoint in PERSIST may not be particularly relevant. Further, DRRX’s CRL response includes substantive additional data that supports safety of the drug. FDA’s response is anticipated within six months – which means we may not hear back until sometime near year-end.

As we had removed POSIMIR from our model, a favorable response from FDA would likely provide upside to our estimates. The market for POSIMIR could be substantial and, as such, potential revisions to our model could be as well. As such, we will be eagerly awaiting word from FDA.

View Exhibit I

Similar to POSIMIR, bupivacaine is the active ingredient in Pacira Biosciences’ Exparel, which is also indicated for postsurgical pain relief. Exparel (bupivacaine liposome injectable suspension) generated $331M in sales in 2018 (effectively all of which was from the U.S.) which analysts forecast will grow at a CAGR of almost 11% to $615M by the year 2024. Exparel accounts for 100% of the revenue of Pacira Biosciences’ (PCRX), which currently trades at a market capitalization of $1.8 billion.

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