Remoxy’s Rejection Drives PTIE Stock 70% Lower
This week was a rough one for biotech company Pain Therapeutics, Inc. (NASDAQ:PTIE) after the firm’s pain drug, Remoxy ER, was shot down by the FDA advisory committee.
PTIE stock had been trading at more than $9 per share ahead of the news and investors were hopeful about the drug’s potential. However, an overwhelming vote against Remoxy brought PTIE more than 70% lower in pre-market trading on Wednesday morning.
The Remoxy Story
The biotech space is a risky one because FDA approval weighs so heavily on companies’ success. Sometimes, even the most promising drugs are rejected or delayed during the FDA approval process — and that kind of news can cause huge swings for biotech stocks.
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That is precisely what happened with PTIE stock, whose management was optimistic about the potential for Remoxy to become a blockbuster drug for the company. Remoxy was designed to be a pain-relief treatment that would prevent abuse and overuse — a growing problem with prescription opioids.
Remoxy was specially formulated as a thick gel, making it impossible to be broken down into smaller particles and very difficult to extract with a syringe for injection. The firm hoped to market the drug as a prescription pain drug that couldn’t be snorted, smoked or injected, thus deterring against many forms of prescription drug abuse.
However, the drug looks unlikely to get marketing clearance, something management had been banking on at the beginning of May when it released its first quarter results. On June 26, PTIE execs presented their key Remoxy data at the FDA Advisory meeting, but the committee voted 14 to 3 against approving Remoxy as a severe pain management drug. The overwhelming “no” vote spooked shareholders, because, although the Advisory Committee doesn’t have the final say when it comes to drug approval, the FDA tends to follow its recommendations. On Aug. 7, a final decision is set to be made, but investors can be pretty certain that another no is on the horizon.
What Now?
The committee’s overwhelming nay vote on Remoxy was a major blow to PTIE stock for good reason — the company doesn’t have a lot else to fall back on right now. Pain Therapeutics is working on another abuse-deterrent pain treatment that delivers medication through a skin patch called Fenrock, but it’s in the very early stages of development. The firm is also working on two other drugs designed to detect and treat Alzheimer’s disease, but, again, both are in early stages and unlikely to make much difference until years down the line.
PTIE does have a few things going for itself — for one, the firm carries no long-term debt and management believes its existing capital is great enough to cover the company’s operating requirements over the course of the next year. That suggests that the firm is run efficiently and that management is careful about keeping costs to a minimum.
Not only that, but Pain Therapeutics has been able to secure research grants from the National Institutes of Health for its work around Alzheimer’s and the National Institute on Drug Abuse has played a huge role in funding its R&D for both Remoxy and Fenrock.
Any Chance of Recovery for PTIE Stock?
For some biotechs, a FDA rejection means a short-lived pullback before the market moves on to other news and so it can be a great buying opportunity. For PTIE stock, though, I’m not sure that will be the case. The stock is unlikely to make any kind of a comeback this year unless the FDA does an about-face on Aug. 7.
While this setback will likely fade from investors’ minds by the end of the summer, PTIE doesn’t look to have any promising news around the corner that can prop the stock back up. Without Remoxy, PTIE will have to wait a long time before one of its other drugs even comes close to vying for approval — and that’s assuming they are successful in clinical trials before that point.
Unfortunately for Pain Therapeutics, the biotech space is a bumpy one and the Remoxy rejection was a crushing blow for the company’s near-term future. I think there’s definitely a lot of potential for abuse-deterrent paint drugs, but unfortunately it looks like the firm’s shining hope has hit a dead end.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
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