Labopharm Inc. - In High Spirits

(RTTNews) - A little less than two weeks now remain for the FDA to announce its decision on Labopharm Inc.'s (DDSS | Quote | Chart | News | PowerRating) (DDS.TO) investigational depression drug DDS-04A, a novel once-daily formulation of trazodone. The FDA is scheduled to decide on the drug on July 18. In the face of a looming regulatory decision, shares of Labopharm hit a new 52-week high of $2.48 on July 2 on the Nasdaq.

The Canadian biotech company filed its New Drug Application, or NDA, for DDS-04A last September under Section 505(B | Quote | Chart | News | PowerRating)(2 | Quote | Chart | News | PowerRating) of the Federal Food, Drug and Cosmetic Act. This section typically applies to reformulations of drugs that are already approved and being marketed, allowing the company to refer to existing efficacy and safety data on trazodone.

Labopharm's NDA was based on data from five pivotal pharmacokinetic studies and the positive results from its North American phase III placebo controlled clinical trial, which enrolled over 400 patients.

DDS-04A is the rapid-onset formulation of Trazodone that was approved by the FDA in 1982 for the treatment of depression in adults. Trazodone was sold under the brand name Desyrel by Bristol-Myers Squibb Co. (BMY | Quote | Chart | News | PowerRating). Following the expiry of the drug's patent, generic version of Trazodone became available and the brand-name version is no longer being manufactured.

According to Labopharm, in the phase III study dubbed 04ACL3-001, the primary endpoint achieved statistical significance providing an improvement from baseline to the end of the study as measured by the Hamilton Rating Scale for Depression (HAMD-17).

Patients treated with DDS-04A experienced rapid onset of action as demonstrated by a clinically significant improvement in HAMD scores within the first two weeks of treatment. In addition, the study demonstrated an improvement in the overall quality of sleep and a favorable adverse event profile, including transient mild to moderate somnolence, no difference from placebo in anxiety, agitation, sexual dysfunction and weight change.

Major depression is one of the most prevalent central nervous disorders, affecting more than 120 million people worldwide. The antidepressants that are currently used are plagued by certain limitations like delayed onset of therapeutic response, insomnia or sleep disturbance, sexual dysfunction and anxiety to name a few. According to the World Health Organization, 40% of patients treated with current antidepressants discontinue treatment within the first 12 weeks due to limitations with existing products and their unwanted side effects.

Labopharm believes that the profile of DDS-04A, which is at the altar awaiting the FDA decision, addresses the limitations of the existing antidepressants. What's more, the company also hopes to capture a significant share of the global anti-depressant market.

According to market research firm, IMS Health, global sales of antidepressants total about $21 billion a year. In the U.S. antidepressants racked up sales of $12 billion in 2007, the last year for which data are available, according to IMS Health.

Labopharm began the year 2009 on a high note. On December 31, 2008 Ryzolt, a once-daily formulation of the analgesic tramadol, was approved by the FDA for the management of moderate to moderately severe chronic pain in adults.

The approval of Ryzolt is the first U.S. FDA approval that Labopharm has obtained for a drug using its patented Contramid controlled-release technology for oral administration of solid dosage medications. The drug was launched in the U.S. as recently as May by Labopharm's U.S. marketing partner, Purdue Pharma.

Labopharm's once-daily tramadol product is already marketed in Europe, Canada, South Korea, Australia, and a number of countries. The company markets its product primarily through licensing and distribution arrangements with local pharmaceutical companies.

The company has completed phase III trials evaluating an investigational drug, which is a twice-daily formulation that combines the analgesics tramadol and acetaminophen. According to the company, the results of the trial are insufficient to support the acceptance of a New Drug Application by the FDA in the United States. However, the company believes that the trial results may be accepted for the evaluation of analgesics in Europe, Canada and other jurisdictions.

Labopharm is also developing a series of abuse deterrent products based on its proprietary Contramid-based technology platform. Having completed proof-of-principle studies for an abuse-deterrent formulation of a widely prescribed combination pain product, the company is preparing to advance the product to clinical studies.

The company made its trading debut on the Nasdaq on April 28 2006, with its IPO priced at $8 per share. However, the company's shares have been trading on the Toronto Stock Exchange since 1996.

The company was founded in 1990 and was formerly known as Centre de recherche appliquee pharmaceutique CRAP inc. The name was changed to Labopharm Inc. in September 1994.

Labopharm has incurred substantial operating losses since its inception and as of March 31, 2009, had an accumulated deficit of C$255 million. For the first-quarter ended March 31, 2009, net loss narrowed to C$8.0 million or C$0.14 per share from C$9.7 million or C$0.17 per share in the year-ago quarter, thanks to higher revenues and lower research and development expenses.

The company generates revenue from product sales, research and development collaborations, and licensing arrangements.

Quarterly revenue increased to C$5.0 million from C$3.2 million in the comparable year-ago quarter as sales of the company's once-daily tramadol product rose an impressive 76%. The once-daily tramadol product logged in sales of C$3.8 million in the first-quarter of 2009, up from C$2.2 million in the first-quarter of 2008. Licensing revenue for the recent first-quarter totaled C$1.2 million compared to C$1.1 million in the same period a year before.

Now that, the company's once-daily tramadol has been launched in the U.S. too, its sales can be expected to grow appreciably, which may ultimately improve its bottom-line results. In addition, the looming FDA decision on depression drug DDS-04A, if positive, is a near term catalyst that could drive Labopharm's share price higher and traders and investors are placing their bets. Will DDS-04A reach the finish line? ...Stay tuned.

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