(Adds detail, analyst comment)
By Natalie Grover
July 7 Endo International Plc and BioDelivery Sciences International Inc said their experimental pain drug was found effective in a second late-stage trial, taking the drug a step closer to a marketing approval.
BioDelivery's shares jumped as much as 20 percent to a new life-high, while Endo was down 1.7 percent on Monday morning.
BioDelivery Chief Executive Mark Sirgo, who expects to submit the marketing application for the drug by January 2015, told Reuters he expects peak sales of about $500 million in the United States.
The company's shares have been on a tear in the past year, tripling in value, as investors bet on the potential of the drug, BEMA buprenorphine.
The painkiller was being tested against a placebo in 511 patients, who were on regular opioid therapy, the companies said on Monday.
Data from another late-stage trial in January showed that the drug significantly reduced chronic pain in patients who do not take opioids regularly.
Opioid addiction in the United States has assumed epidemic proportions but that has not hindered the development of opioid painkillers, which include formulations of morphine, oxycodone, fentanyl and Oxycontin, a long-acting form of oxycodone.
These drugs are widely prescribed, including for patients who have had dental or surgical procedures and those with chronic back pain or headaches.
New opioid painkillers continue to be introduced, including Zogenix Inc's long-acting Zohydro. The painkiller has stirred controversy among U.S. politicians, prosecutors and medical groups over its potential for abuse.
"The pitch on buprenorphine remains opioid-level pain relief with less opioid side effects," Roth Capital Partners analysts said, raising their price target on BioDelivery's stock by $1 to $16.50.
The treatment, which is delivered using BioDelivery's flagship BEMA technology, is classified by the United States Drug Enforcement Administration as a schedule III controlled substance.
This classification, which is defined by a moderate to low potential for dependence, will make physicians more likely to prescribe BEMA buprenorphine over Zohydro.
Zohydro's formulation is classified as a schedule II controlled substance with a higher propensity for addiction.
"We see little in the way of an approval, possibly in the second half of 2015," Piper Jaffray analyst Charles Duncan said, adding that he expects peak sales of about $600 million.
The U.S. Food and Drug Administration also approved label changes for long-acting opioids in April, saying it was necessary to highlight the danger of abuse and possible death with these drugs.
BioDelivery, which entered into an agreement with Endo to develop the drug for the treatment of chronic pain in January 2012, will receive a $10 million milestone payment from Endo as part of the deal. Its drug for opioid dependence, Bunavail, was approved by the regulator in June.
Endo International's shares were down 1.5 percent at $68.19, while BioDelivery's stock was up about 11 percent at $13.28 by mid-day on the Nasdaq. (Reporting by Natalie Grover in Bangalore; Editing by Saumyadeb Chakrabarty)