Avanir shares vault 300 pct on positive drug result
BANGALORE (Reuters) - Avanir Pharmaceuticals' (AVNR.O) market value quadrupled Wednesday after the company said its drug candidate Zenvia reduced pain due to nerve damage in diabetes patients during a late-stage trial.
Two test groups treated with different twice-daily doses of Zenvia had lesser pain than those treated with a placebo, or dummy drug, the company said in a statement.
"They have taken the first positive step in the drug approval process. This news could not have come at a better time," Steve Brozak of WBB Securities said by phone.
"Now the question remains what is the FDA going to ask for in the drug approval process."
In February, U.S. Food and Drug Administration had asked Avanir, which had also been developing Zenvia for the treatment of involuntary emotional expression disorder (IEED), to test a new formulation due to cardiovascular risks.
The FDA wanted the Aliso Viejo, California-based company to test Zenvia for IEED with a lower dosage of quinidine, a compound used in the treatment abnormal heart beats.
The phase III trial for neuropathic pain included two doses of Zenvia, 45/30 mg twice daily and 30/30 mg twice daily doses, Avanir said in a statement.
The company expects this to be the first of two studies required by the regulators to approve Zenvia in the treatment of diabetic neuropathic pain.
Avanir also plans to take Zenvia into late-stage programs for IEED. A confirmatory trial in IEED with a 10mg quinidine dose formulation will begin later this year.
Avanir started its clinical test on Zenvia in 2005 at 40 sites in the United States and Israel and enrolled 379 patients.
About 25 percent patients enrolled for the study from one group and 21 percent from the other group discontinued the trial due to adverse effects, the company said. In comparison, only 11.4 percent using the placebo discontinued.
DAY TRADING
In order to further develop Zenvia, the company has to search for a partner and raise cash immediately, WBB Securities' Brozak said.
"That has to be one of their significant strategy. However, the question remains what are the royalties they expect from such collaboration," he said.
As of February, the company had cash and cash-equivalents of $14.5 million.
Avanir had last month ended two research and development agreements with AstraZeneca Plc (AZN.L) and Novartis (NOVN.VX). It had also announced the closing of a facility to save cash to fund the trials of Zenvia.
In afternoon trade, shares of the company were up $4 at $5.27 on the Nasdaq, after rising to $5.14 earlier in the day. It is still way below the $14.69 the stock had hit a year ago.
Total trading volume of over 70 million shares was way above the total outstanding shares of 39.6 million.
Brozak, however, discounted the stock movement as a knee-jerk reaction.
"What is happening is that all the day traders are basically going out there and trying to make a quick buck in terms of selling back and forth among themselves."
