* FDA asks for more data citing safety issues
* Co says may need to conduct additional safety trials
* CEO: Enough cash to see through required trials
* Says hopes FDA meeting will not need more than a yr
* Shares fall as much as 50 pct (Adds CEO comments, updates stock movement)
By Esha Dey
BANGALORE, Oct 29 (Reuters) - Transcept Pharmaceuticals Inc TSPT.O said U.S. health regulators did not approve its experimental sleep-disorder drug, citing safety issues, and requested additional data that might require more studies, wiping out half the company’s market value.
The U.S. Food and Drug Administration has asked for additional data to show that the drug Intermezzo, when taken in the middle of the night as directed, would not present any risk, particularly related to driving ability on the next day.
Transcept is trying to get the drug approved for use as-needed to treat insomnia in patients who find it difficult to return to sleep after waking up in the middle of the night.
“A reasonable estimate is that this whole process will certainly not take less than six months. We would hope that the pending meeting with the FDA will not require more than a year, but we do not know yet,” Chief Executive Glenn Oclassen said in an interview with Reuters.
The company is “very confident” that its current cash can see it through the additional work quite comfortably, he said.
As of June 30, the company had cash, cash equivalents and marketable securities of $73.4 million. It also received a $25 million upfront payment in August from its marketing partner Purdue Pharmaceutical LP on Intermezzo.
However, Oclassen declined to comment on how much the company expects to spend on the trials.
In a complete response letter, the FDA also asked Transcept to address methods to avoid inadvertent dosing with less than four hours of bedtime remaining, and inadvertent re-dosing in a single night.
On a conference call, the company allayed doubts, raised by analysts, about the FDA not regarding the middle-of-the-night awakenings as a meaningful indication.
“These (safety) concerns being raised are a confirmation of the fact that the FDA believes this is a group that needs special treatment,” Chief Executive Glenn Oclassen said.
The letter indicates that the regulators are interested in data from driving studies, he added.
“(The driving) studies are not big studies,” Oclassen said. “They typically measure lateral movement back and forth across a lane, they are sometimes run in simulators. But these are studies with tens of patients and not hundreds of patients.”
Transcept, which said in August that it would cut 30 percent jobs to reduce expenses, would request a meeting with the FDA to discuss specific requirements for approval.
“We have to clarify with the FDA to make sure that we do understand what they want and what else they want,” CEO Oclassen said.
The company said according to its deal with Purdue, Transcept will remain responsible for the approval process until the approved new drug application is transferred to Purdue.
Also, if the drug’s approval is delayed beyond June 30, 2010, the $30 million milestone payment due to Transcept will be reduced by $2 million per month for each 30-day period that the approval is delayed after that date.
Shares of the company were down 48 percent at $5.92 in afternoon trade on Nasdaq. They touched a low of $5.72 earlier in the day. (Reporting by Esha Dey in Bangalore; Editing by Vinu Pilakkott and Aradhana Aravindan)