Somaxon Pharmaceuticals Inc. (Nasdaq: SOMX) is a specialty pharmaceutical company focused on the in-licensing and development of product candidates for the treatment of diseases and disorders in the central nervous system therapeutic area.
1. In March of this year, the company was granted FDA approval to sell Silenor (doxepin) 3 milligram and 6 milligram tablets for the treatment of insomnia characterized by difficulty with sleep maintenance.
The company’s clinical development program for Silenor included four phase III clinical trials, and the primary efficacy endpoint achieved statistical significance in each trial. Its clinical trials for Silenor also demonstrated a favorable safety and tolerability profile, including a low dropout rate, an adverse event profile comparable to placebo, no clinically meaningful next-day residual effects and no evidence of amnesia, complex sleep behaviors, hallucinations, tolerance or withdrawal effects. Additionally, Silenor has not been designated as a controlled substance by the U.S. Drug Enforcement Administration because of its demonstrated lack of abuse potential.
According to the company, abuse potential/risk of dependence was one of the most common safety concerns cited by patients as a reason for not seeking prescription treatment for insomnia, switching medications or discontinuing treatment. But no withdrawal effects or other adverse events have been found to be associated with Silenor in clinical trials.
2. Silenor binds with high affinity to the histamine H1 receptor, where it functions to block histamine, one of several naturally occurring neurotransmitters in the brain that promote wakefulness. It is believed that the sleep maintenance effect of Silenor is due to this blockade of histamine. This mechanism is different from those of other FDA-approved insomnia drugs in the market. According to the company, most FDA-approved sleep aids work via the GABA receptor system, and are regulated as Schedule IV controlled substances by the U.S. Drug Enforcement Agency (DEA) because they are associated with some risk of abuse.
3. With the above positive attributes in its favor, Somaxon can look forward to gaining sustainable competitive advantage in the sleep market, which is considered to be a potentially large market. According to data from the American Psychiatric Association, about 70 million adult Americans are affected by insomnia. Somaxon’s own market research indicated that only 25% of patients being treated for insomnia with prescription medications claimed they were very satisfied with their current treatment.
4. Somaxon, on its way to launching Silenor later in September, achieved a number of accomplishments since the start of the second quarter of 2010. Most notably, the company completed its hiring of internal staff to support the planned commercial launch.
Being a development-stage company, Somaxon has had no revenue from product sales to date. The company announced that it has narrowed its second-quarter net loss to 5.7 million, or 16 cents per share, from $6.1 million, or 33 cents per share, in the comparable quarter last year. At June 30, 2010, the company had cash and cash equivalents totaling $54.5 million, compared to $5.2 million at December 31, 2009.
The stock has a 52-week range of $0.90 to $10.60. It is currently trading above its 50-day and 200-day moving averages of $3.57 and $5.11, respectively.
5. Analysts following the company have Buy recommendations on the stock.
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Beacon Equity Group Disclaimer
This newsletter is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Beaconequity.com is a wholly-owned subsidiary of BlueWave Advisors.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.
