Shares of Zogenix Inc. (NASDAQ: ZGNX) fell as much as 26% on Wednesday after a rival pharmaceutical company said it will seek regulatory approval of a tamper-proof version of Zogenix’s powerful new pain drug.
The betting seemed to be that if Purdue Pharma’s drug hydrocodone bitartrate wins U.S. Food and Drug Administration (FDA) approval, then Zogenix’s drug Zohydro might get pulled from the market.
Zogenix shares have more than doubled since the end of 2012 as hopes built for approval of Zohydro. The FDA approved the drug in October, and it became available to pharmacies last week.
However, Zogenix shares have been extremely volatile — at least on a percentage basis — because critics of Zohydro say the drug is too powerful and addictive and could kill new patients and children, and it is not safer than other current pain drug.
Moreover, they charge, Zohydro, in its current form, can easily be manipulated by addicts seeking a high, and the FDA should have waited to approve a tamper-proof version of the drug.
San Diego-based Zogenix, which specializes in developing pain medications, says the drug should be used only by patients who cannot take other opioid-based painkillers, and it says use of the drug is strictly controlled.
But when Zohydro won FDA approval in October, Bob Rappaport, the FDA’s director of pain drugs, said its time on the market could be limited if a tamper-resistant version of the drug becomes available.
Purdue Pharma’s drug is encased in a tamper-resistant capsule that makes it hard to crush, snort or inject. The company, headquartered in Stamford, Conn., said Wednesday it is seeking a priority review of its drug that could shave two to three months off the normal 10-month approval process.
A tamper-resistant version of Zohydro might not be available unto 2016.
The controversy over Zohydro comes as the United States grapples with an epidemic of prescription drug abuse, especially involving powerful opioid pain medications. Opioids include morphine, codeine and oxycodone, as well as hydrocodone.
Zohydro essentially is a higher-hydrocodone-dose version of Vicodin, itself an addictive and powerful drug. Hydrocone-based pain killers are the most-prescribed pharmacy drugs in the United States, Bloomberg News said.
A number of U.S. Senators have asked the FDA to pull its approval of Zohydro. A coalition of addiction experts, physicians and others were unsuccessful last month in their petition to get the drug pulled.
Zogenix shares were down 18.1% to $3.72 on Wednesday. It had fallen to as low as $3.35. The company went public in late 2010. After peaking at $6.90 in January 2011, the shares collapsed to as low as $1.11 in December 2012.
Revenue was $33 million in 2013, down 25% from 2012. The company lost $80.9 million compared with a 2012 loss of $47.4 million. It does have another FDA-approved product on the market. Sumavel DosePro, a rapid-acting migraine medication, accounted for $9 million of the company’s $9.9 million in fourth-quarter revenue.