Acura Pharmaceuticals (ACUR) - could abuse-deterrent pain killer deter investors?

Summary 

Company - Acura Pharmaceuticals (ACUR)

Drug candidate - Acurox

PDUFA - June 17, 2011

July 2009 - FDA issued CRL

April 2010 - FDA advisory panel voted 19 to 1 against Acurox approval

June 18, 2011 - PDUFA (?)

Poll by Gekkowire

64% approval

28% CRL

8% delay

Acurox® (oxycodone HCl) Tablets

Acurox® is an immediate release opioid analgesic (pain killer), oxycodone, tablet with a proposed indication for relief of moderate-to-severe pain and is designed with proprietary formulations to deter common methods of misuse and abuse by IV injection and nasal snorting.  Acurox® Tablets are being developed in strengths of 5 mg and 7.5 mg.

Third time's a charm?!

Acurox' road to marketing is not without regulatory hurdles.  The original version of Acurox, one including niacin, was initially rejected by the FDA in July 2009 due to concerns over the claimed deterrent benefits of the experimental drug.  Then, in April 2010, a similar issue was raised by the FDA advisory panel members, who voted 19 to 1 against recommending Acurox for approval due to insufficient data supporting niacin's benefit and efficacy in deterring prospective abusers.  Interestingly, despite the skepticism surrounding the use of niacin, the panel members generally favored the injection and snorting deterrent advantages of Acurox's formulation.  In fact, some members even felt like Acurox was readily approvable if the niacin component of the drug was removed.  During the meeting, it was brought up that introducing an additional side effect - flushing - to a pain killer through the addition of niacin may decrease patient compliance and eventually raise medical cost unnecessarily, as patients delay the prescribed treatment.  Based on the feedback and comments received from the panel meeting, Acura Pharmaceuticals decided to give it a third try with a new, niacin-free version of Acurox, which was granted priority review status in February 2011.  The Palatine, Il-based biotech recently published the following statement on its website:

"In addition to filing acceptance and assignment of a priority review classification, the FDA’s filing communication letter to Pfizer (Acura Pharma's partner) also includes preliminary comments about potential review issues relating to the intranasal abuse liability study included in the Acurox® Tablets NDA.  The preliminary notice of potential review issues is not indicative of deficiencies that may be identified during the FDA’s review of the NDA.  No assurance can be given that any issues raised as part of the FDA’s review of the Acurox® Tablets NDA (including the potential review issues in the FDA’s filing communication letter) will be addressed to the FDA’s satisfaction or that the Acurox® Tablets NDA will be approved by the FDA."

Trading map

The price target on Acurox approval ranges from ~$6 to 10.  Although, I, like 64% of the traders, am optimistic about Acurox approval, personally think the $10 target is too ambitious given that we are only 9 trading sessions away from the PDUFA.  Since ACUR had already run up from the $3 level in March of this year to the more recent $5 level, it is more likely that approval has already been priced in with limited upside remaining.  I believe that ACUR may run up to ~$5.50 before the PDUFA action date (June 17), followed by a slight pop to $5.70 before a major sell-off.  Given this outlook, I plan to use the post-approval slide strategy to purchase cheap put options during the narrow window immediately after the approval announcement, expecting a quick drop in share price (the 'post-approval slide').  For reference, the July $5 puts are trading at just under a dollar, $0.99.  However, I will wait until the approval announcement before I buy, as the price will likely be lower at that time.  Follow me on Twitter (@Michaeljuan01) for trading updates.  Good luck!