Pozen stock plunges on FDA decision

NEW YORK (CNNMoney.com) -- Pozen's stock price plunged 46 percent in Thursday trading, after the drugmaker and its partner GlaxoSmithKline got sent back to the drawing board by the FDA.

The agency demanded more data before it would approve Trexima, an experimental painkiller for migraines, said Pozen Inc. and GlaxoSmithKline.

The announcement came as a shock to investors. In Wednesday trading ahead of the announcement, Pozen's (down $7.71 to $9.74, Charts) stock jumped 8 percent as investors bet on FDA approval. The British drugmaker Glaxo (up $0.38 to $51.99, Charts), which has more than 500 times the market cap of its Milwaukee-based partner, did not experience a significant move in stock.

The Food and Drug Administration sent the companies their second approvable letter for the combination drug Trexima, meaning that the drug might someday merit approval, but not before Pozen and Glaxo provide additional information. This could require additional studies, which can be expensive and time-consuming, further delaying Trexima's potential market entry.

Trexima is a combination of an NSAID, a popular form of generic over-the-counter painkiller, and GlaxoSmithKline's Imitrex, a migraine painkiller. Imitrex is estimated to reach $800 million in 2007 sales, according to Ken Trbovich, analyst for RBC Capital Markets.

On Wednesday, prior to the companies' announcement of the FDA letter, Trbovich said Trexima had billion-dollar blockbuster potential, but he also said that rejection of the drug could spur a stock plunge of up to 50 percent.

The FDA had previously said the Trexima is effective as a migraine painkiller. But the agency wants more information about the combo's genotoxicity, or its potential to damage cellular DNA, which can result in mutations or cancer.

Trbovich does not own Pozen stock, but RBC makes a market in the company.