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Depomed: Gabapentin Faces Limited Potential After Study Failure

Posted on: Friday, 13 July 2007, 09:16 CDT

Shares of Depomed have lost over half their value after a Phase III trial for gabapentin GR failed to meet its primary endpoint. Although Depomed is thought to be considering developing the drug in diabetic peripheral neuropathy, another neuropathic pain indication, generic competition and other gabapentin reformulations such as Pfizer's highly successful Lyrica will limit its revenue potential.

Gabapentin GR is a controlled release version of Pfizer's former blockbuster neuropathic pain and epilepsy drug gabapentin (Neurontin). Formulated with Depomed's proprietary AcuForm drug delivery technology, Gabapentin GR holds the potential to offer patients the pain-relief benefits provided by immediate release formulations of gabapentin, with fewer side effects and a more convenient once- or twice-daily dosing regimen. Depomed's gastric retention technology, which produces a controlled release compound by lengthening drug retention time in the stomach, is particularly applicable for gabapentin, which is absorbed through an active transport mechanism which is concentrated in the upper gastrointestinal tract.

Depomed was developing the drug to treat postherpetic neuralgia (PHN), a persistent neuropathic pain condition caused by nerve damage after a shingles, or herpes zoster, viral infection. In a multicenter, double-blind, placebo-controlled trial, which began in May 2006, 407 patients were randomized to receive once- or twice-daily gabapentin GR or placebo for 10 weeks. Neither treatment regimen significantly reduced pain compared with placebo.

Despite this failure in PHN, Depomed may persist with development of gabapentin GR for diabetic peripheral neuropathy (DPN), another neuropathic pain indication. Datamonitor estimates that in 2007, there were 2.3 times more suffers of DPN than PHN across the seven major pharmaceutical markets. Therefore, in terms of patient population and subsequent revenue generation, a marketing license in DPN is significantly more important.

However, despite the commercial attractiveness of persisting with development of gabapentin GR in PHN, Depomed will face significant competition from other gabapentin related drugs. Following the patent expiry of branded Neutonin, Pfizer launched Lyrica (pregabalin) in late 2004, a chemical reformulation of gabapentin. In addition, XenoPort's gabapentin pro-drug XP-13152 is also in late-stage development. As such, competition from generic versions of gabapentin, will limit Depomed's revenue potential in this area.

Depomed will be keen to remain active in the neuropathic pain market, which Datamonitor believes will double from an estimated $2 billion in 2006 to over $4 billion in 2010. With just five approved drugs on the market and a large untapped patient population, neuropathic pain is one of the most attractive indications in the industry.

Source: Datamonitor

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