FDA Approves Avanir and Forest Labs Treatments for PBA and Bacterial Infections

FDA Ends October With Drug Approvals

BOSTON (TheStreet) -- U.S. regulators ended October with two drug approvals, clearing an antibiotic from Forest Labs(FRX_) and a first-time treatment for a neurological disorder developed by Avanir Pharmaceuticals(AVNR).

Investors are still waiting on the fate of Biodel's (BIOD) fast-acting insulin Linjeta. The U.S. Food and Drug Administration was expected to issue an approval decision Friday, but the news could come Monday.

October was a busy but tough month for new drug approvals at the FDA. Regulators rejected seven new drugs, including a diabetes drug from Amylin Pharmaceuticals (AMLN) and weight-loss drugs from Arena Pharmaceuticals (ARNA) and Vivus (VVUS), respectively.

The FDA approved four drugs: the two mentioned above plus drugs from Questcor Pharmaceuticals(QCOR) and Alkermes (ALKS).

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The Forest Labs (FRX) injectable antibiotic Teflaro approved Friday will be used to treat patients with pneumonia and bacterial skin infections, including methicillin-resistant Staphylococcus aureu, or MRSA.

"These are serious and potentially life-threatening infections for which new treatment options are needed. FDA is committed to facilitating new antibiotic drug development," said Edward Cox, the director of FDA's Office of Antimicrobial Products, in a statement.

Forest expects to launch Teflaro in January 2011.

The Avanir drug, Nuedexta, was approved as the first treatment for pseudobulbar affect (PBA) a neurological condition in which patients suffer from uncontrollable outbursts of laughing or crying. Most patients who suffer from PBA are also diagnosed with other neurological disorders like multiple sclerosis or Lou Gehrig's disease.

Avanir won Nuedexta's approval after a lengthy delay brought on by FDA concerns that the drug could cause serious heart rhythm disruptions. Avanir reformulated Neudexta at a lower dose and conducted another safety study to assuage FDA concerns.

The FDA approved Nuedexta without a so-called black box warning, but the label does warn doctors to avoid using the drug in certain patients with heart problems and to monitor patients initially to guard against arrhythmias. The FDA did not release a statement regarding Nuedexta's approval.

Canaccord Genuity analyst Ritu Baral forecasts Nuedexta peak sales of $350 million in the U.S. and another $300 million in Europe, if the drug is approved there in several years. She has a buy rating and a $9 price target on Avanir.

Avanir bears who were burned Friday by Nuedexta's approval also contend that Avanir exaggerates Nuedexta's commercial potential, believing the drug will only garner about $50 million in U.S sales.

Avanir shares closed Friday at $2.42 but doubled in price to $5 in the afterhours session upon news of Nuedexta's approval.

Coming up next for the FDA

Nov. 4: Cadence Pharmaceuticals'(CADX) Ofirmev for fever and pain indications.
Nov. 18: Amgen's(AMGN) Prolia to treat bone complications due to cancer therapy.

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