Somnus puts biz model to test heading into Ph III with insomnia drug

The FDA has dealt some developers of sleeping pills crude awakenings in recent years with its growing demands for safety data. Now Somnus Therapeutics is heading into talks expected next month with U.S. regulators about the design of Phase III trials for its experimental insomnia treatment, Xconomy's Arlene Weintraub reports today.

Yet another big test for the tiny Bedminster, NJ-based developer is to find a big drug company to come up with the financing for late stage development of the treatment, which is an extended-release version of the approved sleep drug Sonata. Somnus CEO Gary Cupit tells Weintraub that the venture-backed company's plan all along has been to get its treatment--called SKP-1041--through mid-stage development and then sell the company to a bigger outfit with the bucks to take its drug to the next level. And SKP-1041 is the only asset in the firm's pipeline.

"The asset is the company," Cupit tells Xconomy. "The intent is to sell the company."

Before Cupit is likely to sell his startup, he's got to talk to the FDA about the design of the Phase III trials that would be needed to gain U.S. marketing approval. As Weintraub points out, the FDA has taken a tough stance on the safety of drugs that are taken on a regular basis to improve a patient's lifestyle (as opposed to treating life-threatening diseases like cancer), and the veteran reporter points to the regulatory hurdles that San Diego-based developers Neurocrine ($NBIX) and Somaxon ($SOMX) have encountered with their insomnia drugs. Culpit says that the pair of Phase III trials his firm plans for SKP-1041 would cost $35 million, a relative bargain considering the potential $500 million in sales the drug could bring.

We'll see what the FDA has to say about the developer's Phase III plans next month. That could have a huge impact on whether Culpit can sell the treatment to a pharma buyer. And it could be a test for biotech business models that involve betting the farm on the success of one drug.

- check out Weintraub's article