Avanir Pharmaceuticals (AVNR) skyrockets on rumors of FDA approval

A late-breaking report posted on TheStreet.com had Avanir Pharmaceuticals, Inc. (Nasdaq: AVNR) abuzz in after-hours trading Friday. The financial news website reported that the United States Food and Drug Administration (FDA) approved Avanir’s Nuedexta, a treatment for a relatively common, yet under-recognized neurological disorder known as Pseudobulbar affect (PBA).

Shares of Avanir were up 15 percent on Friday, in what has been a particularly rough quarter for pharmaceutical stocks. Before Friday, shares of Avanir Pharmaceuticals were down about 13 percent in the past three months.

In a statement, Keith Katkin, President and Chief Executive Officer of Avanir said “The FDA approval of Nuedexta marks an important milestone for people living with PBA, an under-recognized and debilitating neurologic condition. The approval of Nuedexta also marks Avanir’s transition toward becoming a commercial enterprise, ready to support the successful launch of the first FDA-approved treatment for PBA. We expect that Nuedexta will be available by prescription during the first quarter of 2011.”

Formerly known as AVP-923, is a combination of two-well researched components, the active ingredient dextromethorphan, and the enzyme inhibitor quinidine, which serves to increase the bioavailability of dextromethorphan. Avanir is developing Nuedexta for use in PBA and diabetic peripheral neuropathic pain.

Pseudobulbar affect (PBA) is a neurologic disorder characterized by involuntary crying or uncontrollable episodes of crying and/or laughing, or other emotional displays, the condition is also referred to as emotional incontinence. Research suggests that as many as 1.5 million and 2 million people may be afflicted with PBA in the United States alone, although, it is estimated that the number could be much higher due the prevalence of PBA in numerous neurological conditions.

Independent research firm for the healthcare industry, SummerStreet Research Partners predicted such an approval, on October 15. Analyst Carol Werther stated in a note to clients: “We expect a label to treat the signs and symptoms of PBA with warnings not to use with drugs that increase QTc wave prolongation,” the note stated. “Data from the advanced cardiac safety study (ACSS) indicates that AVP-923, even using a 10mg dose of quinidine, still prolongs the QTc (mean of 8.9 ms), just above the level the FDA considers no risk for Torsades de Pointes. (5 msec). Nevertheless, we do not think this will stop approval as many marketed drugs have similar profiles. AVNR submitted a risk map program to prevent abuse of AVP-923.”