Somaxon with Cash Problems

On February 26, 2009, the U.S. FDA issued a Complete Response Letter (CRL) to Somaxon Pharmaceuticals, Inc. (SOMX - Analyst Report) to the new drug application (NDA) for Silenor (doxepin) for the treatment of insomnia.

Based on its review, the FDA has determined that the NDA cannot be approved in its present form. Somaxon will meet with the FDA in early April 2009 to discuss a path forward. In the meantime, the company's cash position is a major concern.

Somaxon will run out of cash sometime around the middle of the year. Management must do some sort of transaction to raise cash in the next few months. At this point, visibility is low and our recommendation is for investors to avoid the name.