Pozen Forecasts Updated

Treximet Prescriptions Showing Marked Improvement

We are updating our financial model on Pozen (POZN - Analyst Report). Although GlaxoSmithKline (GSK - Analyst Report) is not expected to report sales of Treximet until later in the month, we have seen data showing that prescription trends for the drug are showing a dramatic improvement over the past few weeks.

For the week ending April 2, 2009, NRx totaled just over 8,400, and TRx totaled just over 13,250. This is a 62% improvement in prescriptions since the beginning of the year for NRx and a 45% improvement for TRx. The product is gaining sizeable market share in the oral triptan class -- up 44% and 33% through the end of March for NRx and TRx, respectively.

NRx stood at 8% at the end of March 2009, up from only 5% at the end of 2008. Similarly, TRx was up to 6% at the end of March 2009. It is clear that direct-to-consumer (DTC) advertising and sales force training, only just completed in January 2009, is having a significant impact on sales of the drug.

We are increasing our first quarter 2009 Treximet sales forecast to $23.0 million, up from $20.0 million. For the full-year 2009, we see Treximet sales at $137.5 million. For 2009, Pozen is entitled to a "mid-single-digit" royalty (we model 5%) on Treximet sales.

However, in 2010, the royalty rate will escalate to "high teens" (we model 18%). For 2010, we see Treximet sales of $237 million. By 2013, we think Treximet sales can approach $480 million. At 18% royalty, that is approximately $86 million in cash to Pozen from Glaxo.

PN NDA Planned for Mid-2009

In early December 2008, Pozen released positive top-line data from its 400-301/-302 phase III program testing PN-400 (20mg esomeprazole / 500mg naproxen) vs. 500mg enteric coated naproxen alone. Results show that 400 patients total in both trials taking PN-400 experienced statistically significant fewer number of confirmed gastric ulcers by endoscopy compared to 400 subjects receiving enteric coated naproxen during the six-month period.

Pozen expects the filing of the NDA for approval of PN should take place around the middle of the year. Pozen is entitled to receive a $10 million milestone payment from AstraZeneca (AZN - Analyst Report) upon FDA acceptance of the NDA.

We model this milestone payment in the third quarter of 2009. Assuming a standard review period, the FDA should be set to rule on PN by the second quarter 2010.

PA Now Ready for Phase III

With an SPA now agreed upon, Pozen should be in position to initiate the phase III program for PA later in 2009. Data presented at the November 2008 American Heart Association meeting showed that PA-325/20 may provide less upper gastrointestinal mucosal damage compared to 81mg of enteric-coated aspirin and may allow for treatment with higher doses of aspirin (up to 325mg/daily) to increase cardiovascular protection.

Management has noted that its market research has yielded some very encouraging data with respect to the potential use profile for PA. The product could have blockbuster potential, far beyond PN, if approved.

At the very least we expect that Pozen will strike a far better deal for PA than the $375 million + royalty deal the company signed with AstraZeneca for PN. In fact, given Pozen's strong financial position and all the cash being generated by Treximet and eventually PN, we would not be surprised to see Pozen look to retain ownership of PA through the NDA filing, and potentially even look to co-promote the drug upon approval.