Kos says NDAs for Icatibant, Flutiform to be filed by year-end, reports $13.9 million Q2 net income

By Jennifer Lanning Drey

Eugene, Ore., Aug. 8 - Kos Pharmaceuticals Inc. expects to have data this year from two of its pivotal phase 3 clinical trials that could allow the company to file two New Drug Applications by the end of the year, said Adrian Adams, president and chief executive officer of Kos, during a company conference call held Tuesday.

Kos expects to file an NDA for Icatibant for the treatment of hereditary angioedema by the end of the year with a first-to-market launch planned for 2007, Adams said.

The company said enrollment in clinical trials for Icatibant is complete and preliminary data is expected in the third quarter.

In addition, Flutiform, being jointly developed by Kos and SkyePharma, is in phase 3 clinical development. Flutiform is SkyePharma's novel combination product for asthma and chronic obstructive pulmonary disease, or COPD.

"Strategically, we believe this provides an excellent growth opportunity with a potential launch as early as 2009," Adams said.

The product is currently being tested in two double-blind pivotal trials that are enrolling patients whose conditions are considered mild to moderate. Flutiform is also being tested in an open-label 12-month safety study.

Adams said SkyePharma is on track to file an NDA for Flutiform in the second half of 2007.

"Flutiform has high revenue potential in the strongest growth sector within the asthma market, a market projected to be revenues projected to be over $12 billion in 2009.

"Combinations are not only convenient for patients that carry two separate inhalers but also have been shown to optimize the efficacy of the individual agents," he said.

Kos also expects to file an NDA for Simcor early in 2007 and will have clinical data results available in the fourth quarter, Adams said.

In addition, the company has submitted a supplemental New Drug Application for a complete dosage range of Niaspan Caplet Formulation for treatment of high cholesterol. Kos expects to receive the supplemental Food and Drug Administration approval by the end of the year, Adams said.

Kos also announced Tuesday that it has discontinued its development of Niaspan/Iovastatin for peripheral arterial disease and will devote its resources to other research projects with higher productivity potential.

Net income of $13.9 million

Kos is in the strongest financial period in its history, Adams said during Tuesday's call.

Revenue increased 25% during the second quarter to $223.7 million, according to a company news release.

The company reported net income of $13.9 million, or $0.28 per diluted share, for the second quarter, compared to net income of $28.9 million, or $0.61 per diluted share, in the second quarter of 2005, according to the release.

The company said excluding one-time events, net income for the second quarter was $28.9 million, or $0.59 per share, according to the release.

Kos had cash and marketable securities of $482.8 million at June 30, compared with $413 million at Dec. 31, 2005.

Stock option investigation

Following the start of an internal review of its historical stock options grants, Kos received a formal inquiry from the Securities and Exchange Commission asking for documents related to the exercise of stock options between 1997 and the present, Adams said.

"Of course we intend to cooperate fully with this informal inquiry," he said.

The company's review has not found any pattern or practice of inappropriately identifying grant dates with hindsight to provide officers and directors with in-the-money grants, according to the release.

Based on the company's internal review to date, Kos believes certain stock option grants were accounted for using incorrect measurement dates, Adams said.

Kos expects that its audited consolidated financial statements for fiscal years ended Dec. 31, 2005 through 2001, and for the quarter ended March 31, 2006, will need to be reinstated, according to the release.

"Although we don't have a specific time frame at the moment, we intend to file restated financial statements for these periods as soon as practicable pending completion of our internal review," Adams said.

Kos is a Cranbury, N.J. specialty pharmaceutical company engaged in developing, commercializing, manufacturing and marketing proprietary prescription products for the treatment of chronic diseases.

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