Why Collegium Pharmaceutical Is Rocketing Higher Today

Source: Collegium Pharmaceutical,

What: After a key FDA advisory committee gave its unanimous support to approving Collegium Pharmaceutical'sabuse-deterrent formulation of oxycodone earlier today, shares in the company vaulted 36% higher.

So what: Growing use of opioid pain killers and the risk of their abuse has led to regulators cracking down on patients, doctors, and drugmakers and spurred increasing interest in crafting next generation formulations, such as Collegium's Xtampza, that last longer in the body and are less easily abused.

Xtampza combines oxycodone with fatty acid and wax to create tiny beads (a median 300 microns in size) that are hard to manipulate physically and chemically by abusers. Because of this design, Xtampza could be a more ideal solution for patients requiring around-the-clock pain control.

Xtampza also offers other benefits over traditional oxycodone, including stable drug exposure when chewed or crushed. Because of this, the drug can be administered easily to those who have trouble swallowing.

Now what: Chronic pain is typically treated with extended-release opioids and short-acting opioids for breakthrough pain. Given that an estimated four million Americans receive chronic opioid pain treatment, the need for formulations that work better and are less prone to abuse is significant.

Because the pain control market is big and growing, sales of Collegium's Xtampza could end up being significant -- particularly given that sales of Oxycontin, the most prescribed oxycodone, remain north of $2 billion annually in spite of being on the market since 1995.

However, before investors get too excited about Xtampza's potential sales impact on Collegium, they should remember that while the FDA usually sides with the advice of the advisory committee, there's still a chance that the regulator will balk at approving this drug.

Earlier in the week, the FDA indicated it has concerns regarding the fact that Xtampza needs to be taken with food in order to work correctly -- something that could inadvertently lead to dosing and pain management problems. Because of the contradiction, it may be best to sit on the sidelines on this stock, at least until the FDA makes its final decision on October 12.

The article Why Collegium Pharmaceutical Is Rocketing Higher Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Market, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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