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Shares of Cadence Pharmaceuticals Inc. plunged 61.7 percent after the company reported that its intravenous acetaminophen drug, Acetavance, failed to significantly reduce acute postoperative pain over placebo in a pivotal study.

The fact that the drug performed well in a second pivotal study, in which it successfully reduced fever over six hours compared to placebo, was of little consolation.

While picking up the fever market would certainly pad Acetavance's potential revenues, investors are looking at the drug to capture the more easily quantifiable pain market and, therefore, interpreted the Phase III miss as a clear setback, sending the San Diego-based firm's stock (NASDAQ:CADX) down $8.63 Friday to close at $5.36.

Cadence did not report specific results from Study 301, which evaluated Acetavance vs. placebo over 48 hours in postoperative pain following abdominal gynecologic surgery in 331 hospitalized patients, stating only that the drug failed to statistically significantly reduce patients' pain intensity levels. While the company still is in the process of analyzing those data, executives attributed the miss to a "substantially higher than predicted variability" in pain intensity scores.

"You see both intra-patient and inter-patient variability," Cadence CEO Ted Schroeder told BioWorld Today. "You really see patients bouncing all over the place" on the 100-point pain scale, and that inconsistency "washed out the efficacy signal."

Schroeder offered two factors that might have contributed to the disappointing results. First, patients in the study began receiving Acetavance immediately after surgery, and the initial six hours yielded the highest instances of variability, possibly due to "residual cognitive impairment" following the procedure. And second, he said, there's been "a fairly rapid change" in surgical practice that has prompted many hysterectomy patients to opt for less invasive procedures, so that abdominal surgery now tends to be reserved for the "more complicated cases" that involve "more trauma during surgery."

That's "speculation on both points," Schroeder added, though it means Cadence remains confident that an ongoing pivotal study of Acetavance in pain following abdominal laparoscopic procedures will produce positive results. That study (Study 304), initiated in the fourth quarter of 2007, is expected to involve 240 patients to test 24 hours of Acetavance therapy, but, unlike Study 301, it is designed with "tighter entry criteria," and patients will not begin treatment until the first day after surgery, he said.

Cadence anticipates completing enrollment in the second quarter, with data available in the second half of this year.

The question is whether the FDA will allow the company to proceed with a new drug application in pain without requiring another trial in abdominal gynecologic surgery patients.

Cadence said the agency has asked that Acetavance be tested in orthopedic pain - the firm already has positive Phase III data in hand for that indication - and in soft-tissue pain, and there's a chance regulators might be willing to accept positive efficacy data from the laparoscopic trial to fulfill the soft-tissue model requirement.

The company plans to seek a meeting with the FDA to determine whether a new study is needed. If so, Cadence should be able to have the new trial up and running more quickly than Study 301, which completed enrollment in nine months, Schroeder said. "So from a delay standpoint, it would maybe add months. It certainly wouldn't be years."

On the plus side, one of the FDA's key concerns for Study 301 was the safety of Acetavance over 48 hours, and "we clearly answered that question," he said.

Data showed that the drug demonstrated a safety profile that was no different than placebo and compares favorably to oral acetaminophen, which already is used widely in the hospital setting.

Acetavance also met several secondary endpoints in the study, including pain relief, global patient satisfaction and time to rescue medication.

In the pivotal study in fever, Study 302 evaluated the antipyretic efficacy and safety of Acetavance over a six-hour period compared to placebo in 60 patients. A second study, Study 303, is ongoing to test the speed of onset of fever reduction compared to orally administered acetaminophen in 81 adult patients.

But the pain indication is "our preferred pathway," Schroeder said, adding that the company likely would file a supplemental NDA later to expand the drug's use for fever.

"We remain highly confident in [Acetavance's] analgesic effect," he added, "and think it really answers an unmet medical need."

Cadence gained U.S. rights to the product from New York-based Bristol-Myers Squibb Co., which has marketed intravenous acetaminophen in Europe since 2002.

Also in its pipeline, Cadence has Omigard (omiganan pentahydrochloride 1 percent topical gel), which is in a Phase III trial for the prevention of catheter-related infections. The firm expects to complete patient enrollment in the second quarter.

Cadence reported a net loss of $13 million, or 45 cents per share, for the third quarter. As of Sept. 30, it had cash and equivalents totaling $54.5 million. The firm has said it intends to raise additional capital this year and, in December, filed a $100 million shelf registration statement with the SEC.