Dec. 11 (Bloomberg) -- Pain Therapeutics Inc. and King Pharmaceuticals Inc. fell in New York trading after U.S. regulators said they needed more data before approving Remoxy, one of the first painkillers designed to prevent abuse.

Pain Therapeutics fell $1.62, or 21 percent, to $6.13 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The decline for the San Mateo, California-based company was the greatest single-day drop since Jan. 17, 2003. King, of Bristol, Tennessee, dropped 70 cents, or 7 percent, to $9.26 in New York Stock Exchange composite trading.

The Food and Drug Administration “believes additional non- clinical data will be required to support the approval” of their experimental painkiller, the companies said today in a statement. Investors are overreacting, and it’s “extremely encouraging” that the FDA didn’t request new studies in people, said Corey Davis, an analyst at Natixis Bleichroeder in New York, in an e- mail.

“This should be a very quick turnaround and still allow them to launch the drug by the second quarter of 2009,” he said. “It’s not surprising that in today’s environment that investors shoot first and ask questions later. But when the questions are asked and answered, both stocks should quickly rebound.”

Davis has said Remoxy may bring in $400 million in sales by 2010 if it is approved. The taffy-like capsule contains the same active ingredient as OxyContin, the often-abused pain medicine made by closely held Purdue Pharma LP.

‘Diligently Committed’

King would sell Remoxy if it is approved, and pay royalties of 15 percent to 20 percent to Pain Therapeutics, which doesn’t have any products on the market. The companies said in the statement that they are reviewing the FDA’s decision and “remain diligently committed” to their partnership to bring Remoxy and other abuse-resistant painkillers to the market.

They are among a half-dozen companies racing to introduce the first drugs for chronic pain that can’t be crushed, snorted or injected for a quick high. Doctors considered sustained- release, high-dose painkillers major breakthroughs for cancer and chronic pain when they were introduced in the mid-1990s. The FDA says it realized in 2000 that the drugs were being manipulated.

The agency expedited its review of Remoxy under a program to help bring products to market faster if they offer significant improvements over existing therapies. The drug was designed to work in a range of twice-daily doses for people with moderate to severe pain, and to pose fewer risks in case of accidental overdose or deliberate misuse.

A majority of outside advisers to the FDA spoke favorably of Remoxy’s tamper-resistant characteristics at a meeting Nov. 13. Studies show that it releases less of the narcotic oxycodone than OxyContin when dissolved, heated or chilled. The viscous texture also prevents Remoxy from being drawn into a syringe and limits the appeal of chewing it.

Purdue’s Settlement

Purdue, of Stamford, Connecticut, agreed in May 2007 to pay $634.5 million to settle claims that its promotions from 1996 to 2001 misled doctors about the drug’s risks.

King is under pressure from investors to introduce new drugs to replace revenue lost after its top-selling heart pill Altace went generic last year, eroding a third of the company’s revenue. King has agreed to buy Alpharma Inc., another developer of abuse- resistant pain drugs, for $1.6 billion to expand its stake in the emerging market for new pain medicines.

Researchers say all chronic pain medicines will switch to new formulas that resist tampering. Even a 5 percent share of the market would be worth $700 million, King Chief Executive Officer Brian Markison has said.

To contact the reporter on this story: Catherine Larkin in Rockville, Maryland at clarkin4@bloomberg.net.

Last Updated: December 11, 2008 16:35 EST