Washington Editor

Nastech Pharmaceutical Co. Inc. licensed its nasally administered apomorphine product for sexual dysfunction in both men and women to Peapack, N.J.-based Pharmacia Corp. in a deal with a $56.4 million potential.

The agreement means Pharmacia will be responsible for all further development, including ongoing Phase II trials in female sexual dysfunction (FSD) and planned Phase III trials in erectile dysfunction (ED), as well as future regulatory filing duties. Pharmacia also gains exclusive worldwide rights to market the unnamed product.

Representatives from Pharmacia could not be reached to comment on the expected start date of Phase III trials. However, Steven Quay, chairman, president and CEO of Hauppauge, N.Y.-based Nastech, told BioWorld Today that he expects development of apomorphine will be a priority.

Signing the deal triggers an immediate $3 million payment for Nastech, which retains rights to apomorphine for indications outside sexual dysfunction, including Parkinson’s disease.

“We’re extremely pleased to have Pharmacia as our partner. They are one of the top-tier Fortune 100 pharmaceutical companies,” Quay said. “Over the months of working with them coming up to this deal, we’ve been pleased with the professionalism and enthusiasm they have for this product.”

Quay said Pharmacia has the marketing expertise and muscle to compete with other major companies in this indication.

Nastech, on the other hand, operates under the goal of developing products and managing them through the first few stages toward marketing. “Our real focus is formulation science,” he said. “We want to be able to have multiple products with multiple partners and from a business point of view, it makes sense to partner those early for significant milestones, up-front payments and royalties.”

Aside from the initial $3 million, the deal gives Nastech other development and sales milestones totaling an additional $45 million upon satisfaction of certain future conditions. Up to $3.4 million of Nastech’s costs are reimbursable.

Pharmacia also will purchase 250,000 shares of Nastech common stock for a total of $5 million. And upon commercialization, Nastech will receive significant royalties on product sales that escalate based on sales levels. For the first five years following launch, Nastech will manufacture certain qualities of nasally administered apomorphine and will receive transfer payments from Pharmacia. Nastech also receives minimum royalties during a portion of the term of the agreement.

Apomorphine is a potent dopamine agonist that promotes erectile function by stimulating the D1/D2 class of dopamine receptors in the brain responsible for the initiation of erectile response. Nastech’s proprietary nasal formulation is designed to maximize the rapid onset, therapeutic effect and overall safety of apomorphine.

Data from Phase II trials of 184 men with ED demonstrated safety and efficacy, according to Nastech. The drug also showed an onset of action about 15 minutes after dosing that matches normal human sexual response physiology. Meanwhile, in women, Nastech is conducting an ongoing, multicenter trial involving 75 women. Quay said the company is not ready to release information on the study at this time.

In a conference call with investors and analysts Monday, Quay characterized ED as a large and growing market opportunity. Quoting figures from Deutsche Banc Alex. Brown, he said ED drugs are expected to peak at $6 billion annually worldwide. In the U.S. alone, about 30 million men suffer from ED and at present 10 million have tried Viagra, while 7 million remain on the drug. “That means there’s an enormous untreated market,” he said.

For women, he said approximately 43 percent suffer from some form of female sexual dysfunction.

In other recent business, Nastech received clearance from the FDA to market its Mammary Aspiration Specimen Cytology Test (MASCT) device for potential early detection of breast cancer. Nastech also was granted marketing approval from the Swedish Medical Products Agency (MPA) to sell Nascobal Gel for Intranasal Administration to treat vitamin B12 malabsorption. Nascobal is currently marketed in the U.S. by Nastech’s U.S. licensee, Schwarz Pharma.

Nastech’s stock (NASDAQ:NSTK) closed Monday at $17.70, down 30 cents, while Pharmacia’s stock (NYSE:PHA) closed at $39.40, down 90 cents.