Neuromed Pharmaceuticals' rationale for paying $30 million up front plus milestones and royalties to Johnson & Johnson subsidiary ALZA Corp. in exchange for U.S. rights to OROS Hydromorphone might not be intuitively obvious.

After all, Neuromed is known for its discovery of novel, calcium channel blockers for pain. And while OROS Hydromorphone is a pain drug, it's a late-stage, specialty pharmaceutical product in need of regulatory and marketing support.

Yet the decision makes perfect sense to Neuromed President and CEO Christopher Gallen.

"Our primary driver has always been the calcium channel blockers," Gallen said. Yet OROS Hydromorphone will provide nearer-term revenues to help fund Neuromed's pipeline, while at the same time allowing the Vancouver, British Columbia-based company to build a marketing infrastructure targeted to pain specialists.

Additional terms were not disclosed, but Gallen characterized the deal as "front-end loaded" and said the remaining milestone payments will be tied to regulatory submissions and approvals.

Hydromorphone is a widely available Schedule II opioid analgesic. Standard versions require dosing several times per day, but OROS Hydromorphone is a once-daily formulation based on ALZA's OROS Push-Pull controlled release drug delivery system. Janssen-Cilag, another Johnson & Johnson subsidiary, markets the drug as Jurnista in Germany and other European countries.

In the U.S., OROS Hydromorphone failed a Phase III trial and got an approvable letter, but Gallen said the successful completion of a single pivotal trial should be sufficient for approval. He added that while ALZA's troubles likely stemmed from a fixed-dose trial design, Neuromed will conduct a flexible-dose trial in 272 patients with lower back pain. The company currently is in discussions with the FDA regarding a special protocol assessment for the study, which would begin in July and last 12-18 months.

Neuromed is also planning a similar study of OROS Hydromorphone in osteoarthritis, although that trial would not be required for approval.

If approved, ALZA will continue to manufacture the drug, but Neuromed will handle U.S. sales through a niche sales force targeted to pain specialists. Exactly how many sales reps will be hired will depend on the label and the competitive landscape at the time of launch, Gallen said.

The size of the sales force also may depend on what other pain drugs Neuromed licenses between now and then, added Sean Cunliffe, Neuromed's vice president of commercial development.

Gallen and Cunliffe said they are not aware of any other extended-release versions of hydromorphone on the market or in development. Purdue Pharma LP previously sold a version called Palladone (hydromorphone HCl extended-release), but it voluntarily pulled the product after studies indicated the delivery system broke down in the presence of alcohol. (See BioWorld Today, July 18, 2005.)

If all goes well, Neuromed can expect to tap into the $400 million annual market for sustained-release morphine drugs, which includes Avinza (morphine sulfate extended-release capsules, King Pharmaceuticals Inc.) and Kadian (sustained-release morphine capsules, Alpharma Inc.), among others.

While OROS Hydromorphone may not be a blockbuster, its revenues will help supplement the $74 million in venture capital funding Neuromed has raised to date. Payments from Merck & Co. Inc., of Whitehouse Station, N.J., which licensed Neuromed's N-type calcium channel blocker program about a year ago in a $475 million deal, also will add to the company's financial stability. (See BioWorld Today, March 21, 2006.)

Gallen said Neuromed has about $46 million left over from its venture capital funds and initial Merck payments, adding that the ALZA deal "put us into fund-raising mode." But while he expects to access the public markets at some point, for now he said he'd prefer to "focus on building the company."

And that means focusing on the calcium channel blockers. Although Merck has taken over development of the N-type program, including Phase II trials with pain drug MK-6721, Neuromed is working closely with the big pharma to develop second- and third-generation versions.

Neuromed also holds all the rights to its T-type calcium channel blockers and has obtained positive preclinical data in acute and chronic pain, hypertension and epilepsy. Gallen said that program will advance into IND-enabling toxicology studies this year, with Phase I and "possibly Phase II" studies slated for 2008.

Gallen is betting that the combination of equity financing, partnering revenue and specialty pharma sales will help Neuromed advance its internal programs without caving to the partnering pressures that cause many biotechs to "lose control of their products." Although larger indications for the T-type program, such as hypertension, would likely be partnered, Neuromed's end goal is to have an entrenched, experienced internal sales force ready to tackle the pain and epilepsy indications.