genta gets a line at end of ths story.
Pfizer, San Diego Biotechnology Firm Join in $400 Million Alliance
Dec 20, 2002 (The San Diego Union-Tribune - Knight Ridder/Tribune Business News
via COMTEX) -- Neurocrine Biosciences yesterday landed a deal worth up to $400
million to share rights to an experimental insomnia drug with Pfizer, the
world's largest pharmaceutical company.
Pfizer agreed to pay the small San Diego biotechnology company an upfront $100
million and up to $300 million in milestone payments in return for exclusive
rights to the sleeping pill outside the United States and shared rights in the
more lucrative U.S. market.
The deal is among the largest this year between a biotech and a big
pharmaceutical company and underscores the growing importance of alliances
between deep-pocket drug giants and innovative but money-losing biotechs.
The agreement also is the second of its kind this week for Pfizer, which earlier
agreed to pay New York-based Eyetech Pharmaceuticals as much as $745 million for
rights to a drug for vision loss.
After a decade of growth, many pharmaceutical companies face declining profits
on old drugs that are going off patent and fewer potential new drugs in the
pipeline, so they are willing to pay a premium for promising, late-stage drug
candidates, according to Wall Street analysts.
Michael King of Banc of America Securities estimates that Neurocrine's insomnia
drug, called Indiplon, could reach $700 million in sales by 2007, about three
years after its anticipated approval in late 2004.
"Big Pharma would like to do more deals like this, but there aren't too many
exciting products out there to license," King said. "Neurocrine was one of the
last really good ones around, and they could have had their pick of anyone they
wanted."
Neurocrine wasn't slow to celebrate its good fortune. A huge, makeshift sign
appeared yesterday in front of Neurocrine's Sorrento Valley headquarters
"Indiplon is in bed with Pfizer" and champagne corks were popping for the
company's 250 employees by late afternoon.
Gary Lyons, chief executive of Neurocrine, said he approached Pfizer early this
year with a proposal for a co-marketing agreement. After steady negotiations,
sweetened earlier this year by successful Phase 3 trial results in the first of
eight Indiplon studies, the deal was made.
"It's kind of anti-climatic because we've been living this for nine months,"
Lyons said. "But to finally get there is a great sigh of relief and a wonderful
Christmas present."
If approved, Indiplon will compete with already existing sleeping pills, such as
French company Sanofi-Synthelabo's best seller, Ambien. Shares of Neurocrine
rose 31 cents, or about 1 percent, to close yesterday at $42.86.
The ultimate value of Neurocrine's Pfizer deal will climb if and when the
biotech wins approval for Indiplon. Indiplon is being tested in final, Phase 3
clinical trials, and Neurocrine hopes to apply to the Food and Drug
Administration for approval late next year. The FDA could take up to a year to
complete its review.
The two companies did not disclose their profit-sharing arrangement, but some
Wall Street analysts speculated that Neurocrine will retain close to a 50
percent share of profits in the U.S. market.
New York-based Pfizer, which has a large research facility in San Diego, also
will fund a 200-member Neurocrine sales force to sell Indiplon, as well as
Pfizer's antidepressant drug, Zoloft, to psychiatrists and sleep specialists.
And once Indiplon is launched, Pfizer will give Neurocrine loans totaling $175
million.
"To be set up with cash, a substantial share of profits and a sales force by the
world's top pharmaceutical company it's the dream of every biotech to get a deal
like this," analyst Matthew Geller of CIBC World Markets said.
Jim Shrine of BioWorld Today, a daily newsletter that tracks the industry, said
the Neurocrine deal is among a handful of major drug licensing agreements forged
this year between a biotech and a pharmaceutical company.
Other significant deals include the Eyetech agreement with Pfizer; New
Jersey-based Genta's $480 million deal with Aventis to develop Genta's cancer
drug, Genasense; and San Diego-based Amylin Pharmaceuticals' $325 million deal
with Eli Lilly & Co. to develop Amylin's experimental diabetes drug, Exendin.
By Penni Crabtree |
