NeurogesX Inc (NGSX.O) said
Japan's Astellas Pharma Inc (4503.T) will sell its pain patch,
Qutenza, in the European Economic Area, the Middle East and
Africa, as part of a marketing deal between the two companies.
As part of the agreement with Astellas' European unit,
NeurogesX will receive an upfront payment of about $42 million
for the commercialization rights of Qutenza.
Qutenza, which received regulatory approval in the European
Union last month for the treatment of peripheral neuropathic
pain in non-diabetic adults, is still awaiting approval in the
United States.
NeurogesX Chief Executive Anthony DiTonno said the pain
patch is expected to be launched in the first half of 2010, but
declined to comment on the revenue expectations from the
product.
The U.S. company would get royalties in percentage of net
sales that would start in the high teens and progress to
mid-twenties upon reaching certain sales milestones, DiTonno
told Reuters.
Lazard Capital Markets analyst William Tanner said the deal
far exceeded his expectations of an upfront payment ranging
from $15 million to $20 million and royalties in low double
digits.
Tanner expects total worldwide sales of Qutenza to be about
$30 million in 2010.
NeurogesX will also receive about $7 million for a license
option of its most advanced pipeline candidate after Qutenza,
NGX-1998, as part its deal with Astellas.
It is also eligible to receive additional sales-based
milestone payments and option payments of about $97 million
related to NGX-1998.
NGX-1998 is a topically applied, liquid formulation that
uses the same active ingredient as Qutenza and is designed to
treat pain associated with neuropathic pain conditions. It has
completed three early stage clinical trials.
NeurogesX, which had just enough cash to fund operations
through 2009 prior to the Astellas deal, plans to use the total
$49 million in upfront payments for Qutenza's U.S. launch and
further development of NGX-1998.
NeurogesX shares rose 4 percent earlier in the day, but
pared gains and fell as much as 13 percent.
Lazard's Tanner said the fall in the stock price has got
nothing specific to do with NeurogesX.
"The stock is behaving this way because the stock was up
nicely for the year and it is just a terrible tape," Tanner
said.
The company's shares, which have nearly quintupled in
market value over the past six months, were down 68 cents at
$5.95 Monday afternoon on Nasdaq.
(Editing by Aradhana Aravindan and Deepak Kannan)
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