Washington Editor

Proprius Pharmaceuticals Inc. agreed to pay up to $117 million to license a topical pain drug, Indaflex 2.5% indomethacin cream, from AlphaRx Inc.

The Phase II product, a non-steroidal anti-inflammatory drug, employs AlphaRx's formulation technology to deliver the potent NSAID indomethacin through the skin and directly to the soft tissue surrounding the joint. Its initial development is in osteoarthritis of the knee.

"We think Indaflex could be a highly effective and safe product, addressing a very large market opportunity," Proprius President and CEO Michael Walsh told BioWorld Today.

He pointed to estimates showing that about 43 million Americans suffer from some form of arthritis today, a figure expected to grow to 70 million in the next 25 years. At present, the worldwide market for topical anti-rheumatics and analgesics is about $3 billion annually, with the majority of sales coming from topical NSAIDs sold in Europe and Japan.

That market potential clearly represents a big draw - the chronic pain market is always popular among drug developers - and Indaflex represents something new.

Privately held Proprius, of San Diego, acquired its exclusive global rights, except for Asia and Mexico, as well as rights to next-generation products and all other topical NSAIDs developed by AlphaRx. In return, the Markham, Ontario-based drug delivery firm is receiving a $1 million up-front payment and could gain up to $116 million in milestone payments for the successful development and commercialization, followed by double-digit royalties on worldwide sales.

Notably, Proprius is assuming all further clinical development costs. Indaflex's Phase II trial is about midway through its planned enrollment of 210 patients, with data expected late next quarter or early in the fourth quarter. Walsh, who described the study as "a well-designed trial evaluating the product's safety and efficacy," added that Proprius expects to be in a position to begin Phase III trials in the first half of next year.

The specialty pharmaceutical company, which has internal marketing plans for Indaflex, sees a lucrative payoff down the road with a product that represents a substitute for orally delivered NSAIDs, drugs that have received a black eye of sorts in the wake of the market withdrawals of Vioxx (rofecoxib, from Merck & Co. Inc.) and Bextra (valdecoxib, from Pfizer Inc.).

"Physicians and patients are looking for an alternative," Walsh said, noting that topical NSAIDs offer the potential of matching or surpassing the efficacy of oral treatments without their negative cardiovascular and gastrointestinal side effects. Phase I data showed negligible concentrations of circulating indomethacin in human volunteers after its topical application, suggesting a low probability of systemic adverse events. In addition, previous animal data pointed to Indaflex's potential efficacy, demonstrating its superiority to both oral indomethacin and Vioxx.

Topical NSAIDs already are used in Europe and Japan, Walsh said, and he added that Indaflex has the potential to be "best in class" among such products because AlphaRx's patented drug delivery technology overcame insolubility problems associated with indomethacin, a potent NSAID with decades of clinical experience.

AlphaRx, he said, has formulated high concentrations of indomethacin in small, nanoparticle sizes, "allowing for effective penetration through the skin and into the soft tissues and muscle around the joints."

Beyond osteoarthritis, Walsh said Indaflex has the potential to be used in a range of additional pain indications. It is delivered in 50-mg doses.

As for Proprius, which was incorporated last year and has received an undisclosed amount of venture capital backing, this deal represents the first of several in-licensing arrangements expected to come in the next year or so. Proprius is focused on personalized medicine for rheumatology and autoimmune diseases and aims to differentiate itself from more traditional drug companies by offering combinations of therapeutic products and diagnostic services.

AlphaRx shares (OTC BB:ALRX) lost 2 cents Tuesday to close at 18 cents.