Washington Editor

Neurocrine Biosciences Inc.'s investors were revved up Wednesday on the news that the firm had inked an exclusive worldwide deal potentially worth more than $575 million, including $75 million up front, with Abbott to develop and commercialize elagolix, a first-in-class oral gonadotropin-releasing hormone antagonist (GnRH), for the treatment of endometriosis-related pain.

Shares of San Diego-based Neurocrine (NASDAQ:NBIX) gained 67 cents Wednesday, or 14.2 percent, to close at $5.37.

Given that Abbott's Lupron (leuprolide acetate) is the leading GnRH agonist used to treat endometriosis, Neurocrine's partnering choice makes "eminent strategic sense," said Cowen & Co. analyst Phil Nadeau.

Oppenheimer & Co. Brian Abrahams also said Abbott's experience in the space made it a "solid partner" for Neurocrine.

Abbott has "defined the role of the GnRH mechanism in endocrine diseases in both women's and men's health," said CEO Kevin Gorman.

"This couldn't be a better partner to put elagolix in the hands of," he added, noting that the small biotech "couldn't do it ourselves."

From a strategic standpoint, "this is an ideal fit," he told investors and analysts Wednesday during a conference call.

"Abbott has not only an appreciation for this mechanism of action and what it is capable of, but also they are absolutely dedicated to bringing this important medicine to women," Gorman said, noting that the firms also plan to develop the drug as a treatment for uterine fibroids.

He insisted that the economics of the deal were "excellent," arguing that the package included "real, true attainable milestones."

Gorman said the majority of the milestones are development-based. "There's a very small portion of the milestones that are commercialization milestones," he said.

Under the partnership, Neurocrine also is eligible for royalties on product sales, which Gorman described as being in a "real good neighborhood.

"It is absolutely appropriate for deals of this size, this stage in the development, and it is tiered based on sales," he said.

Under the deal, Abbott is gaining not only the worldwide exclusive rights to develop and commercialize elagolix, but the rights to all of the next-generation GnRH antagonists for women's and men's health developed under the partnership.

"Abbott recognizes the value that we bring with the backup program," Gorman said. "They understand the need for compounds with unique pharmacologies at the GnRH receptor."

In addition to the up-front and milestone payments, Abbott will fund all ongoing development activities.

The deal also calls for Neurocrine to receive reimbursement from Abbott for internal and external expenses related to the GnRH program, which includes about $20 million in personnel funding through the end of 2012.

While Abbott is going to be assuming the "heavy lifting" and taking "all of the spend off of Neurocrine," the big pharma "isn't going to be taking over all of the development aspect," Gorman said.

"We are going to be getting significant funding into the company from Abbott in order to work with them very closely," he explained.

"There is a transition plan that is in place that we are going to be going through as we do technology transfer over to Abbott, as we transfer databases and our knowledge base over there. But we will be actively working on elagolix and the backups for actually quite some time now," Gorman said.

Company officials noted that the firms' current goal for the elagolix program is to request an end-of-Phase-II meeting with the FDA's Division of Reproductive and Urologic Products, with anticipation that the product would be ready to enter Phase III by the end of the year.

They said Abbott would now be the driving force behind that effort.

Neurocrine last month reported that top-line data from its Phase II Daisy PETAL trial (study 901) had confirmed that elagolix is associated with statistically significant reductions in dysmenorrhea, nonmenstrual pelvic pain, and dyspareunia compared with placebo. (See BioWorld Today, May 26, 2010.)

With a typical Phase III program from start to finish lasting about two years, the companies are anticipating an FDA filing in 2013.

Neurocrine officials also noted that the firm has a commitment from Abbott to rapidly move elagolix into a Phase II development program for uterine fibroids. While endometriosis is "clearly" the lead indication for elagolix, Gorman pointed out that uterine fibroids is a larger indication, with a high unmet medical need.

"So it is a great second indication to be going into," Gorman said.

The infusion of cash from the Abbott partnership, he said, will allow Neurocrine to pursue acquiring assets from other firms.

"This is truly a turning point in the evolution of the company," he said. "We have had our eye on a number of things out there that we have been interested in over the years. It's a list that constantly changes."

But, Gorman warned, "You have to be careful. You've got to kiss a lot of frogs."

Nonetheless, he said he expected Neurocrine to be "very active" on the asset acquisition front.

"We are very open to all different kinds of deal structures in looking at augmenting our currently strong pipeline and augmenting what our research group brings to us," Gorman said.

But even with an eye on future assets, he insisted that Neurocrine currently has a "complete pipeline," and a "very productive research group."

Gorman said the company plans to reveal new data from its corticotropin-releasing factor antagonist later this year.

Neurocrine also expects to have Phase II data from its Urocortin 2 congestive heart failure program early next year, he said, adding that the company's vesicular monoamine transporter 2 inhibitor program targeting tardive dyskinesia also is "progressing."