With Phase III data on Gattex expected very soon, Nycomed is paying $10 million to NPS Pharmaceuticals Inc. for the first right to look at the results and enter a potential $185 million agreement.

Gattex (teduglutide) is in analogue of glucagon-like peptide-2 that is completing an 84-patient trial in patients with short bowel syndrome. Data from that study are expected early in the fourth quarter.

Nycomed, of Zurich, Switzerland, has two weeks from the release of the Phase III data to decide if it wants to pay another $25 million for rights to the product in gastrointestinal indications outside North America.

If Nycomed exercises its license option, NPS, of Parsippany, N.J., then would be entitled to an additional $150 million in milestone payments related to the SBS indication, development of the product in new indications and attainment of certain sales thresholds. NPS also would get double-digit royalties on resulting sales by Nycomed, already an NPS partner in Europe for the osteoporosis drug Proteact (Preos).

NPS' stock (NASDAQ:NPSP) gained 95 cents Wednesday, or 19 percent, to close at $6.

Brandi Simpson, senior director of investor relations at NPS, said NPS plans to market the product itself in the U.S. Gattex has been granted orphan designation in both the U.S. and Europe for short bowel syndrome, a condition facing patients who have had a significant portion of their bowel removed, resulting in inefficient absorption of nutrients and fluids. Patients often must rely on parenteral nutrition, or intravenous feeding tubes, to survive.

The 84-patient Phase III trial that began in April 2004 included patients in Europe and the U.S. and tested whether Gattex could provide a 20 percent reduction vs. baseline in the need for parenteral nutrition at weeks 20 to 24. The trial also included a placebo arm, as well as multiple secondary endpoints.

Simpson said the trial design did not include an interim analysis, and the data remained blinded to company officials.

She told BioWorld Today there are an estimated 10,000 to 20,000 SBS patients in the U.S. on parenteral nutrition, with perhaps 10,000 dependent on total parenteral nutrition, defined as use of the treatment for three or more days a week.

NPS said it would plan to file a new drug application in mid-2008, assuming positive data from the Phase III trial. Simpson said there are a limited number of specialists who treat the condition, and NPS expects it would be able to sell the product in the U.S. with a "relatively modest sales force."

The Gattex deal with Nycomed also includes a component under which they would share further costs for development in new indications. Among the lead potential follow-on indications are chemotherapy-induced gastrointestinal mucositis in cancer patients and necrotizing enterocolitis in preterm infants, both of which have been studied in preclinical trials. NPS previously completed a Phase IIa trial of Gattex in Crohn's disease, an indication it would not pursue further without a partner, Simpson said.

The company said the GLP-2 hormone regulates the growth, proliferation and maintenance of cells lining the gastrointestinal tract. Gattex has one amino acid change from GLP-2, resulting in a much longer half-life. The product is designed to produce a significant increase in both the mass and absorptive surface area of the lining, as well as reducing gut permeability. Treatment aims to result in significant growth of the intestinal lining and improved dietary absorption.

NPS has implemented "monetization strategies" of late, an effort that has brought in about $200 million this year, almost all of which will be used to retire current outstanding debt. NPS issued about $100 million in Sensipar royalty-backed notes, royalties that come from Amgen Inc. sales of the product for hyperparathyroidism. NPS also completed the sale of $50 million in convertible notes, and got $50 million up front through the sale of its royalty entitlement from European sales of Proteact by Nycomed.

As of June 30, NPS had $91.4 million in cash and equivalents - a total that does not include the recently raised $200 million - and about 46.7 million shares outstanding.

The company suffered a setback last year when the FDA indicated another trial of Preos (parathyroid hormone for injection) would be needed before it could be approved in the U.S. Simpson said NPS would not pursue that additional trial without a partner.

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