InSite Vision Inc. is getting $13 million up front from Inspire Pharmaceuticals Inc. in exchange for rights to AzaSite for ocular infections, and would get another $19 million upon FDA approval.

Inspire gained exclusive rights in the U.S. and Canada to the product, a topical solution of the antibiotic azithromycin formulated with InSite's DuraSite ocular delivery technology. InSite filed a new drug application with the FDA in June seeking approval for treating bacterial conjunctivitis. FDA action on the NDA is expected by the end of April.

Christy Shaffer, president and CEO of Inspire, said if approved in April, Inspire would be in a position to launch AzaSite in the second half of 2007. Its sales force, which already is selling two Allergan Inc. products, would be increased upon approval to 98 representatives from the current 64.

Kumar Chandrasekaran, CEO of Alameda, Calif.-based InSite, told BioWorld Today that Inspire was chosen as the partner because of its existing sales force and interest in the area, and the "passion" it showed for the product. Chandrasekaran said that among the priorities at InSite now is partnering AzaSite outside North America, and initiating the approval process in Canada.

Inspire, of Durham, N.C., is making a $13 million up-front payment for rights and would make a $19 million milestone payment upon FDA approval. It also would pay InSite sales royalties of 20 percent in the first two years of commercialization and 25 percent in subsequent years.

On Thursday, a day before the Inspire deal, InSite gained additional security in its patent position on AzaSite product by getting an exclusive license from Pfizer Inc. covering the use of azithromycin to treat eye infections. Chandrasekaran said New York-based Pfizer would be entitled to a "small, single-digit" portion of royalties due InSite.

Inspire's U.S. sales force already is the primary seller of the Irvine, Calif.-based Allergan product Elestat, an epinastine ophthalmic solution for allergic conjunctivitis, and it is co-promoting Allergan's Restasis, a cyclosporine ophthalmic emulsion for dry eye. The deal on AzaSite fits nicely with Inspire's ophthalmologic focus and existing sales organization, Shaffer said, adding that it brings "the potential to generate sizable near-term revenues."

Shaffer told BioWorld Today that Inspire had been in discussions with InSite regarding AzaSite for more than a year, and that the InSite license from Pfizer was a significant piece to ensure there would be no intellectual property issues following launch. She said Inspire conducted market research showing that AzaSite's convenient dosing regimen would position it well to capture a "meaningful" share of the $600 million-plus U.S. prescription market for ophthalmic anti-infectives.

Separately, Inspire got exclusive rights to negotiate a license agreement on another InSite product, AzaSite Plus (ISV-502), a combination antibiotic/corticosteroid product formulated with the DuraSite technology for ophthalmic indications. InSite last week reported favorable safety and tolerability data from a Phase I trial. Chandrasekaran said InSite intends to move quickly into extended trials.

DuraSite is a polymer-based eye-drop formulation that can be customized to deliver a variety of drug candidates. DuraSite remains in the eye for up to several hours, gradually releasing the active ingredient, which allows it to be dosed less frequently. In trials, it was dosed twice a day for two days and once a day for three days, a total of seven drops versus up to 20 to 30 drops for some would-be competitive products.

AzaSite now moves to the front of what already is a late-stage lineup of product candidates at Inspire.

An internally developed product, Prolacria (diquafosol tetrasodium) for dry eye, has been the subject of two approvable letters from the FDA. Inspire provided additional information to the FDA in November, and later said it had been granted a meeting with the agency. It intends to provide an update on the product's status by the end of this month, Shaffer said. Allergan has a license to that product, while Inspire retains co-promotion rights.

Also this month, as part of its planned earnings release on Feb. 27, Inspire intends to update its program for bilastine, an oral antihistamine for which it licensed U.S. and Canadian rights on Nov. 1 from the Spanish pharmaceutical firm FAES Farma SA. FAES has conducted two large, potentially pivotal Phase III seasonal allergic rhinitis trials in Europe. Inspire is in discussions with the FDA on what additional work may be needed to support an NDA filing. As part of that deal, Inspire also got most worldwide rights to ocular formulations of bilastine.

Inspire also is in the first of two planned Phase III trials with denufosol tetrasodium (INS37217 Respiratory) for cystic fibrosis. The product is designed to enhance the lung's mucosal hydration and mucociliary clearance through stimulation of the P2Y2 receptor. Patient enrollment in that TIGER-1 trial was expected to be completed in the fourth quarter of this year.

Among other products at Inspire is epinastine nasal spray for allergic rhinitis, to which it gained U.S. and Canadian rights a year ago in a deal with Boehringer Ingelheim International GmbH, of Ingelheim, Germany. Inspire has completed one Phase II trial. In December, it initiated a Phase II clinical trial to evaluate epinastine nasal spray in seasonal allergic rhinitis. Trial results are expected to be reported by midyear.

Inspire's stock (NASDAQ:ISPH) gained 46 cents Friday to close at $7.83. InSite's stock (AMEX:ISV) fell 5 cents to close at $1.63.