Hoping to leave the struggles of 2006 behind, DOV Pharmaceuticals Inc. is continuing to refocus its clinical pipeline. To that end, the Somerset, N.J.-based firm licensed rights to its late-stage pain drug, bicifadine, to XTL Biopharmaceuticals Ltd. in a deal potentially worth more than $130 million.
DOV had been seeking to partner that compound, a sustained-release analgesic, since October. That's when the company, which had suffered clinical and regulatory setbacks and a Nasdaq delisting, decided to pursue a new strategic direction that included the out-licensing of bicifadine in favor of concentrating its resources on internal Phase I and Phase II programs in neuropsychiatric disorders.
The company could not be reached for comment but said in its press release that the deal with XTL represents a "critical step" in DOV's refocusing efforts.
Terms of the agreement call for XTL to pay an up-front fee of $7.5 million. Of that, DOV said, $5 million will be allocated to Madison, N.J.-based Wyeth, which licensed bicifadine to DOV. Beyond that, the company could receive milestone payments of $126.5 million, with $115 million due either upon or after marketing, plus escalating low double-digit royalties on product sales.
Bicifadine, a serotonin and norepinephrine reuptake inhibitor (SNRI), will become the lead compound in XTL's pipeline. The Rehovot, Israel-based company anticipates moving away from the acute and chronic pain indications investigated by DOV, and focusing instead on neuropathic pain, a market that totaled about $1.8 billion in 2005 and is expected to grow to $5.5 billion by 2015.
News of the collaboration pushed DOV's stock (Pink Sheets:DOVP) up 15 cents, 51.7 percent, Tuesday to close at 44 cents, though that is a far cry from the stock's closing price of $15 only a year ago.
The company's troubles began in April, when results of a Phase III study of bicifadine failed to significantly reduce chronic low-back pain compared to placebo. Shares fell by more than half that day, closing at $8.50, and were hammered again less than a month later when Neurocrine Biosciences Inc. reported a regulatory delay for its sleep drug indiplon.
In May, the FDA granted an approvable letter for an immediate-release version and rejected a modified-release formulation. DOV, which gained rights to indiplon in the same Wyeth deal as bicifadine, licensed the product in San Diego-based Neurocrine in 1998. (See BioWorld Today, April 26, 2006, and May 17, 2006.)
By the fall, DOV's shares were trading at less than $1, and management began looking for ways to reduce cash expenditures while moving its early stage pipeline forward.
In December, the company terminated its license agreement with Whitehouse Station, N.J.-based Merck & Co. Inc. for DOV 21,947 and DOV 216,303, triple reuptake inhibitors aimed at treating depression and other disorders. By ending that partnership, DOV retains full rights to the compounds and said it might seek broader collaboration opportunities.
DOV 21,947 is expected to begin Phase II testing in the third quarter.
DOV, which has not yet reported its fourth-quarter and full-year earnings, had a net loss of $17.5 million, or 68 cents per share for the third quarter of 2006. As of Sept. 30, the company had about $47 million in cash.