While awaiting FDA approval of its beta-blocker PW2101 for hypertension and angina, Penwest Pharmaceuticals Co. entered a marketing deal with Prism Pharmaceuticals Inc. to sell the product in the U.S. and Canada.

The licensing agreement calls for privately held King of Prussia, Pa.-based Prism to make an up-front $4 million payment to Penwest, as well as clinical and regulatory milestones of up to $9.5 million if certain conditions of the agreement are met, such as final FDA approval granted by the end of the year.

The milestones are "contingent upon how many dosage strengths get approved and the timing of approval," said Jennifer Good, senior vice president and chief financial officer of Danbury, Conn.-based Penwest.

Penwest also stands to receive royalties ranging from 15 percent to 18 percent of net product sales, depending on sales volume.

"The overall beta-blocker market is about $1.5 billion," Good said.

The FDA accepted the company's new drug application, which included data from a pivotal trial evaluating four dosage levels of PW2101, though the agency requested an additional trial on the low-dose version of the drug. That second pivotal trial missed its primary endpoint, but the company remained optimistic after results showed the low-dose PW2101 hit secondary endpoints. Those additional data were added to the original NDA.

The prescription drug user fee action date for completion of the FDA review is June 30.

"We planned, internally, to be ready for a fourth-quarter launch," she told BioWorld Today, adding that the company expects to receive an approvable letter before labeling discussions with the FDA.

PW2101, a controlled-release formulation of an immediate-release beta-blocker, was developed using the company's TimeRx platform, which has yielded Geminex, a dual drug delivery system designed for independent release of differing active ingredients in a single drug. It also has yielded SyncroDose, a chronotherapeutic drug delivery system that releases drug at a specific site and time.

The product is the first that Penwest has developed fully on its own through the NDA submission, rather than out-licensing it earlier in the development process.

While Prism handles marketing in the U.S. and Canada, Penwest also intends to look at market opportunities outside of North America, and will be "scouting out" a potential European market this summer, Good said. Penwest likely will look for another partnering opportunity there.

In addition to PW2101, Penwest has developed Oxymorphone ER, an extended-release opioid analgesic to treat moderate to severe pain in patients that require continuous opioid therapy over an extended period of time. Its partner, Endo Pharmaceuticals Inc., of Chadds Ford, Pa., filed an NDA to which the FDA responded with an approvable letter in October 2003, requesting an additional pivotal trial. Endo and the FDA reached an agreement regarding the protocol for that trial in December, and data are expected early in the fourth quarter, Good said.

Penwest also has several early stage products to address central nervous system diseases, such as epilepsy, depression and schizophrenia.

The company is expected to release its first-quarter earnings Friday. It reported a net loss of $6.5 million for the quarter ending Dec. 31. Cash, cash equivalents and short-term investments at the end of the year totaled about $74.3 million, and included a $33 million private placement completed in December. (See BioWorld Today, Dec. 13, 2004.)

The company's shares (NASDAQ:PPCO) were up 1 cent Wednesday to close at $13.54.