A Medical Device Daily
Durect (Cupertino, California) reported signing a $45 million licensing and product development agreement with Endo Pharmaceuticals (Clinton, New Jersey), covering Durect's transdermal patch product for chronic pain.
Endo will pay Durect an up-front fee of $10 million, with additional payments of around $35 million upon achievement of predetermined regulatory and commercial milestones. Endo will also pay undisclosed royalties to Durect on net sales of the sufentanil transdermal patch.
The agreement, covering the U.S. and Canada, also includes R&D funding to Durect from Endo. Endo said it will assume all development and regulatory filing responsibility and pay for 100% of the required funding. Durect has co-promotion rights to the product.
Potential royalties to Durect, based on product sales, may increase the ultimate deal value, the companies said.
Durect's pain patch is designed to offer several advantages over available chronic pain opioids, it said, putting worldwide revenues for the chronic pain opioid market at more than $4 billion in 2004. Durect said that leaders in the segment are Duragesic ($2.4 billion in sales) and Oxycodone-oral ($1.9 billion).
Durect called the deal with Endo "a big win" as it focuses on carving out one of the industry's largest pain sectors. The company now has four pain-related products and an Alzheimer's disease product in clinical development, using its drug delivery technologies.
Durect's Transdur-based sufentanil patch, in Phase II clinical trials, is designed to offer advantages over other available chronic pain relief patches, including Duragesic.
James Brown, president and CEO of Durect, said, "Our Transdur-Sufentanil pain patch attracted high interest from a number of potential partners. We selected Endo because of its strong track record for successfully launching and building new products in the field of pain management."
Peter Lankau, president and chief operating officer of Endo, said, "We feel that Durect's sufentanil patch could offer physicians and patients significant benefits over currently marketed products. The product's week-long duration, combined with its reduced size . . . may offer improved patient convenience and compliance."
Durect said that its pain patch has "enormous market potential," its Phase I clinical data results showing good safety, tolerability and drug release for up to seven days, vs. the current standard of three days. It also is smaller than available patches – about one-fifth the size with therapeutically equivalent doses.
It incorporates sufentanil as its active ingredient, with Durect saying it has data showing a 2-to-1 patient preference for sufentanil over other marketed opioids.
These features may help provide convenience, compliance, cosmetic and quality of life improvements for chronic pain patients in this substantial market.
Durect is developing drug delivery platform technologies that treat chronic debilitating diseases and enable biotechnology products. Durect has five ongoing development programs, with four in collaboration with pharmaceutical partners.
In other financing activity:
• Endocare (Irvine, California), a developer of minimally invasive technologies for tissue and tumor ablation along with vacuum technologies for erectile dysfunction, reported completing a private placement of more than 5.6 million newly issued shares of common stock, raising about $15.6 million in gross proceeds. The shares were priced at $2.77, equal to the March 10 market close, a day prior to the financing close.
The financing syndicate was led by Greenway Capital (Dallas). In addition, two members of the Endocare management team, chairman and CEO Craig Davenport and president and chief operating officer William Nydam, as well as a member of the board of directors, made personal investments totaling $1 million in the transaction. Merchant bank Seven Hills Partners (San Francisco) managed the transaction.
The investors also will receive five-year warrants to purchase more than 1.97 million shares of common stock at $3.50 a share and 1,972,374 shares of common stock at $4 a share.
Davenport said that with expansion of the firm's investor base and a stronger balance sheet, "We can now continue our efforts to rapidly build adoption in prostate and renal cancer cryoablation as well as investing additional capital to continue our entrance into interventional radiology and oncology markets treating palliative bone pain and cancers of the lung and liver."
The company noted that a special committee of the board, set up to avoid conflicts of interest, negotiated the transaction terms with participating investors Davenport and Nydam.
Endocare develops minimally invasive technologies for tissue and tumor ablation, concentrating on devices for the treatment of prostate cancer.
• Microvision (Bothell, Washington), a developer of light scanning technologies, reported completing the sale, to four institutional investors, of $10 million aggregate principal amount of senior secured exchangeable convertible notes and warrants for an aggregate price of $10 million. The notes are convertible at the option of the holders into shares of Microvision common stock at a conversion price of $6.84 a share or exchangeable into shares of Lumera common stock, owned by Microvision, at an exchange price of $5.64 a share.
The notes have a term of two years and scheduled repayments of principal over the last six quarters of the term. Interest on the notes will be at an annual rate of between 6% and 8%. The notes are secured by 1.75 million shares of Lumera common stock owned by Microvision, the maximum number of shares of Lumera common stock transferable upon exchange and/or repayment of the notes.
Microvision is a leader in the development of high-resolution displays and imaging systems based on the company's proprietary silicon micro-mirror technology.
• Xilas Medical (San Antonio), a medical device company focused on diabetic foot care, reported that it has completed a $1 million Series B financing. The company said it now has raised a total of $1.5 million from private investors as well as company insiders.
"We were able to achieve our objective in 2004 of moving the company from research and development into full commercialization of our products for people with diabetes that are high-risk to experience foot problems," said Don Lawson, CEO of Xilas. "We are particularly pleased that XLHealth, the firm conducting a disease management demonstration project for more than 10,000 Medicare beneficiaries throughout Texas, chose Xilas to provide its products."
The federal project, run by The Centers for Medicare and Medicaid Services (Baltimore), taking place over three years, will determine the benefits of disease management programs and the ways to make these services available for chronically ill Medicare beneficiaries.
Xilas is commercializing a family of medical device products for the diagnosis and prevention of foot-related problems, especially those pertaining to people suffering from diabetes. The company has released a family of patented products that address temperature measurement, neuropathy or nerve damage assessment, and plantar stress reduction. The company previously received $2.7 million from the National Institutes of Health (Bethesda, Maryland) for clinical trials and testing.