Durect Corp. formed a commercialization agreement worth up to $45 million in up-front and milestone payments for its transdermal patch pain product with Endo Pharmaceuticals Holdings Inc.

The sufentanil-containing patch, which employs Durect's Transdur drug-adhesive matrix formulation, is in Phase II studies for relief of moderate to severe chronic pain for up to seven days.

The agreement gives Endo, of Chadds Ford, Pa., the exclusive license to develop and commercialize the patch in the U.S. and Canada. Endo now is responsible for the expenses of all development and regulatory activities.

"It's a great deal for us, as well as for Endo," said Jim Brown, Durect's president and CEO. "We have five different products in development, and this is our patch technology. This is going into the pain space where the Duragesic patch, J&J's product, is today."

Under terms of the agreement, Endo will pay Cupertino, Calif.-based Durect a $10 million up-front fee, as well as up to $35 million in regulatory and commercial milestone payments. Durect also is entitled to a high royalty rate that could put the company's share of profits into nine digits, Brown said.

New Brunswick, N.J.-based Johnson & Johnson developed Duragesic (fentanyl transdermal system), a 72-hour system for the management of chronic pain. The product, which uses Mountain View, Calif.-based ALZA Corp.'s D-Trans transdermal delivery technology, had worldwide sales of $2.1 billion last year.

Brown said Durect's royalty share from Endo will be north of the 12 percent rate specified in J&J's deal with its subsidiary, ALZA. The transdermal sufentanil patch would compete in the $4 billion strong-opioid market.

"Our goal going into this deal was to get the returns that you would expect from an end-of-Phase II kind of deal," Brown told BioWorld Today.

He said the company succeeded and will bring home between 35 percent and 40 percent of the profits, if the product reaches the market. While Durect had a high interest from a number of potential partners, Endo seemed like the right fit for the company.

"Endo's done a great job in the pain space," Brown said. "They're a small enough company that this is as important to them as it is to us."

Brown said its sufentanil patch might offer some benefits over J&J's fentanyl product because it's "about a fifth of the size, and lasts for a full week, over twice as long." Durect's patch also may cause less of an irritation. Sufentanil is approved for use in hospitals as an analgesic, and it is the active ingredient in Durect's Chronogesic.

That product, which was in Phase III trials, hit a roadblock in late 2003, when preclinical studies showed a small number of units using the system experienced a stoppage in delivery of the drug. (See BioWorld Today, Oct. 20, 2003.)

Since then, Durect has been working to design a system that will eliminate the premature shutdown. It has not resumed clinical trials.

Durect and Endo formed a $57 million agreement in November 2002 for the development and commercialization of Chronogesic in the U.S. and Canada. The product is an osmotic implant that delivers sufentanil continuously for three months using the Duros implant technology that Durect exclusively licensed from ALZA. (See BioWorld Today, Nov. 12, 2002.)

Data from the Chronogesic studies provide Durect with a good history and clinical basis for conducting trials for the sufentanil patch, Brown said. It has completed Phase I trials with 24 patients and now is in a Phase II trial, transitioning chronic pain patents from the Duragesic patch to the sufentanil patch.

"We saw a really great safety profile and delivery rate profile" in the Phase I trial, Brown said, "and we expect to have Phase II data in the second half of this year."

In addition to its Transdur transdermal technology, Durect is focused on four other platforms, including the Saber delivery system for protein and small-molecule delivery, the Oradur sustained-release oral gel-cap technology, the Durin biodegradable implant, and the Microdure biodegradable microparticulates.

In other news for Endo, the company entered an agreement with ProEthic Pharmaceuticals Inc. for the U.S. and Canadian rights to develop and commercialize a once-daily ketoprofen-containing topical patch. Ketoprofen is available in the U.S. in an oral form for treating inflammation and pain. The patch version, which is in Phase II testing to treat acute pain associated with soft-tissue injuries, might offer more targeted pain control than the oral therapy, since it bypasses the bloodstream. It also would have a more convenient, once-a-day dosing regimen.

Terms of that agreement include a $10 million up-front payment and up to $14 million in regulatory milestone payments for Montgomery, Ala.-based ProEthic, which was founded in 2001 and is privately held.

Durect's stock (NASDAQ:DRRX) rose 24 cents Monday to close at $3.60, while Endo's stock (NASDAQ:ENDP) gained 19 cents to close at $22.25.