New River Pharmaceuticals Inc. could receive $500 million in a collaboration deal with Shire Pharmaceuticals Group plc for global commercialization of New River's Phase III compound being developed for attention deficit hyperactivity disorder.

Shares of New River (NASDAQ: NRPH) rose $1.45 Monday, to close at $23.95.

The companies will collaborate on the development, manufacturing and sales of NRP104, an amphetamine prodrug, in the U.S. Developing and commercializing the product outside the U.S. will be Shire, of Basingstoke, UK, with New River receiving royalties on net sales.

Krish Krishnan, chief financial officer and chief operating officer for New River, said Shire was an ideal company with which to collaborate due to its "global presence" and "a familiarity with amphetamine-based products."

"Shire has an excellent sales and marketing organization, and it also has a lot of experience on the development side, so they can bring that to the table, too," Krishnan said. He added that another plus is Shire's position as "a market leader in the ADHD space," since the company already markets its Adderall XR in the U.S. and Canada.

Under terms of the deal, Shire will pay an initial $50 million signing fee, then a further $50 million upon the filing of a new drug application. Pending marketing approval, New River could receive up to $300 million in milestone payments, depending on the characteristics of the FDA-approved product labeling and an additional $100 million milestone as a sales bonus if certain sales targets are reached. Krishnan said New River could receive another $5 million from the first European commercial sales.

New River anticipates a commercial launch of NRP104 in 2006, only two years after the company first filed its investigational new drug application.

"Because we are developing derivatives of existing actives, the clinical cycle tends to be fast," Krishnan said. "We have the benefit of existing data to refer to."

The orally administered NRP104 was developed using New River's Carrierwave technology, which Krishnan described as the "process of combining one or more of the 20 naturally occurring amino acids to an existing active, a process that creates a new chemical or molecular entity."

Carrierwave is not a drug delivery platform, because the process results in a separate entity known as a conditionally bioreversible derivative, he said. Its bioreversible nature allows the chief pharmaceutical ingredient to remain inactive until the individual components of the entity are broken down and released into a patient's system. New River said that rate of release provokes a "saturation effect" to control the amount of drug released over a period of time.

Krishnan said the technology might prevent patients from overdosing or getting addicted. "We want to create a drug that works just as directed, so potentially no one can abuse it," he said.

Clinical studies of NRP104 showed the drug achieved the same blood levels as products sold for ADHD, such as Adderall XR, but demonstrated possible overdose protection and other "significant safety attributes," Krishnan said.

Drugs on the market for ADHD include stimulants such as Ritalin (Novartis AG) and Concerta (Johnson & Johnson), and non-stimulant Strattera (Eli Lilly and Co.).

NRP104 received fast-track status in September in cocaine-dependency treatment. New River is collaborating with the National Institute on Drug Abuse to design preclinical and clinical programs.

While New River has spent much of its time during the past year advancing NRP104, the Radford, Va.-based company is getting ready to move two products for treating pain into clinical development this year.

NRP290, a derivative of hydrocodone, is designed to treat acute pain.

"Our goal is to create a drug that works just as well as the hydrocodone products out there, like Vicodin, but have abuse-resistant properties," Krishnan said. "We want to develop a drug that's just as innocuous as some of the lower pain products, like ibuprofen."

That drug is in preclinical development, though New River expects to file an investigational new drug application during the first half of this year.

About six months behind NRP290 is the company's second pain product, NRP369, an oxycodone derivative to treat chronic pain designed with the efficacy of OxyContin but without the addictive quality.

"We're a small company and we tend to stay focused on one active at a time," Krishnan said, adding that New River has between 25 and 30 employees. "But our technology itself can be applied broadly, and we expect to be looking at applications in other areas, such as antivirals, later on."

He said the company is poised to grow as the value of its products increases, adding more people to its research and development area and sales and marketing department.

In August, the company raised $33.6 million through its initial public offering of 4.2 million common shares at $8 apiece.

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