DOV Pharmaceutical Inc. licensed worldwide rights of its triple uptake inhibitor compounds for psychiatric disorders to Merck & Co. Inc. in a deal worth $455 million, if all milestones are met.
The news caused DOV's stock (NASDAQ:DOVP) to climb $2.68 Friday, or 21.1 percent, to close at $15.40.
Merck gains exclusive responsibility for development, manufacturing and commercialization of DOV 21,947 for all psychiatric indications, and of DOV 216,303 to treat depression, anxiety and addiction. Dosing of the products has been completed in a Phase Ib and a Phase II trial, respectively.
The deal is one of DOV's largest agreements to date, said Barbara Duncan, the company's vice president of finance and chief financial officer.
"We're thrilled. We couldn't have had a better partner than Merck," she told BioWorld Today. "Merck is one of the premiere neuroscience teams out there in terms of drug development, so it was a natural fit."
Merck, of Whitehouse Station, N.J., will hold the rights to all indications for DOV 21,947, which DOV was developing initially for depression. DOV retained the rights to DOV 216,303 for indications outside of depression, anxiety and addiction.
Terms of the agreement include a $35 million up-front licensing payment to DOV, which will be made upon government clearance under the Hart-Scott-Rodino Act. Another $300 million in milestone payments could follow if certain clinical development and regulatory milestones are achieved, including the approval of two indications. Once the products reach certain sales thresholds, DOV could receive up to $120 million more in milestone payments.
Hackensack, N.J.-based DOV also is entitled to royalties that increase based on certain sales levels. Duncan would not give further details about the royalties, except to say that it was higher than the 6 percent royalty rate attained for the insomnia drug indiplon through an agreement with San Diego-based Neurocrine Biosciences Inc., which occurred in DOV's early days as a company. Neurocrine plans to submit new drug applications next quarter for immediate- and modified-release versions of indiplon. (See BioWorld Today, July 10, 1998.)
As part of the agreement with Merck, DOV also retains the option to co-promote the two products in the U.S. to psychiatrists and other specialists that treat depression.
"This was very important for us to get," Duncan said. "For a company our size, it's important that we are not just considered a royalty company. We intend to develop a sales force, so it's important to have Merck as a partner in developing that sales force."
Triple uptake inhibitors affect the neurotransmitters norepinephrine, serotonin and dopamine, which often are linked to depression and other psychiatric disorders. In preclinical studies, DOV's compounds have been shown to be potent, efficacious and generally safe and well tolerated in early clinical studies.
"We believe they will be more effective and have a more rapid onset of action than any other antidepressants on the market, based on what we've seen in preclinical models," Duncan said.
Handing over the rights to two products opens up DOV's resources for other candidates in the pipeline. Duncan estimates the research and development burn will be reduced by about $3 million this year.
The company's lead product, bicifadine, is moving into two Phase III trials this quarter, and another four Phase III studies next year, in three different pain models. The company reported positive safety and efficacy data from a Phase III trial in a dental pain model last year.
DOV also is studying diltiazem for angina and hypertension, which will move into a Phase III trial in the first half of 2005.
Another product in the pipeline has had some ups and downs in the last year. While ocinaplon performed well in two Phase II trials, producing a statistically significant reduction in anxiety, one patient experienced clinically significant elevated liver enzymes and jaundice.
Last October, the FDA placed a hold on the pivotal Phase III trial for ocinaplon to treat anxiety, asking for additional safety data. The agency agreed to lift the hold in June upon the review of a revised clinical trial protocol that includes more frequent liver enzyme testing. DOV expects to start the pivotal trial later this year. (See BioWorld Today, Oct. 6, 2003.)
"Once they approve the change of protocol, we can start the study," Duncan said.
Founded in 1995, DOV went public two years ago, raising $65 million. (See BioWorld Today, April 26, 2002.)