BioWorld International Correspondent
LONDON - Vernalis plc agreed to reacquire the North American rights to its migraine treatment frovatriptan from Elan Corp. plc for $50 million, and announced a rights issue some time over the next 12 months to fund the deal.
CEO Simon Sturge told BioWorld International, "Basically, we are doing this because we feel there is substantially more potential in the drug than Elan is capable of extracting. The Elan sales force is predominantly hospital based - where they have done a reasonable job. But if you look at where migraine drugs are prescribed, it is primary care."
Vernalis, based in Winnersh, UK, has carried out market research that indicates Elan "just hasn't got a voice in the primary-care market," Sturge said. That deficit would become more critical if Vernalis succeeds in getting frovatriptan approved for the treatment of menstrually associated migraine, for which it is running two Phase IIIb trials.
"Menstrually associated migraine we feel has huge market potential, so we wanted to take frovatriptan back and put it in the hands of a pharma partner with access to the primary-care market and possibly women's health centers," Sturge said. Since its U.S. launch in the second quarter of 2002, frovatriptan has taken 7 percent of the market for the treatment of acute migraine.
The deal with Elan has happened quickly, and although Vernalis has had discussions with possible partners, there are no new marketing arrangements in place. Elan will provide 12 months of "transitional services" to maintain supplies of frovatriptan, but will stop promoting the drug in five to six weeks, as soon as Vernalis' shareholders formally agree to the deal.
Vernalis will make an initial payment of $5 million on completion, followed by $20 million on Dec. 31, 2004, and $25 million on Dec. 31, 2005. Vernalis will also pay about $5 million to buy back inventory.
Sturge said it is undecided how much will be raised in the rights issue because that would depend on the value of future sales of frovatriptan, how soon a new marketing partner is in place and the shape of the deal. In 2003, North American sales of frovatriptan were $37.5 million, with sales in the fourth quarter of $13.7 million. Whereas under the Elan deal Vernalis was entitled to a 10 percent royalty, until a new partner is in place, Vernalis will be booking all the revenues from frovatriptan.
"There are several floating parts, and as a result it is uncertain at the moment how much money we will need to raise; it could be we don't need to at all," Sturge said.