National Editor

With strong Phase III data and a new drug application filed for its overactive bladder treatment, Indevus Pharmaceuticals Inc. priced $60 million in convertible notes due 2008.

The notes carry a 6.25 percent interest rate and will be convertible into shares of stock at about $6.66 each, which amounts to an initial conversion rate of approximately 150.2404 shares per $1,000 principal amount of the notes.

The conversion price represents a 30 percent premium to the July 10 closing price of Indevus shares (NASDAQ:IDEV), which ended Friday at $5.59, up 47 cents. Initial purchasers have an option to buy up to $12 million more in notes as part of the transaction that is expected to close July 16.

Trospium, a muscarinic receptor antagonist licensed in the U.S. from Madaus AG, of Köln, Germany, in 1999, relaxes smooth muscle tissue in the bladder to decrease contractions. It's dosed twice daily, and Indevus has a deal with Andover, UK-based Shire Pharmaceuticals Group plc to develop a once-daily dose.

Keeping patients on existing treatments for overactive bladder is difficult since many develop the unpleasant side effect of dry mouth. About 17 million people in the U.S. are afflicted with the condition and the market is estimated at about $1 billion, the company said.

"It's a market driven by tolerability," said William Boni, vice president of corporate communications for Lexington, Mass.-based Indevus. Dry mouth, he noted, is "kind of a paradoxical side effect for that particular condition. If you have dry mouth, you're prone to drink more," which makes the bladder problem more difficult to live with.

In Indevus' Phase III trial, which showed significant relief from overactive bladder, dry mouth was reported in 21.8 percent of trospium patients and constipation was reported in 9.5 percent,. (See BioWorld Today, April 29, 2003.)

The two U.S. market leaders for overactive bladder are Ditropan XLR (oxybutinin) from New Brunswick, N.J.-based Johnson & Johnson and Detrol (tolterodine) from Pharmacia Corp., of Peapack, N.J., which merged with New York-based Pfizer Inc.

Boni said Indevus believes trospium has shown a "highly competitive profile," based on efficacy and tolerability.

Indevus said it will use the money from the convertibles to advance trospium, as well as for clinical development of its other product candidates, and to acquire and develop new product candidates, as well as for working capital and general corporate purposes.

Next in the pipeline for Phase III development is the anti-anxiety drug pagoclone, for which Pfizer returned the rights last year.

"We're determining the optimal clinical structure, whether or not we'll take it forward ourselves," Boni told BioWorld Today. "Pagoclone made it to Phase III in panic disorder, but we may decide to do additional Phase III testing to have a very strong database."

The company will need a partner for that, as well as a marketing partner for trospium.

"The Indevus business model is one where corporate partnerships play a very important role," Boni said. The company had $33 million in cash at the end of March, with a burn rate "historically in the mid-teens, but you can expect that is ramping up in anticipation of the launch of trospium."

Indevus changed its name last year from Interneuron Pharmaceuticals Inc., saying the company was moving away from neurological drugs and toward in-licensing and development of treatments, including those for anxiety disorders, overactive bladder, inflammatory bowel disease and the prevention of HIV.

The changed name stands for "in development, primarily in the U.S.," Boni said, although the "-us" is also taken as a scientific suffix.

"Our company is focused on clinical development-stage products rather than basic research," he said.

After pagoclone in the pipeline is citicoline for ischemic stroke.

"There have been three Phase III trials and one Phase II/III trial," Boni said. "One of them has met the primary endpoint and the others have been statistically significant only when looked at [together]. We're waiting for some closure on from the FDA, with respect to outcome measurements," he added, but the drug seems effective in improving cognitive and motor ability following stroke.