Nastech Pharmaceutical Co. Inc. reacquired U.S. rights to Nascobal gel product for vitamin B12 deficiency from Schwarz Pharma AG.

Nastech, of Bothell, Wash., will pay Schwartz $8.75 million, plus interest, over a four-year period. The deal includes a $1.5 million up-front payment. Schwarz, of Monheim, Germany, gives up its right to receive any consideration from a second-generation dosage form of cyanocobalamin (Nascobal), as well as on future sales or licensing of intranasal scopolamine, designed to treat motion sickness. The deal around scopolamine eliminates a contingent liability from Nastech to Schwarz of about $4 million.

With rights back, Nastech signed a contract sales agreement with Cardinal Health Inc., of Dublin, Ohio. Cardinal Health will allocate 50 direct sales representatives who will cover the United States. Cardinal Health will collect undisclosed monthly fees for its services.

Nastech, for its part, will conduct promotional and marketing campaigns to support the product. Nascobal is an intranasally administered gel designed to maintain the hematologic status of B12. It was first approved in the U.S. in 1997 to treat pernicious anemia. In July, it was approved through a new drug application supplement to treat B12 deficiency in patients with HIV, AIDS, multiple sclerosis and Crohn's disease.

"On July 1, Nastech served Schwarz with a notice of termination [of the deal] and made a demand for arbitration regarding the 1997 agreement," Steven Quay, chairman, CEO and president of Nastech, said in a conference call Tuesday. With rights back, Quay said the "lengthy process" of arbitration is avoided.

With the label expansion, Nastech now has a much broader audience for its product and plans to maximize the regained rights.

"Now that we have our product rights back, the recent label expansion for Nascobal encompassing Crohn's disease enables us to address approximately a half-million additional patients who will benefit from Nascobal therapy," Quay said. "We believe Nascobal has significant upside potential and we plan to capitalize on it."

In February, Nastech signed a deal with Pharmacia Corp., of Peapack, N.J., for a product, nasally administered apomorphine, designed to treat sexual dysfunction in both sexes. That agreement has a $56.4 million potential to Nastech. (See BioWorld Today, Feb. 5, 2002.)

Nastech's stock (NASDAQ:NSTK) fell 22 cents Tuesday to close at $8.06.