Zonagen Inc. reported a mixed bag of news regarding its phentolamine-based technologies to treat sexual dysfunction.

The Woodlands, Texas-based firm said it agreed to split with Schering-Plough Corp., terminating worldwide licensing agreements covering technologies including Vasomax, Zonagen's oral therapy to treat erectile dysfunction.

"We felt it was coming," Zonagen President and CEO Joseph Podolski told BioWorld Today. "It's certainly not a good thing, but in this case, given how this market is evolving, it gives us the opportunity to shop this product again and also gives us the opportunity to shop our second and third generations."

The agreement was initiated in November 1997, but problems surfaced throughout the partnership. As recently as two months ago, Madison, N.J.-based Schering-Plough withdrew its application for marketing in the United Kingdom after examining comments from the UK's Committee on Safety of Medicines. (See BioWorld Today, May 1, 2002.)

Despite spending in excess of $20 million in milestone payments, Schering-Plough returned the technology to Zonagen for undisclosed present and future considerations. Included were all licenses, options and other rights with respect to Zonagen's phentolamine-based products, its combination products, patent rights, know-how and trademarks for the treatment of sexual dysfunction for both men and women.

Also, Schering-Plough will transfer and assign rights, title and interest to all new drug applications or similar foreign submissions or approvals relating to those products. The drug is approved in nine Latin American countries, and applications have been submitted elsewhere.

"We're going to try [to secure another partner]," Podolski said. "I seriously doubt it's going to be a major [pharmaceutical firm], but you never know. I think this whole market is going to move toward combination [therapies] because I think they can achieve the maximum erectile efficacy with minimal side effects."

Zonagen will be responsible on its own for all obligations in the relevant countries with respect to such submissions and approvals.

"Our drug does offer a different mechanism of action, therefore having a different side effect profile," Podolski said. "I think there might be some men who prefer a non-specific alpha blocker like our drug."

Zonagen also said it submitted to the FDA final results from the one-year mechanistic study of phentolamine-induced brown fat proliferations. As a result of negative findings two years ago, the FDA placed a clinical hold on Vasomax, a decision later upgraded to a partial clinical hold. Data from the one-year study suggest that phentolamine administered to both old and young rats at various doses does not induce or promote brown fat proliferations in the rat, potentially refuting the FDA's concerns regarding the appearance of brown fat proliferations in the prior two-year study. No gross brown fat proliferations were observed during the entire one-year period that the animals were administered the drug.

"The data say you can administer this drug chronically - even daily, in a rat - and it's going to be safe," Podolski said. "There are some secondary effects that are experienced in rats that aren't experienced in humans that might lead to these brown fat proliferations, but their prospects in human beings, with the way the drug is going to be used, are going to be minimal. Frankly, I don't think our study clearly delineates why it did happen, but it's pretty clear that it wasn't phentolamine that caused it."

He said he expects the FDA to take three to six months to assess the latest data.

"I do still think the product has some potential," Podolski added. "And that's why we did go ahead and submit the mechanistic study results to lift the clinical hold here in the U.S. There's no guarantee that's going to happen, but we think we have a good data set."

Zonagen's stock (NASDAQ:ZONA) closed Monday at $1.46, down a penny.

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