By Matthew Willett

Genentech Inc. returned all rights to P2Y2 agonists for treatment of respiratory disorders back to Inspire Pharmaceuticals Inc. at no cost to Inspire, which has received $16 million of the estimated $78 million deal started in December 1999.

The program, which includes INS365 Respiratory for bronchitis and INS37217 Respiratory for cystic fibrosis and sinusitis, includes a Phase II trial for INS365 in chronic bronchitis ¿ a trial that was suspended in April to evaluate protocol design issues, and patients continue to receive treatment or placebo ¿ and a completed Phase I trial of INS37217. A Phase I/II trial in adult and pediatric CF patients has been initiated with INS37217, and Inspire said an investigational new drug filing and initiation of a Phase I study of INS37217 in sinusitis would occur in the third quarter.

Mary Bennett, Inspire¿s vice president of operations and communications, said the reacquisition of rights will give Inspire a better chance of getting the most value it can out of the products.

She said the decision was based on a corporate development pipeline review at Genentech, not data from the programs, much of which was still blinded and unseen by Genentech.

¿We¿re disappointed in that Genentech is an excellent partner. We like working with Genentech, but at the same time these programs have a lot of value, and we¿re happy to have them back,¿ Bennett told BioWorld Today. ¿We do have the resources we need to take the program through. We needed that kind of deal at the time, for cash and because it validated our technology, but we do have enough now to carry us through, so we don¿t need to partner.¿

With the exception of the program for INS37217 in cystic fibrosis, Bennett said Inspire plans to develop the therapeutics on its own, then partner the compounds for non-U.S. commercialization. Bennett said Inspire currently has about $70 million in cash, enough to fund its pipeline development and to take it through to profitability.

¿We don¿t market outside the U.S., so at some point we¿ll want to find a partner outside the U.S.,¿ she said. ¿Whether we look for a partner or not is something we¿ll consider when we drive further down the pipeline. We¿d like to do further development because you get more value delivered when you partner then.¿

Bennett said the chronic bronchitis market carries a potential for more than $1 billion in peak sales, and the cystic fibrosis market, because of the smaller patient population, is a much smaller potential. That, however, is a good reason, she said, to maintain rights to the program in cystic fibrosis and avoid profit sharing.

P2Y2 receptor agonists are designed to regulate the receptors responsible for mucosal hydration and mucociliary clearance. The products being developed with Genentech were formulated for inhalation.

Genentech officials could not be reached for comment.

Inspire¿s deals on INS365 with Japanese partners are unaffected. It is being developed for ophthalmic indications by Santen Pharmaceutical Co. Ltd., of Osaka. Kissei Pharmaceutical Co. Ltd., of Matsumoto City, is developing the drug for respiratory indications.

Wall Street analysts in their research reports echoed Bennett¿s optimism about the value of the respiratory programs. Inspire¿s stock (NASDAQ:ISPH) closed at $11.45, down $2.96, or 20.5 percent. It had fallen as low as $8.90.

¿We were pretty pleased, I¿d say,¿ Bennett said early Wednesday. ¿We saw an initial decline but we¿re coming back, and the investors and analysts we¿ve talked to understand our situation and the long-term value of the products to Inspire. I think the market reaction was reasonable.¿

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