By Nuala Moran
BioWorld International Corespondent
LONDON - Vernalis Group plc renegotiated its marketing deal with Elan Corp. plc for the migraine treatment frovatriptan, avoiding the need to raise new funds from investors.
Elan is investing #5 million (US$7.4 million), increasing its stake in Vernalis from 2 percent to 6 percent, and making a $10 million loan that will be repaid by a reduction in the level of royalties due to Vernalis on North American sales of frovatriptan.
In return, Vernalis, of Wokingham, Berkshire, will conduct a series of Phase IIIb/IV clinical studies, in an attempt to demonstrate frovatriptan's advantages over competing products. The studies are expected to involve 6,500 migraine sufferers. Elan will pay additional post-approval milestones.
At the same time, Vernalis said it has agreed to buy out SmithKline Beecham plc's worldwide royalty rights over frovatriptan for $25 million in cash. The money will be paid in installments over four years and is subject to frovatriptan making certain sales targets. Vernalis in-licensed frovatriptan for development in October 1994.
Vernalis CEO Robert Mansfield said, "We estimate that the deal with SB will be broadly cash-neutral over the first four years following U.S. launch, after which we expect our net margin on frovatriptan sales to increase by around 40 percent for the remainder of the patent life." The patent runs to 2014.
Earlier this year SB agreed to transfer all patents and other intellectual property relating to frovatriptan to Vernalis. The decision to forgo the royalty stream follows discussions with the U.S. Federal Trade Commission over the merger of SB with Glaxo Wellcome plc. The deal is subject to formal FTC approval.
The #15 million from Elan will be added to #2.75 million that Vernalis made earlier this month from the sale of its stake in Cancer Research Ventures Ltd., the technology transfer arm of the Cancer Research Campaign charity.