By Randall Osborne

As it races with Pfizer Inc. for approval of an oral erectile dysfunction drug, Zonagen Inc. is collaborating with FDA-savvy Schering-Plough Corp. in a deal worth up $57.5 million.

Zonagen, of The Woodlands, Texas, will receive an up-front payment of $10 million from Schering-Plough, of Madison, N.J., with milestone payments as regulatory goals are achieved, said Jean Anne Mire, vice president of investor relations for Zonagen.

Under terms of the deal, Schering-Plough gets worldwide marketing rights to Zonagen's Vasomax, an immediate-release oral formulation of phentolamine mesylate, which works as a short-term alpha-adrenergic blocker, Mire said.

"By blocking alpha receptors, you allow smooth-muscle relaxation and thus vasodilation," she said. Alpha blockers often are used to treat high blood pressure, she noted.

Zonagen, which in June reported positive results of its second pivotal Phase III trial for Vasomax, seeks an expedited review of its new drug application (NDA) by the FDA. In the study, 293 men at 14 centers were given 40 mg doses of Vasomax against a placebo. Thirty-four percent responded to the dose as compared with 21 percent responding to the placebo. Mire said the NDA will be filed soon.

"The data is being compiled as we speak," she said, adding that she could not give an exact date when the NDA would be filed, since the upcoming holidays may slow the procedure.

In September, Pfizer, of New York, filed its regulatory applications with the FDA for Viagra (sildenafil citrate), the first oral erectile dysfunction drug for which approval had been sought.

"It uses a slightly different pathway, by inhibiting an enzyme, but essentially [Viagra and Vasomax] are involved in causing relaxation and vasodilation," Mire said.

The FDA has granted an expedited review for Viagra, she said. Although the quicker treatment usually is granted by the FDA to life-saving drugs, the agency has the option to move other applications along at a faster rate.

"As long as we file before [Viagra] is approved, we'd be eligible for expedited review, too," Mire said.

The choice of Schering-Plough as a partner involved "not only the money, but they have a world of expertise with the FDA," she said. "Schering has been heavily integrated into this process."

Zonagen will receive escalating royalties on product sales under terms of the collaboration.

Erectile dysfunction is believed to afflict an estimated 48 million men between ages 40 and 70 in the U.S., Canada and Europe. Of those cases, about 70 percent are believed to be caused by conditions — such as diabetes, kidney disease, chronic alcoholism, multiple sclerosis, atherosclerosis and vascular disease — that damage arteries, smooth muscles and fibrous tissues.

Zonagen, which focuses on the areas of urology, female health and contraception, has an oral therapeutic, ZON 73096, in clinical trials for benign prostatic hyperplasia (prostate gland enlargement). Unlike currently used drugs, it appears to work without lowering testosterone levels. Three female contraceptive products are in preclinical testing.

As of Sept. 30, Zonagen had $70.2 million in cash, with a net loss of $15.1 million for the first nine months of 1997.

Zonagen's stock (NASDAQ:ZONA) closed Monday at $34.875, up $0.313. Schering-Plough's stock (NYSE:SGP) closed Monday at $60.250, down $1.25. *

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