P&G in shock nasal spray exit

Just last week the two firms were working on the design of a Phase II study for the PTH1-34 osteoporosis treatment, but by Tuesday P&G Pharmaceuticals had notified Nastech of its intention to terminate the development and license agreement. According to Nastech's Form 8K filed yesterday, "P&G determined that PTH1-34 did not meet its requirements to continue the partnership,"​ and therefore exited the agreement after having paid Nastech only $17m of the $577m the firm had hoped to see as a result of the collaboration. In a conference call held yesterday, Nastech CEO Steven Quay speculated that the decision could have been prompted by the fact that the original timescales for product development have had to be extended, meaning that the product may not be able to fully exploit patent expiration of Fosamax (alendronate) in 2008. When P&G and Nastech signed their agreement back in January 2006, it seemed like they would be able to deliver their parathyroid hormone product to the market in 2008 or early 2009 following US Food and Drug Administration (FDA) approval. Now that this timescale is highly unlikely, Quay postulated that this could have been "a major reason"​ for P&G's decision. Development plans have stumbled a little since the project kicked off less than two years ago, with Nastech missing out on a $15m milestone payment in December last year after P&G instigated a contract amendment and requested an additional clinical study be conducted. As it is, the only payments Nastech has actually received through the collaboration are the $10m on the original signing of the deal, and a $7m milestone payment during the second quarter of 2006. The company, however, still has confidence in the product despite P&G's silent departure, and as such plans to advance the spray into a Phase II study looking at bone mineral density during the first quarter of 2008. "Although we are disappointed with P&G's decision, we remain confident that, as the only approved anabolic drug for osteoporosis, PTH is a very important therapeutic,"​ a statement from Nastech read. Completed studies have shown teriparatide delivered nasally to have a similar pharmacokinetic profile to Eli Lilly's injectable Forteo treatment. Over the first nine months of the year, Lilly reported Forteo sales of over $500m. With daily injection currently the only administration route available for PTH, a non-invasive, patient friendly delivery mechanism that effectively delivers the treatment would appear to have significant potential in the market place. However, with P&G's evaluation essentially causing the firm to cut its losses and drop its part in product development, the company would appear to believe that potential returns are not significant enough to warrant further investment on its part. The company was unable to comment prior to going to press. Termination of the agreement leaves Nastech expecting revenues of $5.5m over the fourth quarter, with the company planning to examine intiatives to reduce its burn rate as its compiles its 2008 budget.