BOTHELL - Shares of Nastech Pharmaceutical Co. tumbled Tuesday after it revealed delays in developing a nasal spray for osteoporosis, resulting in the postponement of a $15 million payment from its drug partner.
Nastech's stock price fell $2.99, or nearly 16 percent, to close at $16.20.
In a conference call with investors, Nastech's chairman and chief executive said the hurdle doesn't quell the enthusiasm about the parathyroid hormone spray.
"We continue to be excited about the potential for PTH spray to be a safe and effective noninjectable treatment for osteoporosis," Steven Quay said.
In February, Procter & Gamble Pharmaceuticals announced it would help Nastech develop and market the PTH1-34 nasal spray under an agreement that could eventually bring more than $577 million to Nastech. That assumes the drug makes it through the Food and Drug Administration's regulatory process and to the pharmaceutical market.
The agreement called for Nastech to receive "milestone payments" once certain steps in the testing and approval process have been reached. To date, it has received $17 million from Procter & Gamble.
Quay said Procter & Gamble completed a drug safety study on the spray in post-menopausal women and elderly men earlier this year. After that test showed no signs of trouble, the company began testing the spray on patients with low bone mass to measure signs of improvement in bone strength.
Instead of being completed this year, however, that second test now is scheduled to be finished in mid-2007. Procter & Gamble also is planning an additional phase 2 drug safety study.
"Nastech and P&G believe that the additional data resulting from the on-going and planned studies are important for the FDA regulatory pathway," the companies said in a written statement.
Quay added that the additional study isn't required by the FDA, but is a "prudent step" before committing to a larger, expensive and crucial phase 3 test of the spray.
Because of the additional step and the test that is still being conducted, however, Procter & Gamble has delayed a $15 million milestone payment to Nastech.
Under the amended agreement between the two partners, Nastech will get $5 million when the additional study is started and the remaining $10 million once the partners are ready to begin the phase 3 study.
In addition to Quay's reassurance to investors, Procter & Gamble gave a public vote of confidence to continuing the drug's development.
"Nastech is an excellent partner and we look forward to future progress on this clinical program," Mark Collar, president of Procter & Gamble's pharmaceutical and personal health division, said in a news release.
Nastech's PTH spray is on the market in an injected form from Eli Lilly and Co. called Forteo. Because that form of the hormone already has been through clinical studies and regulators' scrutiny, Nastech's spray is undergoing a shorter and less costly application process.
If the spray is eventually approved, it will be made exclusively at Nastech's Bothell headquarters. The company then will supply the drug to Procter & Gamble at a price that includes a profit for Nastech.
source - Herald