Biotech Values

[DewDiligence]

Merck-Nastech in PYY deal –NY Times:

[The deal includes a shockingly small amount of up-front money, only $5M, although the Times article says total milestone payments could amount to $341M if various regulatory *and* sales targets are met.

Presumably, Merck concurred with the view (#msg-3451506) that the IP for therapeutic use of PYY is not sufficiently locked up to warrant a richer deal. As noted in the Times article, AMLN is pursuing a PYY obesity drug; another company active in this field is EMIS, who is seeking to develop an *oral* PYY formulation.]

http://www.nytimes.com/2004/09/27/business/27obese.html

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Merck Obtains Rights to Drug That Tells the Body It's Full

By ANDREW POLLACK
September 27, 2004

Merck & Company has obtained rights to license an experimental drug to treat obesity that has generated scientific interest because it is based on a hormone used by the body to signal that it has eaten enough.

The rights are from the Nastech Pharmaceutical Company, which has developed a nasal spray incorporating the hormone. The two companies are expected to announce the deal today.

The drug is now in the earliest stages of clinical trials, meaning that, if found to be effective, it would probably take several years to become available to consumers.

The spray incorporates peptide YY 3-36, or PYY for short. It is a hormone made by the small intestine that is sent to the brain to signal satiety. There is some evidence that obese people make less of this hormone than leaner people, suggesting that their brains might be receiving only a weak signal to stop eating.

In one small experiment, published in The New England Journal of Medicine last year, both obese and lean volunteers received a single intravenous infusion of the hormone. At a buffet lunch later that day, they ate 30 percent less than those who received a placebo.

But it is not known whether taking the hormone every day would lead to sustained weight loss. In a recent paper in the journal Nature, a large group of scientists questioned the hormone's potential, saying that they were unable to replicate earlier results from studies on rodents showing that the hormone lessened food intake and weight gain.

Nastech, based in Bothell, Wash., will initially receive $5 million from Merck and will be eligible to receive up to $341 million more if the drug obtains various approvals and meets certain sales targets. Nastech would also receive royalties on sales and would be able to help market the drug in the United States.

The upfront payment seems quite small for a drug that could address a huge market. Stephen C. Quay, chief executive of Nastech, said one reason could be that Nastech did not develop the drug itself, only the nasal spray delivery, which is the company's specialty.

Nasal spray would be more convenient than injection, he said, and Nastech has been licensing rights to certain academic discoveries regarding PYY. Still, it is not clear that the company would be able to block others from developing injected forms of the hormone. Amylin Pharmaceuticals of San Diego has started clinical trials of just such a drug.

Merck has no obesity drugs on the market, but it is making the area a priority, said Janet Skidmore, a spokeswoman. She said the company had three obesity drugs in midstage clinical trials and was dedicating a new research center in Boston partly to that subject.

Merck, whose internal drug development efforts have suffered setbacks lately, has become more aggressive in licensing experimental drugs from other companies.

Developing weight-loss drugs has been difficult for the industry because the body has many mechanisms for maintaining its weight. Some previous approaches that initially generated scientific excitement turned out not to work. And the few drugs that have made it to market provide only modest weight loss and have been hampered by side effects.
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