Merck terminates deal with Nastech to develop PYY3-36 nasal spray for obesity

By E. Janene Geiss

Philadelphia, March 2 - Nastech Pharmaceutical Co. Inc. said Thursday that it has reacquired its rights to PYY3-36 nasal spray for treatment of obesity from its collaboration partner, Merck & Co., Inc.

Nastech's agreement with Merck has terminated with receipt of Merck's notice effective March 1, according to a company news release.

Merck's conclusion, based on the "Preliminary Proof of Concept Study" it has conducted, is that Nastech's intra-nasal formulation of PYY did not demonstrate efficacy.

Nastech, however, said its review of the data received from Merck to date indicates that Nastech's formulation is capable of delivering PYY, via nasal administration to the blood stream, with an acceptable nasal safety profile.

Although there can be no assurance, Nastech said it believes that with dose-ranging studies they will be able to identify an appropriate dose or dosage regimen for intra-nasal PYY.

"Based on our review, Nastech believes that clinical trial results to date support the continued development of this important investigational product for the treatment of obesity, and we remain committed to the further advancement of the PYY clinical program this year," Steven C. Quay, chairman, president and chief executive officer of Nastech, said in the release.

"While we are disappointed that we and Merck could not reach a mutually acceptable agreement following discussions with a view to finding terms of agreement for the continued development of PYY intranasal formulations under the collaboration agreement, we will continue to advance the program. Nastech has both the human and the financial resources to drive the rapid development of PYY for obesity, and to also advance its other ongoing programs," Quay added.

Assuming successful completion of further dose optimization studies, Nastech said it will undertake a phase 2 clinical trial program after which Nastech intends to seek a new commercial partnership for PYY with a major pharmaceutical company that has a strong presence in metabolic diseases and that is capable of conducting late-stage clinical development and worldwide commercialization in the obesity space.

Nastech said it intends to cooperate with Merck in the production of a manuscript to be submitted for publication concerning the clinical trials performed by Merck.

Nastech said it expects to recognize about $3.7 million in revenue in the first quarter due to such termination.

Nastech is a Bothell, Wash., pharmaceutical company developing innovative products based on proprietary molecular biology-based drug delivery technologies with a focus on respiratory disease, inflammatory conditions, obesity and osteoporosis.

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