Neurocrine Inks $575 Mil. Deal With Abbott To Develop and Sell Gynecologic, Elagolix

Elagolix could be the first oral drug approved for endometriosis that does not have severe side effects.

Neurocrine Biosciences sealed a deal with Abbott, valued at up to $575 million, to advance its novel gonadotropin-releasing hormone (GnRH) antagonist, elagolix, into Phase III studies for endometriosis, the companies announced June 16.

Abbott agreed to pay $75 million upfront to develop and globally commercialize elagolix for the treatment of endometriosis-related pain, and undertake Phase II studies for the treatment of uterine fibroids. Neurocrine also could earn up to $500 million in milestones, mainly tied to pre-commercial achievements, and will receive undisclosed sales royalties.

If approved, elagolix would be the first oral therapy on the market for endometriosis that does not have severe side effects. So far, the most common side effect reported for the drug was nausea. The World Endometriosis Research Foundation estimates that the condition affects about 100 million women globally. Though endometriosis is elagolix's primary indication, use in uterine fibroids represents an even larger market opportunity for the drug.

The deal ends Neurocrine's search for a suitor with the resources and expertise to develop elagolix for several indications and, eventually, sell the drug. In addition to endometriosis and uterine fibroids, Neurocrine also believes elagolix could be used to treat prostate cancer and benign prostatic hyperplasia, since the drug lowers testosterone levels in men.

Neurocrine released favorable Phase II results for elagolix in late May. At that time, President and Chief Executive Kevin Gorman said the company was in the final steps of securing a partner, which it needed in order to start Phase III studies for the drug (Also see "Daisy PETALs In Hand, Neurocrine Needs To Pick A Partner For Its Endometriosis Pain Drug" - Pink Sheet, 25 May, 2010.).

Though Neurocrine had been in talks with several potential partners, Abbott's experience with the GnRH mechanism made it an ideal fit. "Abbott is the company out there that really defined the GnRH mechanism," Gorman said in an interview. "They understand the marketplace better than any company."

Abbott sells Lupron (leuprolide), an injectable GnRH agonist, which is one of two approved therapies for endometriosis. Pfizer's injectable contraceptive Depo-Provera is also approved for this use. Both drugs carry black box warnings, however. Leuprolide induces menopause-like effects, including bone loss and hot flashes, while Depo-Provera also carries the risk of bone loss.

Leuprolide also is indicated to treat prostate cancer, which Gorman said adds value to the deal since elagolix is in preclinical studies for this use.

Endometriosis makes up a modest amount of Lupron's total sales, though it is Abbott's leading gynecologic product. Its acquisition of Solvay pharmaceuticals last year also added expertise in hormonal treatments and additional women's health products to its portfolio.

Abbott would not break down Lupron's sales by indication, but Morgan Stanley analysts estimate that endometriosis accounted for about 20 percent of the drug's rounded $800 million 2009 sales. Abbott will need to position elagolix in the market in a way that it will not cannibalize Lupron's sales.

"Lupron has undesirable side effects including bone degeneration, while the safety profile of elagolix appears good," Morgan Stanley analysts said in a same-day note. "Although it is early to discuss market segmentation, we see an opportunity to expand treatment into mild or moderate patients currently on birth control. In our view, peak sales of $500-750 million do not appear unreasonable."

Neurocrine and Abbott expect to have an end-of-Phase II meeting with FDA in late August or early September and start Phase III studies for the drug at the end of 2010. A new drug application is slated for filing in late 2012 or early 2013.

Under the terms of the deal, Neurocrine will be responsible for manufacturing elagolix in the near term, since it has the equipment in place and the supply chain to do so. As part of its funding for internal expenses, Abbott is paying for 30 full time employees from Neurocrine through 2012, in part to cover manufacturing responsibilities.

-Carlene Olsen ([email protected])