The UK’s Vernalis has received a vital cash injection from equity fund Paul Capital Healthcare which will help the firm recover from the financial crisis caused by the rejection last year by US regulators of a supplementary filing for the migraine drug Frova.

Under the terms of the agreement, Vernalis will receive some 18.4 million euros from Paul Capital which in return will get 90% of the payments the Winnersh-based firm would have received from European commercialisation partner Menarini for Frova (frovatriptan). Vernalis will continue to supply Menarini with the active pharmaceutical ingredient in the drug, which is approved for the acute treatment of migraine in Europe, the United States, Canada and seven Central American countries.

However Vernalis’ problems stem from the US Food and Drug Administration’s decision last October to turn down a supplemental New Drug Application for Frova as a treatment for menstrual migraine, a move which meant that Vernalis missed out on a $40 million milestone payment from US partner Endo Pharmaceuticals. That forced the firm into a major restructuring programme which led to a reduction in its workforce to 90 from 210 and helped Vernalis meet its $56 million debt obligations to Endo.

The deal with Paul Capital “secures significant, non-dilutive funds for Vernalis”, said chief financial officer Tony Weir, who added that the cash gives the firm “the platform to rebuild new shareholder value in the medium term”. Explaining his company’s decision to back Vernalis, Ken Macleod, a partner at Paul Capital, said migraine affects about 10% of people and leads to billions of dollars in lost productivity each year. “After extensively evaluating both the clinical and commercial data for frovatriptan, we believe this drug is positioned to capture a growing share of the market,” he claimed.

The announcement sent Vernalis shares up almost 9.5% but only to around six pence. Analysts are also worried as to how long the agreement will run as Vernalis just said that the deal will continue until the frovatriptan royalties reach an undisclosed level.