King Pharmaceuticals has entered into a $400 million dollar licensing deal with Pain Therapeutics that will bring it a portfolio of abuse-resistant opioid analgesics, including Remoxy (oxycodone) in late-stage development.

Under the terms of the agreement, King will make an upfront payment of $150 million, and Pain Therapeutics could receive additional milestones of $150 million in cash if Remoxy is successful. King will also cover R&D expenses of up to $100 million.

The deal is a major validation of Pain Therapeutics’ strategy of hanging onto products through development as long as possible in order to secure lucrative terms, and investors responded accordingly, pushing the firm’s shares up by a third to $8.09.

King has an established specialty sales force in the USA, and earlier this week reported a surge in sales to $454 million for the third quarter, along with net income of $120 million, reversing a loss posted by the company a year ago.

Remoxy is designed as an alternative to existing formulations of oxycodone which have been linked to misuse. Oxycodone is the active ingredient in Purdue Pharma's OxyContin, a branded, controlled release narcotic painkiller with annual sales exceeding $1.9 billion that has been the subject of a number of cases of diversion and abuse, according to the US Food and Drug Administration (FDA).

Reports have indicated that abusers crush OxyContin tablets and snort the powder or dissolve it in water or alcohol (vodka apparently being a preferred medium) and inject it. This defeats the controlled-release aspect of the formulation and allows the abuser to attain a “rush” or “high” through rapid absorption of the drug. It is estimated that this abuse is associated with several hundred deaths a year in the USA.

Remoxy is based on a gel drug delivery system, called Oradur and developed by Durect Pharmaceuticals, which makes this type of abuse much more difficult. King and Pain Therapeutics now plan to start a Phase III trial of Remoxy in January that, if successful, would put them in a position to file for approval in 2007.

OxyContin itself is now facing generic competition in the USA, forcing Purdue to slash 800 jobs to cut costs [[15/07/05c]]. But King and Pain Therapeutics believe their abuse-resistant version will be preferred by physicians and could claim OxyContin’s crown. The two companies clearly have big plans for Remoxy. Under the terms of the agreement with King, Pain Therapeutics will receive a 15 % share of the first $1 billion in cumulative net sales and 20% of net sales thereafter.

Last year, state agencies in the US and Purdue took actions to address the abuse and diversion of OxyContin. The FDA approved a stronger safety warning on OxyContin's label, and the agency and Purdue have collaborated on a risk management plan to help detect and prevent OxyContin abuse and diversion, an approach that was not used at the time the drug was first approved in 1995.