Zosano (ZSAN) Terminates Eli Lilly (LLY) Deal, Halts Daily Osteoporosis Drug Program
9/29/2015 6:11:26 AM
September 29, 2015
By Mark Terry,
BioSpace.com Breaking News Staff
Fremont, Calif.-based Zosano Pharma, Inc. announced yesterday that it will halt development of its Daily ZP-PTH treatment intended for severe osteoporosis. It plans to resume development of its Weekly ZP-PTH product.
Japan’s regulatory authorities required additional studies, which would have delayed the marketing of the product by at least a year in Japan. This prompted a re-evaluation of the company’s marketing priorities. In 2014, Zosano signed a collaboration agreement with Eli Lilly and Company (LLY) to develop ZP-PTH, a formulation of parathyroid hormone 1-34 (PTH) that uses Zosano’s microneedle patch system. Under that deal, Lilly acquired worldwide commercialization rights and made an equity investment of up to $15 million. There were also milestone payments that could total up to $300 million for regulatory approvals and up to $125 million for sales milestones. Double-digit royalties were also included.
“While we have received positive feedback from the FDA and were on track to initiate a Phase III trial of Daily ZP-PTH in the U.S., we believe that committing significant capital and other resources to development of Daily ZP-PTH is not a prudent investment given the recent feedback received from Japanese regulatory authorities and the significant milestone payments associated with approval in Japan,” said Vikram Lamba, chief executive officer of Zosano in a statement. “Although we have made the decision to terminate our contract with Lilly due to business reasons, we are extremely thankful for their support and collaboration. Our Weekly ZP-PTH patch has strong clinical data and is well-differentiated compared to competitive products.”
On Sept. 1, Zosano announced that it had completed enrollment in a Phase I clinical study for a novel method of delivering treatments for migraine headaches. That study in 20 healthy volunteers will look at the tolerability and pharmacokinetics of up to five doses of ZP-Triptan compared to subcutaneous injection of sumatriptan and oral administration of zolmitriptan. ZP-Triptan is a microneedle patch coated with zolmitriptan that patients wear on their upper arm.
The company’s transdermal microneedle patch system has been tested in more than 400 patients with over 30,000 patches with a variety of drug formulations.
The company’s stock took a hit at the news, dropping from a share price of $8.71 on Sept. 18, 2015 to a current price of $3.75. The stock has been on a mildly volatile downward trend. Shares traded for $11.67 on March 19, 2015, dropped to $7.26 on June 16, rose to $9.73 on July 16, then back to $7.29 on Aug. 24.
Scott Henry, an analyst with Roth capital, reiterated a “buy” rating for Zosano today, with a price target of $11. The company has consensus rating of “strong buy” with a price target of $11. Zacks upgraded its rating from “sell” to “hold” on July 21.
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