Bothell-based Nastech Pharmaceutical Co. said this morning that Procter &Gamble has pulled out of an agreement to collaborate on a nasal spray to treat osteoporosis.
The end of the drug development deal, first forged in February 2006, sent Nastech’s shares diving downward 38 percent as of 11:20 a.m. The stock price was at $8.67, down more than $5 a share.
Investors see Procter &Gamble’s move as putting doubts on the nasal spray’s viability. Last December, Nastech shares tumbled after it revealed delays in developing the parathyroid hormone spray. That postponed a $15 million payment from Procter &Gamble.
Nastech isn’t giving up, however, saying today it has reacquired all the rights to the experimental nasal spray and plans to start a midstage clinical trial with it early next year.
“Although we are disappointed with P&G’s decision, we remain confident that, as the only approved anabolic drug for osteoporosis, PTH is a very important therapeutic,” Steven Quay, Nastech’s chairman and chief executive, said in a statement.
As a result of the collaboration’s end, Nastech will receive about $5.5 million from Procter &Gamble. Under the terms of the collaboration agreement, Nastech could have eventually earned more than $577 million from Procter &Gamble if the drug proved effective and received regulatory approval.
This is the second large drug development deal that Nastech has seen terminated. In spring 2006, Merck &Co. pulled out of a deal to develop an anti-obesity nasal spray.
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