Schwarz stops Ranbaxy drug

Move puts a question mark on the $42-m deal struck in '02.

Schwarz Pharma AG of Germany has discontinued the development of Ranbaxy Laboratories' RBx 2258 molecule, meant to treat benign prostate hyperplasia. This has put a question mark on the $42-million deal struck in 2002, for which Ranbaxy has so far received $4 million.

Schwarz, in a release posted on its website, said the pre-clinical findings for the RBx 2258 molecule needed further evaluation. As a precautionary measure, Schwarz has decided to put the clinical development programme on hold until final resolution.

Schwarz had, after completing the first phase of tests in Europe, moved the molecule to Phase-II trials in Europe and South Africa.

Ranbaxy has communicated the development to the Bombay Stock Exchange. When contacted, a Ranbaxy executive said, "Such developments are always factored in."

Ranbaxy is the second Indian pharmaceutical company to suffer a setback to its new drug discovery research programme within the last few weeks. Denmark's Novo Nordisk announced last month that it was discontinuing the development of a molecule licensed to it by Dr Reddy's Laboratories.

Under the terms of the deal with Ranbaxy, Schwarz Pharma has the exclusive rights to develop, market and distribute the product in the US, Japan and Europe. Ranbaxy has retained the rights for all other markets.

Ranbaxy was to receive the full payment of $42 million over a period of five to six years. This included $6.3 million upfront, given the successful development of the molecule, followed by royalty on commercialisation.

The agreement also provided for Ranbaxy to manufacture and supply finished formulations of the product to Schwarz Pharma. When the deal was signed between the two companies, RBx 2258 was in second phase of clinical trials in India.

Ranbaxy had initially named the molecule Parvosin, after former Ranbaxy Chairman and Managing Director Parvindar Singh, who died in 1999. When it came to light that another company had registered the brand, Ranbaxy changed it to Pamirosin, Pami being Parvindar Singh's nickname.

Schwarz Pharma develops drugs to treat neurological and urinary problems. Schwarz currently has seven projects in clinical development. Lacosamide to treat epilepsy and neuropathic pain and fesoterodine for the treatment of urinary incontinence are two drugs that are in the last stage of development.

Bitter pill

THE DEAL: Schwarz was to pay $42 mn to Ranbaxy for rights to the US, Japan and Europe markets

THE CATCH: Schwarz says the drug needs further evaluation

PRECEDENT: Novo Nordisk discontinued R&D on a drug licensed to it by Dr Reddy's Lab