Posted on March - 29 - 2010
GTx, a Memphis-based drug developer, and Merck cut ties
GTx Inc. and Merck & Co. Inc. are cutting ties in a clean break that leaves the Memphis-based drug developer with full rights to certain compounds but with a $55 million revenue shortfall in its next quarter.
The two companies signed a collaboration agreement in November 2007 to develop and commercialize a class of drugs called selective androgen receptor modulators that could treat age-related muscle loss and other musculoskeletal conditions.
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The agreement included an upfront payment of $40 million, $15 million in research reimbursements to be paid over three years, a $30 million equity investment by Merck in GTx common stock and the possibility for $422 million in future milestone payments for GTx.
In a recent SEC filing, Merck said it could terminate its agreement with 90 days’ notice any time after Dec. 18, 2009. GTx CEO Dr. Mitchell Steiner said he was surprised to see the statement and called the dissolution agreement a “difficult decision.”
“We were discussing with Merck the next steps, and based on what we think is the best way to go forth, after such deliberation, we decided the best alternative was to terminate our collaboration with Merck,” Steiner said in a Monday morning conference call. “This course of action was the best way to maximize the value of the SARM program.”
In the end, GTx gets all the rights and data to the SARM program with no royalty payments owed to Merck. The SARM program includes Ostarine, a drug designed to increase lean body mass and improve muscle strength in some patients.
GTx is readying the compound for a late-stage clinical trial, the last step before the FDA allows a drug to go to market. Steiner called the compound a “large commercial opportunity” for GTx and one he hoped will meet the near-term objective of generating revenue to transition GTx to a “self-sustaining company.”
GTx chief operating officer Marc Hanover said the company will total $55 million in expected payments from Merck that it will not receive in its next quarter. Hanover said he could not give an accurate guidance picture Monday until company officials examine numerous programs.
GTx reported a net loss of $46.3 million for 2009 for a $1.27 net loss per share. Hanover predicted net losses will be “significantly less than that in 2010.”
“The thought is that obviously we’ve taken significant actions to date,” Hanover said. “In December, as painful as it was, we had to reduce our work force and certain cost structures throughout the company to eliminate costs and expenses.”
– Toby Sells: 529-2742
GTx Inc.
Toremifene, 80 milligrams: Has found a “path forward” on this dose after FDA rejection last year
Toremifene, 20 milligrams: Clinical trial results on this dose are expected this summer, which could lead to marketable drug
In pipeline: Beginning new trial for first-line treatment of advanced prostate cancer
Phone: (901) 523-9700
Web site: gtxinc.com
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