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King and Palatin form strategic alliance to jointly develop and commercialize PT-141 as an innovative treatment for sexual dysfunction.

King Pharmaceuticals, Inc. (Bristol, TN) and Palatin Technologies, Inc. (Cranbury, NJ) announced that they have entered into a strategic alliance to jointly develop and, on obtaining necessary regulatory approvals, commercialize Palatin's PT-141 for the treatment of male and female sexual dysfunction.

PT-141 is the first compound in a new drug class called melanocortin receptor agonists under development to treat sexual dysfunction. This new chemical entity is being evaluated in phase II clinical trials studying the efficacy and safety profile of varying doses of this novel compound in men experiencing erectile dysfunction ("ED") and women experiencing female sexual dysfunction ("FSD"). The mechanism of action of PT-141 may offer important benefits over currently available products for the treatment of ED because it acts on the pathway that controls sexual function without acting directly on the vascular system. Clinical data indicates that PT-141 may be effective in treating a broad range of patients suffering from ED. The nasal formulation of PT-141 currently under development is as convenient as oral treatments, is more patient-friendly than invasive treatments for ED, such as injections and trans-urethral pellets, and appears to result in a rapid onset of action.

Although the current ED market is primarily served by PDE-5 inhibitors which target the vascular system, a substantial unmet medical need for alternative sexual dysfunction therapies exists. Many patients are contraindicated for, or non-responsive to, PDE-5 inhibitors. For example, unlike PDE-5 inhibitors which are contraindicated in patients taking nitrates, primarily for the treatment of cardiovascular disease, current clinical data indicates that PT-141 should not have any drug interactions with nitrates. Current literature indicates that about one half of all patients who receive an initial prescription for a PDE-5 inhibitor do not renew the prescription due chiefly to adverse side effects, drug interaction issues, and/or the lack of an acceptable level of responsiveness.

The companies believe that PT-141 will benefit from the success King has achieved in marketing Altace (ramipril), the leading branded ACE (angiotensin converting enzyme) inhibitor according to IMS America prescription data, to a similar male patient population with its experienced sales force.

In connection with the transaction, King and Palatin entered into a collaborative agreement for the purpose of developing and commercializing PT-141. Pursuant to the terms of the agreement, Palatin has granted King a co-exclusive license with Palatin to PT-141 in North America and an exclusive right to collaborate in the licensing or sublicensing of PT-141 with Palatin outside North America. Palatin has the option to create a urology specialty sales force to co-promote the product in the United States, upon commercialization. This transaction is expected to close before the end of this quarter.

King will pay Palatin $20.0 million at closing, $5.0 million of which will consist of an equity investment in Palatin. In addition, upon achieving certain milestones, King could pay Palatin up to $100.0 million for achieving certain ED and FSD development and regulatory approval targets, a portion of which could consist of additional equity investments in Palatin, at King's option. After regulatory approval and commercialization of PT-141, King may also pay potential one-time milestone payments to Palatin totaling up to $130.0 million upon achieving specified annual North American net sales thresholds.

Under the terms of the agreement, King and Palatin will share all collaboration development and marketing costs and all collaboration net profits derived from net sales of PT-141 in North America based on an agreed percentage. King and Palatin will seek a partner for PT-141 for territories outside of North America and will jointly share in collaboration revenues generated from those territories.

Brian A. Markison, King's President and Chief Executive Officer, stated, "We are very excited to announce our collaborative agreement with Palatin to jointly develop and commercialize PT-141. This transaction exemplifies our strategy to in-license promising novel branded prescription pharmaceutical products in development that have considerable market potential. PT-141 provides an excellent strategic fit, complementing our established primary care and cardiovascular franchises. Additionally, when considering our pending merger with Mylan Laboratories, Inc. and the potential strength of the combined core competencies of King and Mylan, our ability to optimize the commercial potential of PT-141 should be substantial. Moreover, with a composition of matter patent that extends through 2020, PT-141 has the potential to significantly enhance our company's long-term shareholder value."

Mr. Markison explained, "PT-141's fast-acting nasal-spray delivery method and potentially superior drug interaction and safety profile, combined with a unique mechanism of action that targets the central nervous system, highly differentiates the product from currently marketed ED therapies. The vast size of the sexual dysfunction market is well recognized and we believe PT-141 has the promise to meet the substantial unmet needs of patients who are not able to successfully treat their ED with currently available products."

Carl Spana, Ph.D., President and Chief Executive Officer for Palatin, commented, "This strategic alliance with King Pharmaceuticals is a validation of our company's outstanding accomplishments in research and development and represents a major milestone in value creation for our stockholders. In particular, this opportunity to jointly develop and commercialize PT-141 with King Pharmaceuticals will serve as a foundation for the continued development of Palatin as an emerging biopharmaceutical company."

Dr. Spana continued, "This is a smart alliance that leverages each company's strengths. By combining Palatin's first-in-class ED product and melanocortin research and development expertise with King's demonstrated regulatory and manufacturing capabilities, plus its well-established primary care-physician and cardiovascular-specialist sales force, we believe the companies can truly maximize PT-141's potential."

ED is defined as the consistent inability to attain and maintain an erection sufficient for sexual intercourse. The condition is correlated with increasing age, cardiovascular disease, hypertension, diabetes, hyperlipidemia and smoking. In addition, certain prescription drugs and psychogenic issues may contribute to ED. It is estimated that one half of all men over the age of 40 suffer from ED. About 150 million men worldwide and 30 million American men suffer from ED.

FSD consists of four components, including hypoactive sexual desire disorder, female sexual arousal disorder, dyspareunia or painful intercourse and anorgasmia. A February 10, 1999 study published in the Journal of the American Medical Association, JAMA, titled, "Sexual Dysfunction in the United States: Prevalence and Predictors," states that some form of FSD is prevalent in approximately 43 percent of the female population.

King is a vertically integrated branded pharmaceutical company. King seeks to capitalize on opportunities in the pharmaceutical industry through the development, including through in-licensing arrangements and acquisitions, of novel branded prescription pharmaceutical products in attractive markets and the strategic acquisition of branded products that can benefit from focused promotion and marketing and product life-cycle management. As previously reported, Mylan Laboratories, Inc. and King have signed a definitive agreement under which Mylan will acquire King in a stock-for-stock transaction, creating a leading diversified specialty pharmaceutical company.

Palatin is a biopharmaceutical company focused on discovering and developing melanocortin-based therapeutics. NeutroSpec, the company's proprietary radiolabeled monoclonal antibody product for imaging and diagnosing infections, has been approved by the FDA as an imaging agent for the diagnosis of equivocal appendicitis. NeutroSpec is marketed and distributed by Palatin's strategic collaboration partner, Mallinckrodt Imaging, a business unit of Tyco Healthcare. The company is currently conducting clinical trials with its lead drug PT-141, an melanocortin receptor agonist, for the treatment of male and female sexual dysfunction. Palatin's patented drug discovery platform, MIDASTM, streamlines the drug design process with an efficient approach to identify lead compounds from protein targets for drugs.

Palatin Technologies, Inc,

+1-609-495-2200

www.palatin.com

King Pharmaceuticals, Inc.

www.kingpharm.com
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Comment:King and Palatin form strategic alliance to jointly develop and commercialize PT-141 as an innovative treatment for sexual dysfunction.
Publication:BIOTECH Patent News
Geographic Code:1USA
Date:Aug 1, 2004
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