Merck buys drug to plug Vioxx sales gap

In a move to fill a huge sales gap left when it pulled Vioxx from the market nearly two years ago, Merck & Co. agreed to pay up to $475 million for the rights to experimental pain treatments being developed a privately-held biotech firm. Whitehouse Station, N.J.-based Merck will pay Neuromed Pharmaceuticals Ltd. an initial $25 million in cash for the right to research, develop and sell Neuromed’s experimental pain treatments, including the firm’s lead product -- NMED-160 -- currently in mid-stage clinical trials.
If NMED-160 is successfully developed and launched, Merck would pay $202 million in milestone payments, which could grow to $450 million if the drug is later approved for a second use. Neuromed would also receive research funding for two years and Merck would make additional payments if other compounds were developed under the terms of the agreement. Merck, which lost $2.5 billion when it withdrew its Vioxx pain killer from the market in September 2004 because of heart attack and stroke risks, has been battling numerous product liability lawsuits related to the drug. The drug maker won two cases -- one Federal and one in New Jersey -- but there are still more than 9,600 lawsuits outstanding. Neuromed was founded in 1998 as a spin-off from the University of British Columbia.