Merck to pay $475M for pain drugs

Merck & Co., seeking to fill a revenue gap left by the withdrawn painkiller Vioxx, said it will pay as much as $475 million for rights to pain drugs being developed by closely held Neuromed Pharmaceuticals Inc.
euromed will receive an initial fee of $25 million and progress payments that may reach $450 million, Christopher Gallen, chief executive officer of the Conshohocken, Pennsylvania-based company, said Monday in a telephone interview.
The agreement gives Merck Neuromed's most advanced product in development, NMED-160, which is in the second of three stages of human tests needed for U.S. approval. Merck, the fourth- largest U.S. drugmaker, recalled Vioxx in 2004 after its long- term use was tied to a risk of heart attacks and strokes. Vioxx generated $2.5 billion in annual sales before being pulled.
"The market is huge," Gallen said. "It is the single-biggest market for pharma, worth about $28 billion a year."
Whitehouse Station, N.J.-based Merck is responsible for all development costs and activities, the companies said in a statement today. Neuromed, whose research unit is based in Vancouver, British Columbia, will also get research funding for two years as well as royalties from sales of the products.