Quintiles tapping bond market for $150 million; Merck spirals on Vioxx verdict; Vyteris taps PIPEs

By Ronda Fears

Nashville, Aug. 19 - A Texas verdict against pharmaceutical giant Merck & Co. in the death of a man who took the arthritis painkiller Vioxx, with a jury award of $253.4 million to his widow, sent Merck shares spiraling and reverberated throughout the sector.

Merck vowed to appeal the case, plus fight about 4,200 additional state and federal Vioxx-related lawsuits pending across the United States. Merck voluntarily recalled Vioxx last September in what is thought to be the most expensive drug recall ever.

In heavy trade - the biggest taking place in the last hour of the session - Merck shares plunged $2.35 on the day, or 7.73%, to close at $28.06.

The sweeping nature of the suit bodes poorly for similar lawsuits against makers of other pain medications, particularly any used to treat arthritis. For example, Pfizer Inc. has withdrawn its Bextra drug and has been required to provide additional label precautions for its Celebrex, both used for arthritis.

Pfizer shares on Friday lost 33 cents, or 1.28%, to end at $25.55.

But the news sent several makers of pain medicines higher, even those outside of the non-steroidal anti-inflammatory drug class of Vioxx. Pain Therapeutics Inc., for example, which makes opioids used to treat chronic pain, gained 23 cents, or 3.82%, to close Friday at $6.25. Generic drugmaker Watson Pharmaceuticals Inc. also rose slightly.

Pain drug maker Pozen higher

The impact of the Vioxx verdict on smaller companies that make non-steroidal anti-inflammatory drugs, such as Pozen Inc., was causing some hesitation, one onlooker said.

Pozen shares on Friday edged up 2 cents, or 0.22%, to $8.94.

"It's a lot less clear as to what will happen to some of the smaller companies," said a sellside analyst. "It could be a positive thing for the biotechs, because Big Pharma will be wanting more research to come up with alternative drugs."

Pozen on Wednesday had announced winning a patent for a select group of its drug candidates being developed for the management of pain and inflammation associated with conditions such as osteoarthritis. Its drugs specifically address stomach problems associated with taking pain medications, however.

"In the wake of cardiovascular safety concerns regarding the COX-2 selective NSAIDs, physicians are now recommending use of traditional non-selective NSAIDs with acid-suppressive co-therapy to prevent gastrointestinal complications," Pozen said in a prepared statement. "Pozen's PN drug candidates are being designed to provide this type of therapy with the added benefit of ensuring adherence with the use of the gastroprotective PPI with every dose of NSAID."

Pozen has development and commercialization alliances with GlaxoSmithKline plc, a unit of Valeant Pharmaceuticals International and Nycomed Danmark ApS.

Quintiles unit to sell bonds

Quintiles Transnational Corp. announced that its newly formed subsidiary, Duloxetine Royalty Sub, intends to issue $150 million of Duloxetine secured notes, plus as much as $50 million to $150 million of additional notes, depending on market and other conditions.

Quintiles expects to use the net proceeds it will receive from Royalty Sub to repay in full all outstanding term loans, if any, under Quintiles' existing senior secured credit facility, for any other purposes permitted under Quintiles' other debt arrangements and for general corporate purposes.

Payments of principal and interest on the notes will be made solely out of royalty and other payments to be made under an existing agreement between Quintiles and Eli Lilly & Co. based on U.S. sales of the depression and diabetes drug Cymbalta.

Vyteris, Astralis tap PIPEs

Vyteris Holdings Inc. said it plans to raise $10 million from a private placement of 8% convertible debentures with a three-year maturity.

The issue will be convertible into a total of 4,166,667 common shares at $2.40 each. Investors will also receive warrants for 2,083,333 shares, exercisable at $2.88 each, a 20% premium to the conversion price, for seven years. The investors have the option to buy up to $5 million in additional principal of the debentures.

Proceeds, together with a $1 million convertible debenture the company sold earlier this month, will be used for general corporate purposes. Fairlawn, N.J.-based Vyteris develops non-invasive drug delivery products.

Vyteris shares did not move Friday, ending the day at $2.40 with no trades.

Astralis Ltd. closed a private placement of stock for $2 million, issuing 18.2 million shares at $0.11 each to Blue Cedar Ltd. Blue Cedar also received warrants, but the details of those warrants could not be determined by press time Friday.

The company said a second round of financing similar to this one is expected to close in September.

Proceeds from the deal will be used to support the return of the company's Psoraxine product for the treatment of psoriasis. Based in Fairfield, N.J., Astralis is focused on dermatological and auto-immune disorders.

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