Akzo, Pfizer End Collaboration On Asenapine

Dutch chemical group Akzo Nobel NV (AKZOY) and U.S. drug maker Pfizer (PFE) Tuesday said they will end joint development of a drug seen as a key factor in the planned stock market listing of Akzo's pharmaceuticals unit.

Asenapine, a new drug candidate for treating schizophrenia and acute mania associated with Bipolar I Disorder, had been expected to become the first billion-dollar blockbuster drug for the Organon BioSciences unit.

But Pfizer - the world's leading drugmaker measured by prescription sales - said "commercial considerations" had caused it to withdraw.

Akzo said it remains fully committed to bringing the new drug to market, and stressed the move will not derail plans to float Organon in early 2007.

Analysts said Pfizer's decision to withdraw was negative for Akzo Nobel and cast doubt over the flotation. Analysts said the success of the new drug remains uncertain, and that without Pfizer, the product's sales potential looks shaky.

"That Pfizer (PFE) is abandoning the partnership deal with Akzo Nobel (AKZOY) on the development of the new drug asenapine is bad news for Akzo Nobel," said Rabo Securities-analyst Mark van der Geest, who rates Akzo Nobel hold.

Akzo Nobel shares at 1102 GMT were down 0.5%, or EUR0.2 lower, at EUR41.84 in a firmer overall market.

Toon Wilderbeek, Organon BioSciences chief executive officer said Organon's plans for an initial public offering remain on course. "This will not affect the IPO - We are still planning to list a minority of the shares on Euronext Amsterdam."

Akzo Nobel aims to list 20% to 30% of Organon so that the group can concentrate on its profitable coatings and chemicals sectors.

Akzo Nobel now must decide whether it needs another partner to commercialize asenapine, Wilderbeek said in a statement. Pfizer said it will return all product rights, intellectual property and data on Asenapine to Organon during 2007.

Under terms of their 2003 co-development pact, Pfizer paid Akzo Nobel $100 million up front in initial fees and was committed to pay up to $270 million in milestone payments if asenapine received regulatory approval in the U.S., Europe and Japan and reached certain sales targets.

Analyst Danny van Doesburg of SNS Securities said that the fact that Akzo Nobel will now develop the drug on its own is bad news because now it will have to pay all costs related to the development of Asenapine.

"If the drug makes it to the market, and the drug starts bringing in revenues, Akzo Nobel will have to pay a total of $350 million to Pfizer," he said.

He said one positive aspect is however that Akzo will consequently not have to share revenues with Pfizer once the drug is on the market. Van Doesburg rates Akzo a hold and has a price target of EUR48.

Akzo Nobel said Organon will now assess whether further clinical trials are needed to convince the U.S. Food and Drug Administration that asenapine is a useful drug. In October phase II trials for asenapine weren't sufficiently conclusive for Akzo Nobel to seek approval for filing the drug to the US Food and Drug Administration.