Merck partnering with tiny Nastech on nasal spray obesity drug

TRENTON, N.J. (AP) _ Could squirting a little medicine up the nose before mealtime be the Holy Grail for people trying to people shed pounds? <br/><br/>Pharmaceutical giant Merck & Co. appears to be betting

Monday, September 27th 2004, 2:54 pm

By: News On 6

TRENTON, N.J. (AP) _ Could squirting a little medicine up the nose before mealtime be the Holy Grail for people trying to people shed pounds?

Pharmaceutical giant Merck & Co. appears to be betting on it, with a multimillion-dollar partnership with a company that last year began small-scale testing of a nasal spray drug designed to make the stomach feel full faster.

Nastech Pharmaceutical Company Inc. of Bothell, Wash., said Monday that its compound, known as PYY for short, could help address not only the nation's obesity epidemic but related health problems such as diabetes, high blood pressure, heart disease, arthritis and cancer.

The other possible applications are part of the company's overall program, ``but they're the dessert, not the entree,'' Dr. Steven C. Quay, Nastech's chairman, president and chief executive officer, told analysts during a conference call.

In an interview with The Associated Press, Quay said that if further testing of the drug goes well, he thinks it could reduce patients' daily calorie intake by 30 percent.

It would translate into an approximate 50-pound weight loss over a year, based on the 2,800 calories a day the average American eats, he said.

Nastech's stock shot up as much as 43 percent and was up 40 percent, or $3.11, at $10.85 in midafternoon trading on the Nasdaq Stock Market. Shares of Whitehouse Station-based Merck rose 68 cents, or 1.5 percent, to $44.78 on the NYSE.

Under the deal between the two companies, Nastech will receive a $5 million upfront cash payment. It will be eligible to receive up to $131 million if it achieves milestones Merck set for continued testing and regulatory approval of the compound, and could receive up to $210 million more for reaching milestones related to eventual sales of the drug. It also would receive an undisclosed level of royalties on sales of the medicine.

PYY, whose full name is Peptide YY 3-36 Nasal Spray, is based on a hormone made by the intestines that travels through the bloodstream to the brain, telling it that the body is full about 30 to 45 minutes after a person starts eating.

Nastech's version, sprayed into the nose, would allow the drug to quickly move through the nasal lining and into the bloodstream, telling the brain the body is full within 20 to 35 minutes of taking a dose.

Depending on how further testing goes, the eventual drug likely would be taken either daily or shortly before each meal to suppress appetite. PYY has undergone preliminary testing on a total of 60 people with favorable results, Nastech said.

Under the development deal, Merck would be in charge of all mid-stage and late-stage testing on people and would bear the costs for that, as well as costs for Nastech to manufacture the compound for those tests.