Adolor shares up on development deal

Shares of Adolor Corp. shot up nearly 20 percent today after the tiny Exton company said Pfizer Inc. would pay much of the development and commercialization expenses for two new pain drugs.

Pfizer, the world's largest pharmaceutical company by sales, will pay its small partner $30 million up-front, plus $1.9 million in reimbursement for prior development costs.

The companies are teaming up to further develop two Adolor compounds for the treatment of pain and inflammation.

Adolor could receive up to $232.5 million if certain development and regulatory milestones are met.

Founded in 1993, Adolor has no marketed products. Its lead experimental drug, Entereg, to treat bowel discomfort associated with use of opioid painkillers, has had a series of setbacks in the later stages of testing. In April, Adolor and partner GlaxoSmithKline P.L.C. halted clinical trials of Entereg, also known as alvimopan, to thoroughly analyze safety risks, including heart attacks, noted by researchers in patients taking the drug.

Under the deal announced today, New York-based Pfizer would pick up 60 percent of the products' expenses and revenue in the United States, and Adolor would assume the remaining 40 percent of expenses and revenue.

Outside the United States, Pfizer will finance development activities, and Adolor will receive royalties on Pfizer sales.

Pfizer already sells pain medications, including Celebrex, Lyrica and Neurontin.

The Adolor drug ADL5859 is in mid-stage Phase 2 clinical testing for rheumatoid arthritis and acute post-dental-surgery pain. Adolor expects to begin early-stage Phase 1 clinical testing of the other drug, ADL5747, in the first quarter of next year.

The compounds are known as Delta opioid receptor agonists and have the potential to treat a wide range of inflammatory, neuropathic and acute pain conditions, the companies said.

Pacific Growth Equities L.L.C. analyst Gregory Wade said he had no idea that the company was seeking a partner for its experimental pain drugs. "It's a bit of a surprise to us and most investors," he said, in an interview. "We were optimistic about the potential for these drugs, but we hadn't seen any real data yet."

Wade, who upgraded Adolor's stock to "buy" from "neutral," said Adolor got a "tremendous deal" in being able to keep 40 percent of revenue for the two drugs. "That's very attractive," he said, noting that the company appeared "to be in strong financial shape."

Adolor shares closed up 19.47 percent, or 73 cents, to close at $4.48 in Nasdaq trading. Pfizer shares rose 2.17 percent, or 51 cents, to $23.98 on the New York Stock Exchange.