shares doubled on news that the biotech company had entered into an exclusive agreement with
( SGP) for the development and commercialization of prostate cancer treatment Asentar.
Novacea is in the midst of a phase III trial evaluating the oral treatment, a high-dose formulation of a hormone that's delivered through the vitamin D receptor.
In the agreement, Schering-Plough will give Novacea an upfront payment of $60 million, including $35 million as reimbursement for past research and development expenses and a license fee of $25 million. Novacea may also get precommercial milestone payments of up to $380 million, and tiered royalties on worldwide sales of Asentar.
Additionally, Schering-Plough has committed to purchase $12 million of Novacea's common stock at a predetermined price within 10 days of the deal's closing. In a regulatory filing, Novacea said it plans to issue 1.5 million shares of its common stock at a purchase price of roughly $8.05 per share.
"The partnership leverages Novacea's existing capabilities with Schering-Plough's experienced development, regulatory and commercial teams and will provide Novacea with an opportunity to support the commercialization of Asentar in the United States," said John Walker, Novacea's chairman and interim chief executive officer. "Additionally, this agreement provides us with substantial funding for the continued development of our operations."
Novacea's stock skyrocketed $8.60, or 107%, to $16.66 in heavy trading on the news. Schering-Plough was down 31 cents, or 1%, to $32.40.