In Addyi's shadow, Richter walks away from a female libido drug

Hungarian drugmaker Gedeon Richter is no longer developing a treatment for female sexual dysfunction, dissolving a partnership with tiny Palatin Technologies ($PTN) in the middle of late-stage development.

The partners "mutually and amicably" agreed to end a collaboration deal signed in August 2014, Palatin said in a statement, and Richter is returning all rights to bremelanotide, an investigational injection designed to increase women's sexual desire. Richter had agreed to pay as much as €90 million ($101.3 million) for the European rights to the drug, but Palatin booked only €10 million ($11.3 million) of that sum before the termination.

The divorce comes just months after Sprout Pharmaceuticals won FDA approval for the similar Addyi and was summarily acquired by Valeant Pharmaceuticals ($VRX) for $1 billion. Like Addyi, bremelanotide is in development for female hypoactive sexual desire disorder, broadly defined as a lack of libido that leads to personal distress. However, Sprout's drug is a pill to be taken daily, whereas Palatin's is an on-demand, subcutaneous injection.

Richter backed out of the collaboration because "European authorities required such further trials that the company chose not to undertake for risk and cost factors," according to an emailed statement. Richter plans to write off the upfront payments already tendered to Palatin, the company said.

With its partner out the door, the penny-stock Palatin is moving forward with two Phase III studies on bremelanotide involving about 1,100 women. The goal of each is to prove bremelanotide has a statistically significant effect on the number of patient-reported satisfying sexual events and on questionnaire responses compared with placebo, and Palatin expects to have top-line results in the third quarter of 2016.

Now Palatin is "actively engaged in licensing and collaboration discussions with multiple companies" for global and regional rights to bremelanotide, according to its quarterly earnings statement. The company reported $27.3 million in cash and equivalents as of June 30.

- read the statement

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