H Lundbeck A/S and Merck & Co., Inc. announced an agreement, through wholly-owned affiliates, for the exclusive US development and commercialization of gaboxadol, a compound currently in Phase III development for the treatment of sleep disorders.

Under the terms of the agreement, Lundbeck will receive an initial payment of $70 million and up to $200 million in additional milestone payments. Merck and Lundbeck will jointly complete the ongoing trial, with Merck funding the majority of the remaining development activities. The parties anticipate that Merck will file an NDA with the US FDA between late 2006 and mid-2007. Following FDA approval, the companies plan to co-promote gaboxadol in the US. Lundbeck will receive a share of gaboxadol sales in the United States.

"We are delighted to have reached an agreement with one of the strongest global players in central nervous system research," said Dr Peter Kim, president of Merck Research Laboratories. "In the past 50 years, Lundbeck has demonstrated an impressive track record of developing new and innovative compounds for CNS disorders.

"We believe gaboxadol can be an important new option for the treatment of sleep disorders, which negatively impact the lives of millions of Americans. Gaboxadol has an entirely novel mechanism of action, which we believe could have substantial benefits over existing therapies. Merck is committed to the development of treatments for unmet medical needs through pursuit of novel therapies, such as gaboxadol," Dr Kim added.

According to the National Institutes of Health (NIH), more than 40 million Americans experience chronic, long-term sleep disorders each year, while 20 million more experience occasional sleep problems. Sleep disorders and the resulting sleep deprivation interfere with work, driving and social activities. Sleep disorders are responsible for an estimated $16 billion in medical costs each year, with additional costs attributed to lost work and other factors.

Under the terms of the agreement, Lundbeck will co-promote gaboxadol to psychiatrists and other specialists who treat sleep disorders. In order to facilitate Lundbeck's CNS-focused commercial entry into the United States, the agreement includes an option for Lundbeck to co-promote a Merck product prior to the launch of gaboxadol.

"The combination of Merck's strong development and marketing capabilities and its highly sophisticated sales force makes us confident that we have found the best partner for gaboxadol," said Dr Claus Braestrup, president and CEO of Lundbeck. "This agreement also provides a unique opportunity for Lundbeck to build a commercial presence in the United States, with the support of a strong partner."