Vernalis may end marketing deal with Elan after sales setback

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Vernalis, the drug developer formerly known as British Biotech, is considering axing Elan as the marketing partner for its main drug, a migraine treatment called Frova.

Vernalis' management has requested talks with Elan, the cash-strapped Irish drugmaker, to discuss the future of the marketing deal, which could be amended, extended or scrapped. The move comes after disappointing early sales of Frova in the US, and ahead of new trials which Vernalis hopes will show the drug can be prescribed to prevent menstrual migraine.

Sales of Frova, launched last year in the US, have been stymied by intense competition in the crowded market for migraine drugs known as triptans.

Pfizer, the world's largest pharmaceutical company, launched a rival product at the start of this year. Elan has sub-contracted most marketing activity in the US to UCB, which is using about 600 sales reps compared with Pfizer's 6,000.

Elan is due to pay Vernalis a £10m milestone payment when US Frova sales hit $100m, but Vernalis is not now expecting this until 2005. The drug accounts for less than 3 per cent of new prescriptions compared with Pfizer's 6 per cent. However, Vernalis says it has a higher market share among migraine specialists, whose prescribing habits often filter down to general practitioners.

Vernalis is planning to open talks with Elan to improve the prospects for Frova. Winding up the partnership is one option, with Vernalis then looking for a new marketing deal. Another would be the renegotiation of terms to allow Vernalis to put extra investment into trials of new formulations of the drug. Analysts said Elan - which is struggling under a mountain of debt and has been forced to sell off assets to survive - is unlikely to provide the necessary investment.

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