May 3, 2010 (FinancialWire) — NeurogesX, Inc. (NASDAQ: NGSX), a biopharmaceutical company focused on developing and commercializing novel pain management therapies, said that that it has entered into a $40 million royalty financing agreement with Cowen Healthcare Royalty Partners, L.P.

According to NeurogesX, the agreement creates a debt obligation that will be repaid through and secured by royalties and future milestone payments payable to NeurogesX under a distribution,  marketing and license agreement it ahs with Astellas Pharma Europe Ltd. for NeurogesX' Qutenza 8% patch, a dermal delivery system containing prescription strength capsaicin.

Qutenza is marketed in the U.S. by NeurogesX for patients with postherpetic neuralgia.

NeurogesX said it retains all economics resulting from the U.S. market, and Cowen Royalty is not entitled to any payment on U.S. sales.

Under the terms of the royalty financing agreement, Cowen Royalty will be entitled to receive up to 100% of all royalties and sales milestones, as well as certain other payments due to NeurogesX under the Astellas agreement.

After the debt obligation has been fulfilled, payments under the Astellas agreement will revert to NeurogesX. At any point NeurogesX can retire the Cowen financing and regain access to 100% of its European royalty interest in Qutenza.  

Stephen Ghiglieri, NeurogesX’s COO and CFO, said, “We believe this structure provides us with capital to continue executing our operating plan through at least 2011.”

He added that the royalty financing agreement only encumbers revenues generated from the territory currently licensed to Astellas, and does not involve revenues arising from our U.S. operations or other world markets. This feature allows for future financing flexibility, according to Ghiglieri.

California-based NeurogesX was founded on the concept that use of prescription-strength capsaicin could help manage the pain associated with neuropathic pain conditions. The company's lead product, Qutenza 8% patch, is a localized dermal delivery system containing a prescription strength of capsaicin that is currently approved in the United States and the European Union.

Qutenza is now available in the United States for patients with postherpetic neuralgia. In Europe, Qutenza will be marketed by Astellas Pharma Europe Ltd., the European subsidiary of Tokyo-based Astellas Pharma Inc.

The company's most advanced product candidate, NGX-1998, is a topically applied liquid formulation containing a high concentration of capsaicin designed to treat pain associated with neuropathic pain conditions such as PHN. NGX-1998 has completed three Phase 1 studies.

NeurogesX’s early-stage product pipeline includes pre-clinical compounds which are prodrugs of acetaminophen and various opioids.

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