P&G backs out of drug development deal with ARYx Therapeutics

Singapore, July 7, 2008: Fremont, California-based biopharmaceuticals company ARYx Therapeutics has said that American major Procter & Gamble Pharmaceuticals has backed out of a collaboration agreement between the companies.

P&G utilized a one-time thirty-day cancellation option linked to the completion of a Thorough QT (TQT) study to end the collaboration agreement between the companies covering the late-stage development and commercialization of ATI-7505, a prokinetic agent in Phase 2 clinical trials for chronic constipation and functional dyspepsia.

"We are surprised P&G would cancel our collaboration after receiving the results of the TQT study given that we achieved a successful result at the study's primary endpoint, and are disappointed in their decision to return the rights to ATI-7505 to us. We have been informed by P&G their decision is based on their view of certain commercial and technical criteria, and that the program no longer fits into their future plans. This decision by P&G does not in any way diminish our confidence in ATI-7505, and we believe the results from the TQT study, along with continued positive clinical and preclinical data, will allow moving ATI-7505 into late-stage development once the program is in the hands of a new partner," said Dr. Paul Goddard, Chief Executive Officer and Chairman of ARYx Therapeutics.

As part of thed eal, according to a company release, the results from the just-completed TQT study qualified ARYx for the Tier 1, or highest, milestone payment from P&G. The collaboration agreement provides P&G a thirty-day option period from the lock of the database for the TQT study to cancel the collaboration or agree to pay ARYx the milestone payment provided for under our collaboration agreement. P&G has exercised their option to cancel the agreement effective immediately. However, P&G has also been very supportive in agreeing to a transition plan for handing the program back to ARYx to allow it to pursue an optimal partnering package.

As part of the transition plan, the on-going phase 2 studies in chronic constipation and functional dyspepsia will be terminated in an orderly method. No new patients will be enrolled and those currently on therapy will be withdrawn from the studies over the coming weeks, the release added.

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