Nastech shares slump after P&G postpones payment

Shares of Nastech Pharmaceutical fell 14 percent in mid-day trading today to $16.43 after the Bothell biotech company said its partner, Procter & Gamble, did not make a $15 million payment that was scheduled for 2006.

Nastech, which makes nasal spray formulations of drugs, has been collaborating with Procter & Gamble on a nasal spray for osteoporosis, called PTH. The two companies have completed an early-stage clinical study, which measured safety and how the drug is absorbed and cleared from the body.

The company said Procter & Gamble amended their contract after contacting Nastech last month to discuss an additional dose-ranging clinical trial. Nastech said it now expects to get a $5 million payment for beginning the dose-ranging clinical trial, expected in 2007, and a $10 million payment for starting a pivotal clinical trial.

Nastech has received $17 million through the collaboration to date, and stands to receive double-digit, escalating royalty payments if the drug is commercialized.

Needham & Company analyst Mark Monane said in research report that it could mean a 6- to 12-month delay in Nastech's key clinical program, but the more extensive early testing will enhance its odds of success in a pivotal clinical trial.