Novacea shares double on license deal

NEW YORK (CNNMoney.com) -- Shares of Novacea Inc. surged more than 100 percent Wednesday after the biotech said it entered into an exclusive worldwide license agreement with Schering-Plough Corp. for the development and commercialization of the treatment for prostate cancer, Asentar.

Novacea said it is conducting an international Phase 3 trial, evaluating Asentar in 900 patients with androgen-independent prostate cancer. Asentar is a high-dose oral formulation of calcitriol, a hormone that exerts its effects through the vitamin D receptor.

Shares of Novacea (up $8.72 to $16.78, Charts) jumped 107.3 percent during early session trading on the Nasdaq. Schering-Plough (down $0.33 to $32.38, Charts, Fortune 500) shares fell less than 1 percent on the New York Stock Exchange.

Under the terms of the agreement, Novacea will receive an up front payment of $60 million, including $35 million as reimbursement for past research and development expenses, a license fee of $25 million, and a commitment by Schering-Plough to purchase $12 million of Novacea common stock at a predetermined price within ten days of closing.

The agreement also includes potential pre-commercial milestone payments to Novacea of up to $380 million, and tiered royalties on worldwide sales of Asentar.

Schering-Plough will be responsible for forward development costs in exploring indications for earlier stages of prostate cancer. Novacea will provide medical support to Schering-Plough's commercial operations for Asentar in the United States.