Pain Therapeutics Inc. (NASDAQ: PTIE) shares dropped significantly in Monday’s trading on news that Pfizer Inc. (NYSE: PFE) had discontinued its agreement to develop and commercialize Pain’s Remoxy extended release treatment.

Pain will regain the full development and commercial rights to Remoxy, which it had previously licensed from Durect Corp. (NASDAQ: DRRX). The original licensing agreement took place in 2002.

Under this agreement, Durect was reimbursed for formulation and if certain developmental milestones were achieved. Also if the drug was commercialized, Durect would receive royalties of between 6% and 11.5% of net sales.

Remoxy is an investigational extended-release oral formulation of oxycodone intended to treat pain severe enough to require daily long-term opioid treatment.

The press release stated:

Pfizer further announced that it has concluded an internal review of the top-line results of five recently completed clinical studies required to address the Complete Response Letter received in June 2011 from the U.S. Food and Drug Administration (FDA), that Pfizer and Pain Therapeutics will work together for an orderly transition of REMOXY to Pain Therapeutics, and that Pfizer will continue ongoing activities under the agreement for the next six months until the scheduled termination date.

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President and CEO of Durect, James Brown, said:

We are surprised by Pfizer’s decision given the late stage of this program, and continue to believe that REMOXY could play an important role in serving the needs of chronic pain patients while potentially reducing the misuse and abuse of oxycodone.

Shares of Pain had dropped over 53% to $1.95 and shares of Durect plunged over 47% to $0.73 in the noon hour of trading Monday. However Pfizer’s stock did not see any significant change and remains around the $29 price level.

Pain’s stock has a consensus analyst price target of $8.00 and a 52-week trading range of $1.61 to $6.22. The mean price target for Durect is $2.50, and shares have traded in a range of $0.68 to $2.69 over the past year.

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