Finland’s Biotie Therapies has pulled out of its planned merger with Newron Pharmaceuticals following a decision by Merck to return the full global rights to investigational Parkinson’s disease drug safinamide to the Italian firm.

The firms planned to merge a month ago but Biotie says that the return of rights from Merck "constitutes a material adverse effect", giving the company the right to terminate the merger.

Biotie said in a statement on Friday: "After reviewing this development in relation to safinamide, the Board of Directors of Biotie has notified Newron of its decision to exercise its right to terminate the Merger Plan and combination agreement, without further obligations from Biotie. As a result, Biotie is entitled to a break-up fee of EUR1.5 million from Newron."

Safinamide, which is currently under going Phase III trials "has a more limited market potential than originally anticipated," according to Merck.

Newron Pharmaceuticals took the news of the break up well, despite its shares taking a tumble this morning, reports Pharma Times.

Company CEO Luca Benatti stated: "Regaining the global commercial rights to safinamide provides Newron the opportunity to pursue all strategic options. We estimate that the registration dossier will be ready for submission to health authorities in key world markets by the end of 2012."

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