8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

May 6, 2010 (April 30, 2010)

Date of Report (date of earliest event reported)

NEUROGESX, INC.

(Exact name of Registrant as specified in its charter)

Delaware	001-33438	94-3307935
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

2215 Bridgepointe Parkway, Suite 200, San Mateo, California 94404

(Address of principal executive offices)

(650) 358-3300

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On April 30, 2010, NeurogesX, Inc., a Delaware corporation (“NGSX”), entered into a Financing Agreement (the “Financing Agreement”) with Cowen Healthcare Royalty Partners, L.P., a limited partnership organized under the laws of the State of Delaware (“Cowen Royalty”). Under the terms of the Financing Agreement, NGSX is expected to borrow, subject to standard closing conditions, $40 million from Cowen Royalty (the “Borrowed Amount”) and NGSX has agreed to repay such Borrowed Amount together with a return to Cowen Royalty, as described below, out of royalty, milestone, option and certain other payments (collectively, “Revenue Interest”) that NGSX may receive under the Distribution, Marketing and License Agreement, dated as of June 19, 2009 (the “Astellas Agreement”), between NGSX and Astellas Pharma Europe Ltd. (“Astellas”), as a result of Astellas commercializing NGSX’s product, Qutenza, in the territory subject to the Astellas Agreement (comprised of the European Economic Area, including all 27 EU-member states, Iceland, Norway and Liechtenstein; Switzerland, and certain countries in Eastern Europe, the Middle East and Africa, collectively referred to as the “Licensed Territory”), including payments that Astellas may make to NGSX to maintain its option to commercialize NGSX’s product candidate NGX-1998 in the Licensed Territory.

Under the Financing Agreement, NGSX is obligated to pay to Cowen Royalty:

• All of the Revenue Interest payments due to NGSX under the Astellas Agreement, until Cowen Royalty has received $90 million of Revenue Interest payments; and

• 5% of the Revenue Interest payments due to NGSX under the Astellas Agreement for Revenue Interests received by Cowen Royalty over $90 million and until Cowen Royalty has received $106 million of Revenue Interest payments.

The obligation of NGSX to pay these Revenue Interests during the term of the Financing Agreement is secured under a security agreement by rights that NGSX has to Revenue Interests under the Astellas Agreement, and by intellectual property and other rights of NGSX to the extent necessary or used to commercialize products covered by the Astellas Agreement in the Licensed Territory.

NGSX also has the option to pay a prepayment amount to terminate the Financing Agreement at NGSX’s election at any time or in connection with a change of control of NGSX. Such amount is set at a base amount of $76 million (or $68 million if it is being exercised in connection with a change of control), or, if higher, an amount that generates a specified internal rate of return on the Borrowed Amount as of the date of prepayment, in each case reduced by the Revenue Interest payments received by Cowen Royalty up to the date of prepayment.

Unless terminated earlier pursuant to a prepayment, the Financing Agreement also terminates on the earlier of:

• The time when Cowen Royalty has received at least $106 million of Revenue Interest payments; or

• The maturity date, which is the latest to occur of 10 years following the first commercial sale of Qutenza in the Licensed Territory or the last to expire of any patents or regulatory exclusivity covering the products commercialized under the Astellas Agreement in the Licensed Territory.

If Cowen Royalty has not received Revenue Interest payments totaling at least $40 million by the maturity date, NGSX will be obligated to pay to Cowen Royalty the difference between such amount and the Revenue Interests paid to Cowen Royalty under the Financing Agreement up to such date.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K regarding the Financing Agreement is hereby incorporated by reference.

Item 8.01. Other Events.

On April 30, 2010, NeurogesX, Inc. issued a press release entitled “NeurogesX Enters $40 Million Royalty Financing Agreement with Cowen Healthcare Royalty Partners.”

A copy of the press release, dated April 30, 2010, is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The contents of the press release are deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is filed as part of this Form 8-K.

Exhibit No.	Description
99.1	Press Release entitled “NeurogesX Enters $40 Million Royalty Financing Agreement with Cowen Healthcare Royalty Partners.”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NEUROGESX, INC.
Date: May 6, 2010	By:	/s/    STEPHEN F. GHIGLIERI
		Stephen F. Ghiglieri
		Executive Vice President, Chief Operating Officer and Chief Financial Officer

EX-99.1

Exhibit 99.1

NeurogesX, Inc.	The Ruth Group
Stephen Ghiglieri	Sara Pellegrino (investors)
Executive Vice President, COO	(646) 536-7002
and CFO	spellegrino@theruthgroup.com
(650) 358-3310
	Jason Rando (media)
	(646) 536-7025
	jrando@theruthgroup.com

NeurogesX Enters $40 Million Royalty Financing Agreement

with Cowen Healthcare Royalty Partners

San Mateo, Calif., (April 30, 2010) – NeurogesX, Inc. (NASDAQ: NGSX), a biopharmaceutical company focused on developing and commercializing novel pain management therapies, announced today that it has entered into a $40 million royalty financing agreement with Cowen Healthcare Royalty Partners, L.P. (“Cowen Royalty”). The agreement creates a debt obligation that will be repaid through and secured by royalties and future milestone payments payable to NeurogesX under its Distribution, Marketing and License Agreement (the Astellas Agreement) with Astellas Pharma Europe Ltd. (Astellas) for NeurogesX’ Qutenza^® (capsaicin) 8% patch, a dermal delivery system containing prescription strength capsaicin.

Qutenza is marketed in the U.S. by NeurogesX for patients with postherpetic neuralgia (PHN). NeurogesX retains all economics resulting from the U.S. market, and Cowen Royalty is not entitled to any payment on U.S. sales.

Under the terms of the royalty financing agreement, Cowen Royalty will be entitled to receive up to 100% of all royalties and sales milestones, as well as certain other payments due to NeurogesX under the Astellas Agreement. After the debt obligation has been fulfilled, payments under the Astellas Agreement will revert to NeurogesX. At any point NeurogesX can retire the Cowen financing and regain access to 100% of its European royalty interest in Qutenza^®.

The Astellas Agreement provides for royalties on net sales of Qutenza in the Astellas Territory: the European Economic Area, including all 27 EU-member states, Iceland, Norway, and Liechtenstein; Switzerland; and certain countries in Eastern Europe, the Middle East and Africa. The Astellas Agreement also provides for total sales milestones and license option payments of up to € 70 million related to Qutenza and the company’s product candidate, NGX-1998.

Stephen Ghiglieri, Chief Operating Officer and Chief Financial Officer commented, “We are very pleased to announce this royalty financing with Cowen Healthcare Royalty Partners. We believe this structure provides us with capital to continue executing our operating plan through at least 2011. Importantly, this royalty financing agreement only encumbers revenues generated from the territory currently licensed to Astellas, and does not involve revenues arising from our U.S. operations or other world markets. This desirable feature allows for future financing flexibility as we move forward.”

Gregory B. Brown, M.D., Co-Founder and Managing Director of Cowen Royalty, stated, “Qutenza is a unique locally acting therapy, offering a significant benefit for patients. We believe that Astellas is well positioned to capitalize on the European neuropathic pain market. Our team consistently seeks out differentiated products with strong marketing partners, and we believe this transaction with NeurogesX affords a significant and attractive market opportunity for our investors, while providing a non-dilutive source of financing to maximize both the Qutenza opportunity and the potential value creation for NeurogesX shareholders.”

Additional details on the loan agreement can be found in the Current Report on Form 8-K that will be filed by NeurogesX with the Securities and Exchange Commission on or about the date hereof.

About NeurogesX, Inc.

NeurogesX, Inc. (Nasdaq: NGSX) is a San Francisco Bay Area-based biopharmaceutical company focused on developing and commercializing novel pain management therapies. NeurogesX was founded on the concept that use of prescription-strength capsaicin could help manage the pain associated with neuropathic pain conditions. Since its inception, NeurogesX has leveraged its passion to help people with pain to efficiently develop this concept and is now poised to bring its lead product to patients and physicians. In addition, we continue to apply our knowledge and expertise in the development of other novel treatments for pain.

The Company’s lead product, Qutenza^® (capsaicin) 8% patch, is a localized dermal delivery system containing a prescription strength of capsaicin that is currently approved in the United States and the European Union. Qutenza is now available in the United States for patients with postherpetic neuralgia (PHN). In Europe, Qutenza will be marketed by Astellas Pharma Europe Ltd. (Astellas), the European subsidiary of Tokyo-based Astellas Pharma Inc.

The Company’s most advanced product candidate, NGX-1998, is a topically applied liquid formulation containing a high concentration of capsaicin designed to treat pain associated with neuropathic pain conditions such as PHN. NGX-1998 has completed three Phase 1 studies.

The Company’s early-stage product pipeline includes pre-clinical compounds which are prodrugs of acetaminophen and various opioids. The Company has evaluated these compounds in vitro and in vivo.

About Cowen Healthcare Royalty Partners

Cowen Healthcare Royalty Partners is a global healthcare private equity firm, with more than $900 million under management, that invests principally in commercial-stage biopharmaceutical and medical device companies and products through the purchase of royalty interests. The investment team has over 100 years of healthcare related experience including principal investing, structured finance, healthcare industry senior management, Wall Street research and consulting, and scientific and clinical experience. For more information, visit www.cowenroyalty.com.

Safe Harbor Statement

This press release contains forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995 (the “Act”). NeurogesX disclaims any intent or obligation to update these forward-looking statements, and claims the protection of the Safe Harbor for forward-looking statements contained in the Act. Examples of such statements include but are not limited to: statements about the ability of NeurogesX to fund its operations through at least 2011, the ability of Astellas to capitalize on the European pain market with Qutenza, the utility and potential benefits of the royalty financing arrangement to NeurogesX and its shareholders, and the benefits of Qutenza. Such statements are based on management’s current expectations, but actual results may differ materially due to various risks and uncertainties, including, but not limited to: difficulties or delays in the commercialization of Qutenza, including with respect to manufacture and supply of Qutenza; Qutenza and NeurogesX’s other product candidates may have unexpected adverse side effects; physician or patient reluctance to use Qutenza; and other difficulties or delays in the launch of Qutenza in the United States and, by Astellas in the European Union. For further information regarding these and other risks related to NeurogesX’s business, investors should consult NeurogesX’s filings with the Securities and Exchange Commission.