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Roche Holding AG has agreed to fund the development of Evotec AG's pipeline drug for treatment-resistant depression, EVT101, and a next-generation version of the product, in a deal valued at more than $300 million.

Hamburg, Germany-based Evotec previously positioned EVT101 as a potential treatment for Alzheimer's disease and for neuropathic pain, although it has not pursued either opportunity to date.

"We have no firm decisions to go into any other indications at this point in time," Evotec spokeswoman Anne Hennecke told BioWorld Today.

The depression indication came as a surprise to analyst Michael Aitkenhead of Piper Jaffray. Still, he said, "Treatment-resistant depression sounds like a good indication for them to go for."

He pointed to studies of another drug in the same class as EVT-101, Pfizer Inc.'s anesthetic ketamine (CP101,606), which showed antidepressant effects with faster onset and higher response and remission rates.

"Based on these papers, treatment-resistant depression appears to be a good indication to target with EVT101," Aitkenhead told BioWorld Today.

Licensed from Roche in 2003, the compound is an anesthetic that is designed to inhibit the action of the N-methyl d-aspartate receptor. It is about to undergo a Phase II trial in patients with treatment-resistant depression - that is, in those who have not responded to at least two antidepressants.

Evotec is responsible for conducting the trial, although Basel, Switzerland-based Roche will fund it.

"We expect the study to start in the second half of this year and to take approximately 18 months," Hennecke said. The agreement also includes funding for a Phase I trial of a backup compound, EVT103, although the scope of the agreement is limited to a single compound.

Evotec in-licensed EVT101 from Roche in 2003 and completed its preclinical and early clinical development.

Under the new agreement, Evotec is receiving an up-front payment of $10 million, which grants Roche an option to buy back the EVT100 series of compounds.

Evotec would gain an additional $65 million should Roche decide to exercise that option. And it would receive around $225 million in development and commercial milestones should the compound - or a successor - reach the market.

In the event that Roche decides not to exercise its buy-back option, Evotec will be granted exclusive worldwide rights to the entire EVT 100 family of compounds. Evotec then will get rights to all indications under revised terms from the original contract signed between Evotec and Roche at the end of 2003.

No decisions on the Alzheimer's and neuropathic pain indications will be made until Evotec CEO Werner Lanthaler, formerly chief financial officer of Vienna, Austria-based vaccine developer Intercell AG, has completed his review of the company's operations. Further information on his strategy is likely to be forthcoming when the company reports its 2008 annual results on March 27.

"In depression, in general, it would be a completely new mechanism," Evotec's Hennecke said. It could, potentially, be dosed at higher levels than nonselective NMDA receptor antagonists, such as memantine, marketed in the U.S. as the Alzheimer's drug Namenda by Forrest Laboratories Inc., of New York.

The problem with current antidepressants is that they have a slower onset, taking one to four weeks to work, few patients achieve remission and many do not get a response on their first or second antidepressant.

About half of patients don't respond to initial therapy, and the remission rate is about 30 percent with the first agent and about 50 percent following use of the second agent, Aitkenhead said, citing data from a landmark study known as the STAR-D (Sequenced Treatment Alternatives to Relieve Depression) trial.

Aitkenhead noted that there has been quite a bit of work to find new approaches to treating depression, including combining antidepressants such as GlaxoSmithKline plc's Wellbutrin (bupropion) and Lexapro (escitalopram) by H. Lundbeck A/S.

There also was a study of a triple reuptake inhibitor by NeuroSearch A/S and GSK, but that study failed.

In addition, he said, Lundbeck is developing a single agent antidepressant (LUAA21004), which is currently in Phase III.

News of the Roche deal pushed the Evotec stock as high as €0.89 (US$1.12) during trading Monday, although it shed around half of those gains to end the day at €0.79 (US99 cents), a further rise of more than 12 percent. Investors also responded positively to the news of Lanthaler's appointment last Friday, lifting the company's share price by more than 14 percent from Thursday's closing price of €0.61 to close at €0.70.