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By Jennifer Boggs
Assistant Managing Editor
Though a regulatory hitch with migraine drug frovatriptan threatened to derail the company last year, Vernalis plc has turned its fortunes around in the last several months, closing a solid financing in May and now signing an early stage oncology collaboration with GlaxoSmithKline plc.
The deal includes $6 million upon signing to Winnersh, UK.-based Vernalis - half of that coming in the form of an equity subscription of about 2 million Vernalis shares priced at 87 pence each. Vernalis will handle discovery work to identify candidates against an undisclosed cancer target, and if GSK opts to move the program forward into the clinic, the small biotech is eligible for further up-front and milestone payments of more than $200 million.
On top of that, Vernalis could receive royalties ranging up to the double-digits on any product sales, plus additional milestones if London-based GSK decides to develop products emerging from the deal for areas outside of oncology.
Vernalis executives could not be reached for comment, but news of the deal sent shares of Vernalis (LSE:VER) climbing 11 percent, or 9.25 pence, to close Thursday at 93 pence (US$1.56).
That's a far cry from where the company was a year ago following a surprise FDA decision not to expand frovatriptan's label to menstrual migraine. Restructuring efforts began soon after, including a 20-member reduction in staff. The firm also agreed to temporarily give up U.S. royalties on frovatriptan sales to pay off partner Endo Pharmaceuticals Holdings Inc, of Chadds Ford, Pa., and later signed over 90 percent of its European revenues from frovatriptan sales to Paul Capital Healthcare in exchange for much-needed cash totaling $29.2 million. (See BioWorld Today, Feb. 25, 2008, and April 22, 2008.)
That bought Vernalis time to refocus its pipeline - and welcome aboard new CEO Ian Garland - before shoring up its balance sheet with a £22.1 million (US$36.9 million) placement closed earlier this year. (See BioWorld Today, May 6, 2009.)
Investors, however, still await big news from the company's development-stage pipeline, particularly V3381, a dual-acting NMDA antagonist and monoamine oxidase-A inhibitor licensed from Chiesi Farmaceutici.
That drug is in a Phase IIb trial, and Vernalis reported in its earnings that enrollment is ahead of schedule, with all 150 patients expected to be recruited in the fourth quarter. Hoping to decrease its chances of running into the placebo effect that has confounded other pain trials - recent failures have included Labopharm Inc.'s combo tramadol and acetaminophen in a Phase III study in back pain and XenoPort Inc.'s XP13515 in a Phase II diabetic nerve pain trial - Vernalis included in its trial a placebo run-in period to weed out patients who are marked placebo-responders.
Data from the V3381 study are anticipated in the first half of next year, after which Vernalis likely will begin looking for a partner as it gears up for Phase III.
The company also is seeking partners for V1512, a Phase II-stage levodopa methyl-ester formulation for Parkinson's disease, and V85546, a macrophage elastase inhibitor in Phase II development for inflammatory disease.
Programs already partnered include V2006, which Cambridge, Mass.-based Biogen Idec Inc. has moved through Phase IIa in Parkinson's disease, and a heat-shock protein 90 inhibitor that Basel, Switzerland-based Novartis AG recently moved into Phase I, triggering a $1.5 million milestone to Vernalis.
The firm, which reported an operating loss of £5.3 million for the first half of the year, has a cash position of £27.8 million as of June 30. | 
