PERTH, Australia – Melbourne-based Neuren Pharmaceuticals signed a development and commercialization deal with Acadia Pharmaceuticals Inc. worth up to $465 million for North American rights to trofinetide for Rett syndrome and other indications.

Neuren will receive $10 million up front with up to $455 million in potential milestones and royalties. Neuren is also eligible to receive tiered, escalating, double-digit royalties on net sales of trofinetide in North America and one-third of the market value of any rare pediatric disease priority review voucher, if granted, from the FDA. Neuren retains all rights to the compound outside of North America.

The potential milestone payments consist of $105 million in development milestones in Rett syndrome and Fragile X syndrome and up to $350 million subject to achieving certain sales thresholds of trofinetide in North America.

Acadia also gains first negotiation rights with Neuren for additional licenses outside of North America. Neuren said it has an obligation "not to develop a competing product in indications for which Acadia develops and commercializes trofinetide."

Trofinetide is a novel synthetic analog of the aminoterminal tripeptide of IGF-1 designed to treat the core symptoms of Rett syndrome by reducing neuro-inflammation and supporting synaptic function. In the central nervous system, IGF-1 is produced by both neurons and glia, and IGF-1 is critical for both normal development and responding to injury and disease.

In the brain, IGF-1 gets broken down into two separate molecules, one of which is glypromate or GPE, which affects glial cells, while IGF-1 affects mostly neurons. Trofinetide is Neuren's chemically modified form of GPE.

Acadia plans to conduct a phase III study of trofinetide for treatment of Rett syndrome, a rare neurodevelopmental congenital central nervous system disorder. The study is expected to begin in the second half of 2019. Neuren will leverage trial data for regulatory filings outside the U.S.

Neuren completed a phase II study of trofinetide in girls aged 5 to 15 years with Rett syndrome and saw statistically significant and clinically meaningful improvements as measured by the Rett Syndrome Behavior Questionnaire (RSBQ), a caregiver assessment, and the Clinical Global Impression of Improvement (CGI-I), a physician assessment, as co-primary efficacy endpoints.

Rett syndrome occurs worldwide in roughly one of every 10,000 to 15,000 female births. Caused by mutations on the X chromosome on a gene called MeCP24, Rett syndrome is a debilitating neurological disorder that occurs primarily in females between 6 to 18 months of age. It is most often misdiagnosed as autism, cerebral palsy, or non-specific developmental delay. It causes problems in brain function that are responsible for cognitive, sensory, emotional, motor and autonomic function.

Currently there are no approved treatments for girls and women with Rett syndrome. The FDA has granted trofinetide both fast track status and orphan drug designation; it also has orphan drug designation in the EU.

Shared CNS Vision

Both companies share the same vision to develop leading drugs to treat CNS disorders.

"A potential treatment for Rett syndrome is a perfect fit with Acadia's mission to develop novel therapies to improve the lives of patients with central nervous system disorders," said Acadia EVP and Head of R&D Serge Stankovic.

Acadia markets atypical antipsychotic therapy Nuplazid (pimavanserin), the only approved drug to treat hallucinations and delusions associated with Parkinson's disease. The company is also developing Nuplazid for other dementia-related psychosis, including schizophrenia and major depressive disorder.

Neuren is developing therapies to treat brain injuries and neurodevelopment and neurodegenerative disorders. It has programs in both acute and chronic conditions.

Neuren has completed an exploratory study in Fragile X syndrome, which is the most common inherited cause of intellectual disability and the most common known cause of autism. It is caused by a single gene defect on the X chromosome that impacts the FMRP protein, which is responsible for regulating the synapses of nerve cells.

One of every 5,000 males and one of every 4,000 to 8,000 females are estimated to have the mutation. Currently, there are no medicines approved for the treatment of Fragile X syndrome.

Aside from Rett syndrome and Fragile X syndrome, trofinetide is also being developed to treat moderate to severe traumatic brain injury and concussion. The company said it could be the first therapy that is disease-modifying.

Although different CNS conditions can result in different symptoms, many share common underlying pathological factors such as inflammation, abnormal microglial function, dysfunction of synapses and reduced levels of IGF-1.

Neuroinflammation is the most common symptom and is prominent in acute brain injury, neurodevelopmental disorders such as Rett syndrome and Fragile X syndrome, as well as autism and neurodegenerative diseases like Alzheimer's disease and Parkinson's.

Trofinetide helps to correct all four of these hallmark pathological features of many CNS disorders, according to Neuren.

The company is now able to advance its second compound, NNZ-2591, which demonstrated efficacy in models of Parkinson's disease, stroke, traumatic brain injury, peripheral neuropathy, Fragile X syndrome, memory impairment and multiple sclerosis.

"Neuren is in a far stronger position following the partnership with Acadia Pharmaceuticals announced today. It makes a very significant and immediate difference in our ability to complete the development of trofinetide for patients in North America and around the world," said Neuren Executive Chairman Richard Treagus. "Importantly, Neuren now has its lead program fully funded, we have access to Acadia's broad range of capabilities in the U.S., and we have secured significant participation in the potential value of trofinetide in North America, as well as retaining the future value of both trofinetide outside North America and NNZ-2591."

Treagus told shareholders at the annual shareholder meeting in June that the company had a productive end of phase II with the FDA and had clear agreements on a path forward for its phase III trial. Those agreements included the use of RSBQ as a primary endpoint along with CGI-I as a co-primary endpoint in one phase III trial.

"This understanding with the FDA was necessary in order for us to fully scope the phase III study size, timelines and associated costs. These parameters have been central to both our own planning as well as our more recent partnering discussions," Treagus said.

Neuren announced in May that it had entered negotiations with an unnamed pharma company in the U.S., and that the company was investing $4 million by purchasing 1.33 million Neuren shares at A$4 (US$2.97) per share. The investment was a precondition to a "potential partnering arrangement for the development and commercialization of trofinetide," the company announced on May 21.

Morgans analyst Scott Power said the Acadia deal "looks like a great deal."

Even so, the market was underwhelmed on the news, and Neuren's shares on the Australian Securities Exchange (ASX:NEU) plummeted 43 percent from A$2.67 on Monday, closing at A$1.52 on Tuesday.

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