LONDON – Ablynx NV signed a €456.5 million (US$589.5 million) neuroscience deal with Merck & Co Inc., after demonstrating its nanobodies are able to modulate ion channels in a way that no other antibody constructs can manage.

Under the agreement, Ablynx will receive €6.5 million up front and a €2 million research fee to discover nanobodies against a Merck target, with a further €448 million to come in research, regulatory and commercial milestones as candidates progress in development. There will be royalties on any products that make it to market also.

The €8.5 million in up-front payment and R&D fees will be significant in keeping Ablynx's cash burn between €20 million to €25 million in 2012, as promised to the market, said Ed Moses, CEO. But beyond that the deal is an important further validation of the therapeutic range and flexibility of nanobodies.

"People have tried but not been very successful in using antibodies to modulate ion channels," Moses said. "It has been hard to get functional blockers; you find they stick but don't block activity," he told BioWorld Today. The formatting flexibility of nanobodies – single domain antibodies originally derived from camelidae (camels and llamas) – makes it possible to combine antibody-like selectivity and multispecificity in one molecule. "We've impressed one of the most important pharma [companies] in the world and [shown] that nanobodies can do what antibodies can't," Moses said.

Merck's reputation in terms of the quality of its science should pave the way for more ion channel deals, and other companies have expressed an interest, Moses said. Ablynx has demonstrated modulation of both voltage-gated and ligand-gated ion channels in electrophysiology assays, showing nanobodies can act both as agonists to enhance an effect and antagonists to block it.

The top 20 small-molecule drugs targeted at ion channels had sales of $14 billion in 2011. But it's not an area that Ablynx would consider taking forward in-house because the animal models are both complicated and not very good. "That's another reason it's good to do the deal with Merck, because they have all that in place," Moses said. Following discovery by Ghent, Belgium-based Ablynx, Merck will be responsible for all further research, development, manufacturing and commercialization of any nanobodies arising from the collaboration.

Ablynx provided a further significant demonstration of the flexibility of nanobodies last month when it reported positive results from a Phase I study of its first inhaled nanobody, ALX-0171, for the treatment of respiratory syncytial virus infections. While that could be an important product in its own right, demonstrating the safety of pulmonary delivery also opens up a new therapeutic space in which to apply nanobodies.

"This is more important than people realize," Moses said. Local delivery is the next big challenge for an upcoming generation of antibodies. "The lung is a high barrier in terms of local delivery because you would expect to see immunogenicity; we've shown you can deliver [nanobodies] to the lungs without safety problems," Moses said.

That offers a potential route to the pulmonary delivery of biologics, where to date antibodies have been unsuccessful. In addition to treating lung diseases, going via the lungs could become another route for systemic administration.

Further Phase I studies of ALX-0171 are planned, and if successful the product will be moved into a pediatric Phase II trial.