Newron Pharmaceuticals SpA is taking over NeuroNova AB in a stock-based deal valued at €15.4 million (US$19.4 million), which will add two clinical-stage programs to its pipeline of drugs for neurodegenerative disease and €16 million in fresh funding.

Stockholm, Sweden-based NeuroNova was spun out of the Stockholm-based Karolinska Institute in 1998 to commercialize high-profile research on neurogenesis (nerve cell formation) by scientific founders Jonas Frisén and Ann Marie Janson.

The company disclosed equity financings totaling SEK284.5 million (US$40.3 million) since then, but clinical progress has been slow. Its development programs involve a complex, but direct method of administering drugs to the central nervous system (CNS). It involves a subcutaneously implanted drug pump connected, via a catheter, to the CNS.

Its lead program, sNN0031, comprises platelet-derived growth factor BB (PDGF-BB), which has completed a Phase I/II trial in Parkinson's disease patients and now is ready to enter a proof-of-concept study.

According to NeuroNova, the drug is thought to work by stimulating stem cells and progenitor cells in the brain's ventricular wall, close to dopaminergic fibers that play a role in controlling motor function.

Although the volume of clinical data on that program is limited, Milan, Italy-based Newron has conducted extensive due diligence and has had access to unpublished data, CEO Stefan Weber told BioWorld Today. "We are very confident based on the information we have," he said. "We clearly believe this has a very good chance to get through the proof of concept." It will take more than two years to obtain those data.

The second development program, a collaboration with Peter Carmeliet at the Flanders Institute of Biotechnology, in Leuven, Belgium, concerns sNN029, a formulation of vascular endothelial growth factor in development for treating amyotrophic lateral sclerosis, or Lou Gehrig's disease. It is slated to enter a Phase I/II trial shortly.

NeuroNova's main investors, Investor AB, an investment arm of the Wallenberg family, and HealthCap, control about 92 percent of the company's equity and are putting up another €10 million as part of the present transaction. The company has secured another €6 million in research funding from the European Commission's Seventh Framework Program. The total is "more than sufficient" to take the two programs through proof-of-concept trials, Weber said.

NeuroNova's shareholders will hold about 30 percent of the enlarged company's equity on completion of the transaction. Investor AB, indeed, will be its single largest shareholder. "They will be north of 15 percent," Weber said. HealthCap will have a little less. But each will nominate a director to Newron's board, evidence, Weber said, that they are committed long-term investors.

For Newron, the deal is part of its ongoing efforts to rebuild investor trust and confidence, after the abrupt withdrawal of erstwhile partner Merck Serono SA from the development of the Phase III Parkinson's drug safinamide. That move scuttled a previously agreed takeover of Newron by Turku, Finland-based Biotie Therapies Oy and left the company scouting around for alternatives. (See BioWorld International, Nov. 2, 2011.)

Since then, it has licensed safinamide rights in Japan and certain other Asian countries to Meiji Seika Pharma Co. Ltd., of Tokyo, and pharma company Zambon SpA, also of Milan, took on rights to all other territories. (See BioWorld International, April 11, 2012.)

Although Merck Serono's exit from the original agreement appeared to undermine the credibility of the safinamide program, subsequent events in Geneva throw a different light on the matter. Given that Merck Serono is planning to shutter its headquarters in the Swiss city – a move that provoked strike action by its workers this week – its exit from the Newron deal could be seen as a sign of the wider shake-up to come.