With success rates that are even lower than for many other indications, therapeutics development for neurological disorders can strike fear into the brains of biotech executives.

But North Carolina biotechnology start-up Aerial BioPharma LLC hopes to buck that trend – as its management team has twice already.

The team "has been together through three companies now," Stephen Butts told BioWorld Today. Butts is Aerial's chief operating officer and, along with CEO Moise Khayrallah and executive vice president of drug development, Gary Bream, its co-founder.

The first of those three companies, Addrenex Pharmaceuticals Inc., was sold for $29 million to partner Sciele Pharma Inc., which is part of Japanese Shionogi & Co., in 2009. The second, Neuronex Inc., merged with Acorda Therapeutics Inc. earlier this year. (See BioWorld Today, Nov. 17, 2009, and Feb. 17, 2012.)

Aerial was founded in January 2011. The company's funding is primarily angel-based, with some foundation money and smaller investors topping off the coffers.

Butts said that "we do seem to be far more optimistic than most" as far as neurological drug development is concerned. He ascribed that optimism to the fact that Aerial plays to its own strengths. The company does not develop its own pipeline, looking for candidates to in-license instead. "Our real strength," Butts said, "has been the ability to pick assets well."

Butts and his team consider an asset good due to a mix of factors. One big factor is the available data on the compound. Aerial places a premium on human data – "perhaps safety data, or perhaps Phase II data in another indication," Butts said.

The other is that any potential asset needs to have a clear regulatory path forward. One example is the company's ADX-NO5, which Aerial is developing in narcolepsy. The drug, which was granted orphan status by the FDA in August, is in a Phase IIb trial following a successful Phase IIa trial.

ADX-NO5 has other potential indications besides narcolepsy. But there are other approved drugs for narcolepsy, which gives Aerial something to look at in terms of the path to regulatory approval it might follow with its drug.

And market size is not as critical to the Aerial team as human data and an example of a regulatory path. "Not every indication has to be a blockbuster," Butts said.

The company also is developing an acute and chronic pain medication, prostatic acid phosphatase, or PAP. That compound is in IND-enabling studies, and the company hopes to file an IND by the end of 2013.

One thing Butts and his team consider when they evaluate assets is the need for a contract research organization – or rather, the lack of such a need. "We manage our assets in-house," though the company does use so-called Phase I units for Phase I trials. Given that eight employees don't go very far in a clinical trial, the company also has a number of consultants. But "it is not efficient for us to bring in experts on any one area."

If Aerial eschews the early stage research that identifies potential compounds, it also has no interest in taking drugs to market either. "Our game plan is always to partner our assets," Butts said. "We have no commercial aspirations – that's not what we do well."

The company looks for a "value point" at which it can partner on favorable terms. But the precise nature of that value point can vary widely, from the new drug application (NDA) filing stage to products that are Phase III-ready.

On its website, Aerial said that "the success of our strategy is evidenced by the FDA approval of two NDAs, for three indications, over the last four years and the successful filing of several INDs that were cleared to proceed with no restrictions by FDA." Certainly, both Addrenex and Neuronex have had successful exits from a business standpoint. Addrenex was sold to Sciele for $29 million, and all told, if it exercises its option, Acorda could end up paying up to $133 million for Neuronex.