BioWorld International Correspondent

Evotec AG grossed €18.5 million (US$23.4 million) in a private placing with European and American institutional investors, to fund additional early stage trials of its pipeline of central nervous system (CNS) drugs.

"We're planning to expand our CNS programs with a differentiation study for our insomnia drug candidate EVT.201, and we are exploring further development opportunities and potential Phase II studies previously not planned in Alzheimer's disease and additional indications in its other pipeline projects," Evotec president and CEO Jörn Aldag told BioWorld International.

The Hamburg, Germany-based company originally had not planned to pursue a Phase II trial in Alzheimer's, as F. Hoffmann-La Roche Ltd., of Basel, Switzerland, has a call-back option on EVT.101, the lead compound in its EVT.100 series.

"If they don't exercise the option, we would take this forward ourselves," Aldag said. Even if it does, the company now will select an alternative from the same series.

EVT.101 is a selective antagonist of the NR2B subtype of the N-methyl-D-aspartate (NMDA) family of receptors. That differentiates it from memantine, a compound marketed in the U.S. as Namenda by Forrest Laboratories Inc., which binds NMDA receptors non-selectively.

"Because it is non-specific, it can only be dosed to a certain maximum, which doesn't give it tremendous efficacy," he said. "We suspect there are reasons for not dosing it higher."

EVT.101 is undergoing a Phase I multiple ascending-dose study at present. The company aims to initiate a Phase II trial on it or a successor in the second half of the year.

The company also has decided specifically to explore the potential of EVT.201, a candidate drug for insomnia, in the treatment of elderly people with the condition, although it has not yet decided how it will integrate that plan into its ongoing development program.

A Phase I dose-finding study is under way at present, and a Phase II trial is penciled in for the second half of the year.

The compound, a modulator of the GABA A receptor complex, has a different activity profile from other GABA modulators that target receptor subtypes, Aldag said.

A proof-of-principle Phase I study involving 12 subjects indicated it has a positive effect on three parameters - time to onset of sleep, sleep maintenance and mood or disposition of drug recipients the following morning.

Evotec's third clinical development stage compound, EVT.301, is an oral inhibitor of monoamine oxidase B, which also is in development for Alzheimer's.

The funding took the form of an accelerated book-build, with DZ Bank AG, of Frankfurt, Germany, acting as sole lead manager and sole bookrunner.

The company issued about 5.2 million new shares, priced at €3.55 per share. Pre-emptive rights were excluded from the offering, which, under German stock exchange rules, limited the transaction to less than 10 percent of the company's share capital.

The number of shares in issue rose from 62.7 million to about 68 million.

The company reported €53.5 million in cash at the end of 2005. Including the recent injection, it will have about €47 million or €48 million by the end of this year.

"We would clearly run into 2008 with no problem," Aldag said.

The company might enter out-licensing deals from 2007 and also could raise further cash via the sale of its tools and technologies division, which it previously stated is not core to the business.

The company, whose core business remains preclinical pharmaceutical research services, reported group revenues of €79.8 million for 2005, and a net loss of €33.6 million.

It still is valued at a discount to Array BioPharma, of Boulder, Co., a peer with a similar structure, Roman Nagel, analyst at BHF Bank AG in Frankfurt, told BioWorld International.

"That's a company with a more robust or developed product development activity," he said.

By the year end, however, Evotec could be on an equal footing, he said.

The company's share price closed on the Deutsche Börse in Frankfurt at €3.60 Tuesday.