BioWorld International Correspondent
MUNICH, Germany - Evotec OAI AG reacquired Evotec Neurosciences, which it had founded in 1999, by buying back the 78 percent it did not already own. Evotec also attracted new investors who committed to buying 10 million new Evotec shares at €2.72 each, raising €27.2 million in new capital.
The reconfigured company will concentrate on central nervous system indications.
"The strategic rationale is to create long-term and sustainable value from our proprietary drug discovery and development capability," said Joern Aldag, president and CEO of Evotec OAI, of Hamburg, Germany.
"We had sold a portion of Evotec Neurosciences to venture investors, which we are acquiring back in a share-for-share transaction," he said, adding that in the €27 million pipe transaction, "the money is guaranteed, but the elegant thing is that existing shareholders have the right to participate under the same conditions as new investors."
After the investment, the company expects to have total cash of more than €60 million. That will include €20 million from Evotec Neurosciences (ENS), €27 million in fresh capital and about €15 million in cash on Evotec's balance sheet.
The company plans to use the funds to develop the ENS pipeline and aims to have two products in clinical trials in 2006, with at least one of them developed to proof of concept and ready for partners by 2008.
"We hope to bring the first compound into the clinic this year," Aldag said. "We plan to expand our strategy by taking in other interesting CNS projects from other companies or academia. We will also consider acquiring a small CNS company."
The company's pipeline initially will come from ENS, which has two lead compounds that are NMDA NR2B antagonists. ENS said those compounds, which are in-licensed from F. Hoffmann-La Roche Ltd., retain the beneficial effects of non-selective NMDA receptor antagonists, the most recently approved and marketed treatment for Alzheimer's disease, but show improved side effect profiles.
John Kemp, CEO at ENS, said that the company's lead compound, ENS101, showed effectiveness in preclinical Parkinson's disease models and against neuropathic pain, both in preclinical work and in humans. The high dosages did not appear to inhibit memory and learning, he said. The compound also is being considered as a treatment for Alzheimer's disease.
ENS101 is orally administered, and the company expects to begin a Phase I trial this year and to begin a 12- to 18-month Phase II trial in 2006. ENS102 is an intravenously delivered compound, and Evotec expects to begin its clinical trials in early 2006.
"One of the challenges of our discovery program was to get items that are useful for chronic indications," Kemp said, adding that there are "a number" of follow-up compounds the company has in late-stage preclinical development.
ENS also brings research partnerships with Roche, Boehringer Ingelheim and Takeda Pharmaceuticals. The Takeda partnership is expected to bring in at least €12 million, and as much as €20 million, over the next four years.
At the completion of the acquisition, Kemp will join Evotec's executive committee.
Aldag said that Evotec's experience gave it important advantages in a crowded field. "We have spent a lot of time in recent years to build a fully integrated discovery engine," he said. "We have a significant library, lead optimization, medicinal chemistry - practically everything that is needed to push forward small molecules from discovery to proof of concept in humans.
"We have a significant track record in development," he added. "And there are three approved products we are producing for customers."
The acquisition is expected to be completed by the end of March. Shareholder approval is expected in the first week of June, with the financing to be completed in July and August.