Genaissance Pharmaceuticals Inc. acquired an exclusive worldwide license from Merck KGaA to develop and commercialize the small-molecule compound vilazodone.

Vilazodone is a selective serotonin reuptake inhibitor (SSRI) and a 5HT1A partial agonist that is already in the clinic for depression.

"This allows us to leapfrog over early stage discovery and development work and already be at a Phase II stage," said Kevin Rakin, president and CEO of New Haven, Conn.-based Genaissance.

Darmstadt, Germany-based Merck is entitled to receive up to €36 million (US$44.2 million) worth of common shares of Genaissance. The equity would cover the initial license fee, as well as milestone payments up to the first commercial sale. The milestone payments are based on a trailing average of the closing stock price prior to the relevant payment dates. The license fee consists of 369,280 shares, 84,000 of which were issued in April when the companies signed a letter of intent for the agreement. In addition, Merck will receive royalties on all product sales and a share of sublicensing income from any third party.

"The royalties are in the lower double-digits," Rakin said. "So we have the lion-share of the economics from a royalty perspective."

In a total of five Phase II trials for depression in more than 1,000 patients, vilazodone has shown signs of efficacy and a favorable side effect profile. The product was licensed from Merck to London-based GlaxoSmithKline plc, but GSK returned the rights in April 2003, saying Phase IIb data did not support taking it into Phase III trials. Merck had been looking for another partner for the product ever since.

"It's not a core therapeutic area for them," Rakin told BioWorld Today. "That's why they licensed it out in the first place to Glaxo."

Genaissance plans to begin enrollment for a sixth Phase II trial in the first half of 2005. The trial will focus on the pharmacogenomic characterization of patients. Genaissance plans to apply its HAP Technology and clinical genetics expertise, leveraging its knowledge of the genetics of depression and the response to antidepressants, especially to SSRIs. The primary goal is to find genetic markers that can be used to identify a population of patients who will respond to the drug.

"It's kind of an innovative deal in that we're all looking to get the field of pharmacogenomics to move forward," Rakin said. "We've always wondered if we can use pharmacogenomics to move forward a stalled product, and we're now finally getting some tangible examples of that."

With $13.2 billion in U.S. sales in 2003, the depression market is expected to grow to $22.9 billion by 2013.

Genaissance should know within two years whether it can move vilazodone into Phase III trials. If successful, the company hopes to capture a "reasonable share" of the market, Rakin said.

Vilazodone has a different mechanism of action than other drugs targeting depression and anxiety. A pharmacogenomic-based drug could fill the gap in available therapies, in which 50 percent of patients do not achieve initial relief of their depression, Rakin said.

Preclinical results of vilazodone show it might be superior to current depression drugs.

"It's novel and its side effects are at least comparable to SSRIs," Rakin said, "and it has the potential of having superior efficacy."

Genaissance's strategy involves in-licensing drug candidates with promising clinical profiles, then finding genetic markers to identify a responsive patient population. The deal with Merck makes vilazodone Genaissance's lead product.

The company's HAP Technology, which will be used in the Phase II trial of vilazodone, allows genetic variation and population genomics to be integrated into the development, marketing and prescribing of a new generation of DNA-based diagnostic and therapeutic products.

Aside from developing vilazodone, the company markets its Familion Test, which is designed to detect mutations responsible for causing familial long QT and Brugada syndromes, two causes of sudden cardiac death.

The company's stock (NASDAQ:GNSC) rose 3 cents on Thursday, to close at $3.29.

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