BioWorld International Correspondent
LONDON - Vernalis plc landed a deal potentially worth $100 million with Biogen Idec Inc. for Vernalis' Parkinson's disease program that is in Phase I work. Biogen is paying an initial license fee of $10 million and investing $6 million in Vernalis, with a promise to invest a further $4 million in any future Vernalis fund raising.
It is Vernalis' first big-money deal since it was formed last July by the merger of Vernalis and British Biotech plc. The program includes V2006, a selective adenosine A2A receptor antagonist that originates from Cerebrus plc, a central nervous system specialist acquired by Vernalis in 1999.
Biogen Idec, of Cambridge, Mass., is buying 6.2 million shares at 53 pence per share, representing about 4.2 percent of Reading, UK-based Vernalis. James Mullen, CEO of Biogen Idec, said the deal "brings us one step closer to our corporate goal to in-license 50 percent of our pipeline by 2010."
The $100 million excludes any royalties, and the first milestone payment is close, with Phase II studies due to start in 2005.
Vernalis in April reacquired North American rights to its migraine treatment frovatriptan from Elan Corp. plc, of Dublin, Ireland, and said there would be a rights issue some time over the next 12 months to fund the $50 million deal.
Tony Weir, Vernalis' chief financial officer, told BioWorld Today: "This money is helpful, but it does not solve the problem of making all the payments to Elan. We are working on re-licensing frovatriptan as a key priority, because we need a partner who can properly exploit it, and we are also working on an equity fund raising."
It might not be necessary to conduct a fund raising if the deal for frovatriptan is lucrative enough, but the matter must be settled before December, when Vernalis is due to make a $20 million payment to Elan. Vernalis had £24.2 million (US$44.2 million) in cash as of Dec. 31.
Biogen Idec has exclusive rights to the lead compound V2006, which recently completed a Phase I single-ascending-dose study. That showed the orally administered drug was well tolerated, that exposure increased with dose and that potentially therapeutic blood levels (based on preclinical studies) were achieved at the lowest dose tested.
V2006 is designed to restore the imbalance of neurotransmitters caused by loss of dopamine, but without the debilitating side effects, such as dyskinesia, caused by existing dopamine replacement or enhancement treatments. Adenosine and dopamine receptors coexist in the brain, and the idea is that blocking adenosine will make produced dopamine more effective.
Initially the collaboration will focus on completing the Phase I program, with Biogen Idec funding that, as well as all future development. In addition to V2006, Biogen Idec has the right to develop one backup compound in Parkinson's disease and has option rights over the A2A antagonist program, which targets other central nervous systems diseases, too. In particular, laboratory studies suggest the A2A receptor might be a novel target for a new class of antidepressants. Any subsequent deals would be negotiated separately.
Weir said the deal fulfills an undertaking to sign a product collaboration in the second quarter of 2004.
"It is important to have a development partner who is efficient and effective, and Biogen Idec has considerable experience in this area," he said.
Biogen Idec's stock (NASDAQ:BIIB) rose 72 cents Thursday to close at $60.58. Vernalis' stock (NASDAQ:VNLS) jumped 41 cents, or 23 percent, to close at $2.19.