Freeing its resources and staff, Guilford Pharmaceuticals Inc. licensed U.S. rights of GPI 1485 in four indications to a new entity called Symphony Neuro Development Co. (SNDC).
Receiving $43 million in capital within the last week, New York-based SNDC was formed for the sole purpose of developing the GPI 1485 programs. The funding came from Symphony Capital Partners LP, of New York.
SNDC gains rights to the product in the indications of Parkinson's disease, post-prostatectomy erectile dysfunction (PPED), HIV neuropathy and HIV-dementia. The drug is in Phase II testing in Parkinson's disease and PPED, while it's being studied at the preclinical stage in the two HIV indications.
In return, SNDC will invest up to $40 million of that capital to advance the product in those indications. Guilford also has issued to SNDC five-year warrants to purchase 1.5 million shares of Guilford stock at $7.48 per share, giving the warrants a value of more than $11 million.
But Guilford has an ace in the hole - an exclusive purchase option to acquire all of SNDC's equity between April 2005 and March 2007.
"They could acquire the company, which would be a way for them to regain control over 1485 for the indications that they've licensed to us," SNDC Chairman Mark Kessel told BioWorld Today.
If Guilford exercises that option, it would pay between $75.1 million and $119.8 million, depending on when the purchase is made. The company can pay it in cash, stock, or a combination of both as long as common stock does not constitute more than 50 percent of the option exercise price. Guilford said its decision to exercise the option might depend on the outcome of the clinical trials.
As part of the license agreement, Guilford gains one of five seats on SNDC's board, which will initially be filled by Craig Smith, Guilford's chairman, president and CEO. Guilford will consolidate the financial activity of SNDC Holdings within its financial statements.
Smith said that the arrangement provides financial support for the GPI 1485 programs, and frees Guilford staff to focus on other programs.
"We will be able to accelerate the clinical program and prepare for Phase III without risking additional Guilford capital," he said.
The company could not be reached for comment on Friday.
"They're going ahead with this because it enables them really to accelerate their pipeline and focus their resources on those compounds," Kessel said.
Rockville, Md.-based RRD International LLC will manage SNDC and will subcontract a portion of the development work to Guilford and other vendors. Guilford will provide GPI 1485 manufacturing services for SNDC, as well as process development, toxicology, patent and regulatory affairs work.
"We're collaborating with them to the extent that if Guilford does work for us with their own people, then we will reimburse them as we would with any third party provider," Kessel said.
GPI 1485 belongs to a class of small-molecule compounds called neuroimmunophilin ligands, which have been shown in preclinical experiments to repair and regenerate damaged nerves without affecting normal healthy ones. The research came out of work conducted by Solomon Snyder, the director of the department of neuroscience at Johns Hopkins Medical School. He also is a co-founder of Guilford.
Focusing on products that target the hospital market, the company markets Gliadel Wafer for brain cancer and Aggrastat injection for acute coronary syndrome. The two products brought Guilford $8.9 million in revenues in the first quarter.
The company's pipeline includes the anesthetic Aquavan injection, which recently showed in a Phase II trial in patients undergoing colonoscopy that it provides rapid onset and recovery from procedural sedation without serious adverse events. The company began a Phase III trial with the product in May. (See BioWorld Today, May 11, 2004.)
Also in May, Guilford entered a drug discovery agreement with Hamburg, Germany-based Evotec OAI AG, to identify small-molecule compounds that interact with selected Guilford targets.
As of March 31, the company had cash, cash equivalents and investments of $81 million. It recently filed a shelf registration with the SEC to sell up to $100 million in securities.
Guilford's stock (NASDAQ:GLFD) dropped 20 cents on Friday, to close at $5.35.