BioWorld International Correspondent

Danish drug development firm NeuroSearch A/S and GlaxoSmithKline plc entered an alliance focused on the major diseases of the central nervous system.

Under the terms of the deal, NeuroSearch will receive €82 million in guaranteed payments, including €46.8 million immediately. That comprises up-front and research payments worth €29.1 million, plus €17.7 million in return for 616,000 newly issued NeuroSearch shares, priced at a 30 percent premium to its average share price over the 30 days preceding the agreement. On completion of the share transaction, London-based GSK will hold 8 percent of Ballerup-based NeuroSearch.

NeuroSearch also could receive milestone payments totaling €98 million, should its triple monoamine re-uptake inhibitor, NS2359, currently in a Phase II trial for attention deficit hyperactivity disorder (ADHD), gain regulatory approval. The company could receive milestones ranging from €32.7 million to €90 million for other compounds licensed by GSK, depending at which development stage it decided to take them, plus royalties on eventual product sales.

"We have been very focused on the downside protection and very focused on getting cash into the company," spokesman Henrik Moltke told BioWorld International. Over the five-year term of the agreement, GSK will have first option on a range of NeuroSearch programs in ion- channel research and CNS indications such as depression, anxiety and schizophrenia. The deal also includes an option on NeuroSearch's Phase I anti-angiogenesis Endovion program, while an existing agreement in depression between the companies has been rolled into the new structure.

The agreement is by far the biggest in NeuroSearch's history. Even the NS2359 component of it - which is not limited to ADHD - is bigger than any deal it previously signed, Moltke said. It should secure the company's operations until 2007, by which time it aims to have its first products on the market.

"We are not forced to do any fund raising in a complicated market," he said.

NeuroSearch has existing alliances with Boehringer Ingelheim GmbH, of Ingelheim, Germany, in Parkinson's and Alzheimer's diseases; with Abbott Laboratories, of Abbott Park, Ill., in pain; with Pierre Fabre Group, of Boulogne, France, in sodium-channel blockers; and several undisclosed agreements with smaller biotechnology firms.

It has retained rights to NS1209, a neuroprotectant in development for status epilepticus - a form of epilepsy characterized by prolonged and severe seizures that can cause brain damage - and brain damage following stroke. The compound is undergoing Phase II studies, and further Phase II trials are planned for next year. If those are successful, it could gain FDA fast-track status, Moltke said, because of the high level of nonresponders to existing treatments.

"We could very quickly move this compound into commercialization," he said. As it is a hospital product, NeuroSearch plans to continue its development in-house.

NeuroSearch is expected to break even this year and to begin 2004 with around DKK500 million (US$83.4 million) in cash. Its share price hit a 22-month high of DKK192 on the Copenhagen Stock Exchange last Thursday in anticipation of an announcement, which had been flagged as far back as August. It shed some of those gains in subsequent trading sessions as investors took profits on the stock, which has been one of the star performers on the Copenhagen Exchange during the year, having opened 2003 at DKK51. (See BioWorld International, Aug. 13, 2003.)

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