BioWorld International Correspondent

MUNICH, Germany - The development of Axaron AG reflects the development of the biotechnology industry in Germany as a whole and shows how the sector is coping with increasingly challenging market conditions.

Begun in 1997 as a joint venture between chemical giant BASF AG and the American biotech company Lynx Therapeutics Inc., the Heidelberg-based company was known as BASF-LYNX Bioscience AG. It had a broad set of medical missions - to identify novel targets for epilepsy, improve microorganisms for fermentation production and improve screening processes - that reflected the interests of the parent companies.

In November 2001, the partners spun the joint venture out into a fully independent company, Axaron, retaining 85 percent of the ownership, with employees holding the remaining 15 percent. The change in corporate form brought a reduction in the breadth of the company's activities and a clearer focus on its research profile. With the parents now in the background as investors, the new Axaron honed in on diseases of the central nervous system, and stroke in particular.

"We stopped our other programs and focused resources on the CNS programs," Alfred Bach, CEO of Axaron, told BioWorld International. "We saw in strokes a tremendous medical need, because the only current medicines available are useful for only 2 [percent] or 3 percent of patients."

The focus on stroke has led to a compound, AX200, that the company expects to bring into Phase II testing later in 2003. "We believe that we have an innovative approach that will enable us to develop a novel therapeutic compound for the treatment of stroke and possibly other neurodegenerative disorders," Bach said.

"The final outcome of many of these disorders is the death of neurons; many ways lead to that end. In strokes in particular, you have a whole cascade of events that lead to the death of neurons."

The company aims to find a therapy that interferes with that cascade. "AX200 has at least a dual mode of action," Bach said. "It interferes with apoptosis, a result that has been visible in animal models, and it significantly reduces the volume of infarctions" in animal tests.

Bach noted two key differences in the development of Axaron's compound. First, it is already approved for a completely different indication, in which it is well tolerated with very few side effects. That means that the company will not have to undertake preclinical and Phase I trials for toxicity and instead can proceed more directly to testing its efficacy in stroke. This could save considerable time in bringing the product to the market.

Second, the company has proceeded differently from other research into stroke treatment. Axaron has kept some animal models alive for at least six weeks following induced strokes and treatment with AX200 to, as Bach noted, "analyze their performance and behavioral parameters after six weeks." Successful treatment would be measured not just by the physical goal of reducing infarctions but also by animals' performance after treatment. "We could detect that behavioral performance is much better in treated animals," Bach said. "AX200 could have some effect in neuroregeneration. This is novel and potentially important, because the functional outcome is most important for patients."

Like other German biotechnology companies that have moved from broad goals to specific technologies and promising pipelines, Axaron is looking for additional investors. Bach declined to give specifics, but he said, "Like all biotech companies, we are looking for investment partners and partners for our pipeline.

"We are talking with both financial and strategic investors," he added. "Both have their pros and cons. A strategic investor can do due diligence more quickly, but the con is that you give up a certain independence. The con for a financial investor is that the timelines can be very long before the deal is closed. The pro is that you maintain more entrepreneurial freedom."

Over the medium term, the company has another compound related to AX200 with different, and perhaps synergistic, effects on neuroprotection. It also has a compound for the treatment of amyotrophic lateral sclerosis in late preclinical testing.

Reflecting much of the German biotechnology industry again, Axaron is not yet profitable, and Bach declined to give a timetable for its profitability. Instead, he noted its transformation into an independent, entrepreneurial organization with a clear focus, revenue streams and a promising pipeline.