By Randall Osborne

West Coast Editor

Neurobiological Technologies Inc. (NTI) said it will reap at least $7.7 million in front-end milestone payments as a result of the deal between NTI's German collaborator, Merz + Co., and Forest Laboratories Inc. to develop and market the neuron protector Memantine in the U.S. for Alzheimer's disease, neuropathic pain and AIDS-related dementia.

"I can't give you a maximum [payment amount], but it's not far north of that," said Paul Freiman, president and CEO of Richmond, Calif.-based NTI. The marketing agreement between Merz and Forest, of New York, also includes "significant" royalties for NTI, once sales begin, he said.

"We've been almost broke in the past two years, really scratching for survival, and now we've got more money than we know what to do with," Freiman told BioWorld Today. The company has $8.5 million in the bank and a yearly burn rate of $1.5 million, he said.

In February, Frankfurt, Germany-based Merz said a Phase III trial in the U.S. with Memantine for moderately severe to severe Alzheimer's disease yielded positive data in patients for whom nothing else worked. NTI said a marketing partner was being sought in the U.S. to help pay for the second Phase III trial required to submit a new drug application. (See BioWorld Today, Feb. 23, 2000, p. 1.)

Memantine, an orally active N-methyl-D-aspartate (NMDA) antagonist, was the subject of three Phase III trials by Merz in Europe for mild to moderate vascular dementia, moderately severe to severe dementia and Alzheimer's disease. Merz will file a marketing application in Europe at the end of the summer, Freiman said.

On its own, NTI is developing Memantine for diabetic neuropathy and AIDS-related dementia. The company recently finished a "very successful and robust" 421-patient Phase II trial for diabetic neuropathic pain that showed a significant reduction in nighttime pain with Memantine, Freiman said. A meeting is planned with the FDA to design a Phase III study.

"Forest will be paying for, and possibly leading the Phase III charge in the U.S., and we're there to help," Freiman said. "It could be a pivotal trial."

A Phase II trial for AIDS-related dementia is expected to yield results late this year, Freiman said.

"The [National Institutes of Health] is running it, and we're supplying the medication," he said. "That's an important indication. Dementia was something rarely seen when AIDS patients were dying quickly. The AIDS cocktails are allowing longer life, but at the same time, you're getting these side effects."

Memantine, the first NMDA antagonist to show efficacy in Alzheimer's disease and vascular dementia, "theoretically could be used in stroke and Huntington's disease," Freiman added. "We haven't plumbed the depths, because of financial constraints."

NTI has filed for relisting with Nasdaq. The company's stock (OTC Bulletin Board: NTII) closed Friday at $8.50, up $1.50.