LONDON - CeNeS Pharmaceuticals plc is to acquire the U.S. company Cambridge NeuroScience Inc. (CNSI) in an all-share deal that values CNSI at US$44 million.

Daniel Roach, CEO of CeNeS, told BioWorld International, "This is extremely positive for us. It's an extremely good fit, bringing together our expertise in ion channels and stroke and in chronic pain, complementary collaborations, and strong product portfolios.

"The merged company will have six compounds in clinical trials and eight collaborations with pharmaceutical partners."

CNSI, based in Cambridge, Mass., currently has 18 staff, and cash of US$7 million, sufficient for two years of operations. Once a stellar company in the U.S. biotech sector, it has never recovered from the failure in Phase III of Cerestat, an ion channel blocker for the treatment of ischemic stroke. As a result Boehringer Ingelheim ended a partnership deal on the product in July 1998.

CeNeS has #15 million (US$22 million) in cash, sufficient to last two years. But it also has revenue streams from its ion channel services and drug delivery operations, and a drug, Moraxen, which has been submitted for UK registration.

Roach said the two companies got together in September 1999, and had been seriously discussing the takeover since January. Apart from the benefits of merging the technologies of the two companies, CeNeS, based in Cambridge, England, will use its new base to market its products and services in the U.S. "This will significantly enhance our opportunities in the U.S.," said Roach.

The CNSI deal, which will be satisfied by the issue of new CeNeS shares, will create a company with a market capitalization of around #110 million. CNSI is listed on Nasdaq, but Roach said the listing would not be maintained. "We wouldn't be seen in all the noise. I'd rather go back when we are bigger."

CNSI has two collaborations. The first, with the eye care company Allergan Inc., is focusing on the use of ion channel blockers to treat glaucoma by protecting the optic nerve cells from the same kind of damage suffered by brain cells in ischemic stroke. It has another deal with Bayer to develop the recombinant glial growth factor GGF2 as therapy for neurodegenerative diseases such as multiple sclerosis.

This deal comes three weeks after CeNeS failed in an attempt to take over its fellow UK CNS company Vanguard Medica plc. Robert Mansfield, CEO of Vanguard, based in Guildford, told BioWorld International that while there would be benefits in creating a #175 million market capitalization company focused on CNS discovery and development, there was not a good fit between the two.

"The decision on our side was based around synergies for the business and the portfolio. We have a very strong history in development and are very aware of the costs and the risks," he said. For example, [CeNeS' compound] Sipatrigine "is well into its patent life and there are lots of advances in sodium channel blockers. The Phase II and Phase III development is a very expensive proposition."

Last week CeNeS said it expanded its Phase II clinical trial of the sodium channel blocker Sipatrigine in stroke. It has taken over control of the Phase II trial, which began in centers in France and Germany in December, and is in talks with further centers. Sipatrigine has been shown to exert significant neuroprotection in animal models of stroke. CeNeS licensed it from Glaxo Wellcome plc, which had conducted a number of Phase II trials demonstrating the safety profile in patients suffering from acute stroke. However, none of the trials demonstrated efficacy.

The Phase II study designed by CeNeS uses magnetic resonance imaging (MRI) techniques to identify the patients most likely to benefit from treatment. Traditionally, studies based on the clinical scales such as the NIH or Barthel scales, necessitated large Phase III trials to show statistically significant results. Using MRI, CeNeS says it will be able to demonstrate directly that stroke patients can be protected from neurological impairment.

Roach noted, "Sipatrigine has a different mechanism of action to competitor drugs that recently have been withdrawn from development. Sipatrigine is now one of the lead development candidates for the treatment of stroke."

CeNeS also said it had positive results in a Phase II study of its D1 antagonist CEE 03-310 for the treatment of sleep disorders, and will be taking the program forward. The Phase II study of CEE 03-310 showed it had a significant effect on human sleep patterns, specifically rapid eye movement (REM). REM sleep patterns are affected in a range of psychiatric disorders such as depression, schizophrenia and narcolepsy. The placebo-controlled double-blind trial showed the drug delays the onset of REM sleep in a dose-dependent way.

Further studies are planned to evaluate the clinical significance of this effect. "The results will assist in the process of attracting a development partner for this drug," said Roach.

In addition, CeNeS will start a Phase II trial in July of M6G, a metabolite of morphine, in hip replacement patients.

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