By Lisa Seachrist

Washington Editor

In a three-year deal worth $27 million, Neurogen Corp. licensed its integrated drug discovery technology to long-time partner Pfizer Inc. for in-house drug discovery activities.

The non-exclusive license to the Accelerated Intelligent Drug Discovery (AIDD) is the first of what Neurogen hopes will be several non-exclusive licenses for the technology.

"Pfizer is the first customer to take the AIDD technology in-house," said Amy Enders, spokeswoman for Branford, Conn.-based Neurogen. "We are interested in, and have started talking to, other companies about in-licensing the technology. First things first. We want to make Pfizer happy."

Neurogen's AIDD program has served as the basis of a couple of drug development collaborations with Pfizer, of New York, in the indications of anxiety, depression, insomnia, Alzheimer's disease and obesity in humans, and dementia and anxiety in companion animals. Neurogen's AIDD program integrates combinatorial compound synthesis, high throughput screening and advanced informatics to generate drug discovery data. The result is a process that can otherwise take several months can be condensed into two weeks.

Under the terms of the arrangement, Neurogen received an up-front payment of $3 million, and will receive two-thirds of the $27 million by the end of 2000, as it installs the system at Pfizer Central Research. The final third of the money will come as Neurogen makes system enhancements to personalize the technology to Pfizer's needs. Neurogen is not obligated to provide new compound libraries, or provide access to its own compound library.

Pfizer is not limited to any specific disease targets or uses of the AIDD technology, under the terms of the deal. Further details were not disclosed.

"We've been in a long relationship with Pfizer dating back to 1992," Enders said. "That was the basis of this agreement."

In 1992, Neurogen announced its first corporate partnership, a $50 million deal with Pfizer to develop and commercialize compounds for cognition enhancement and anxiety. Pfizer bought $13.75 million worth of stock, or 11 percent of the company. The five-year joint research program called for Neurogen to receive milestone payments and royalties.

In June 1994, the companies agreed on a second collaboration - for sleep disorders - which garnered Neurogen another $20 million. In December 1996, the companies merged the two previous agreements and added two more years and $5.2 million per year to the collaboration. (See BioWorld Today, Nov. 6 1998, p. 1.)

This deal provides for research support, milestones and a potential royalty stream for Neurogen.

In 1995, the two companies signed a $60 million collaborative agreement to develop targets for neuropeptide Y as obesity therapies. (See BioWorld Today, Nov. 7, 1995, p. 1.) Under the terms of this deal, Neurogen is responsible for Phase I testing of any drug candidates, and has the option for profit sharing or co-promotion of any products that come to market.

The collaborations have resulted in several compounds reaching Phase I studies in anxiety, insomnia and Alzheimer's disease. Enders said Neurogen intends to have an obesity compound in Phase I studies by the end of this year.

"As a drug discovery company, this deal with Pfizer opens up a third way to finance ourselves on the road to getting a drug on the market," Enders said. "We can raise money in stock offerings, corporate collaborations, and now in-licensing our technology. We are very fortunate."

Neurogen's stock (NASDAQ:NRGN) closed Thursday at $14.625, up $2.062. Pfizer's shares (NYSE:PFE) ended the day at $100.437, up $1.312.