By Lisa Seachrist

Washington Editor

Sibia Neurosciences Inc. and Eli Lilly and Co. have teamed up to develop compounds that selectively act on certain subtypes of nicotinic acetylcholine receptors as potential therapies for a wide array of central nervous system disorders.

The three-year collaboration is guaranteed to provide La Jolla, Calif.-based Sibia $20 million in research funding and equity investments from Lilly, of Indianapolis. The companies are looking to use Sibia's technology platform to develop drugs to treat Parkinson's disease, Alzheimer's disease, schizophrenia, pain and depression.

"The nicotinic acetylcholine receptor platform is now a rich area for drug discovery," said Jeffrey McKelvy, executive vice president and chief scientific officer for Sibia. "The platform allows for multiple product development across a wide variety of neurological and psychiatric disorders."

Under the terms of the agreement, Sibia will receive $5 million per year in research funding from Lilly. In addition, Lilly will make a $5 million equity investment in Sibia. Lilly, in return, will receive exclusive global rights to any products developed as a result of the collaboration. Lilly will conduct and fund all clinical trials for compounds discovered during the collaboration. Sibia will receive additional milestone payments and royalties on the sales of any products developed.

Within the first year of the collaboration, Lilly will have the exclusive option to license two of Sibia's clinical candidates that currently are in Phase II trials: SIB-1508Y for the treatment of Parkinson's disease and SIB-1553A for Alzheimer's disease. McKelvy said that the option would be short-lived in nature and that the milestone payments and royalty rate covering those products are higher than what was negotiated for the less-advanced and still-to-be-discovered products in the deal.

"If you look at the way that Lilly likes to enter into collaborations, you will see that they like to employ platform technology and exploit those platforms," McKelvy said. "We have the proof of principle for a wide variety of diseases. And, we have all the seminal patents to develop those products."

Sibia's platform technology has identified the various nicotinic receptor subtypes in the human brain, and established a library of recombinant receptor subtypes. Using this library, the company can develop small-molecule drugs that specifically interact with certain subtypes. Research into neurodegenerative diseases such as Parkinson's and Alzheimer's have revealed that nicotinic receptor deficiencies play a role. Targeting those receptors is the strategy that Sibia is using to develop drug candidates.

"We has several companies interested in our technology," McKelvy said. "The reason we have this deal with Lilly is because of their commitment to the program, and their know-how in developing CNS drugs. [Lilly's expertise] developing and marketing CNS products is what's going to bring downstream rewards to us."

Sibia's stock (NASDAQ:SIBI) closed at $4.50 a share Wednesday, up 12.5 cents. Lilly's stock (NYSE:LLY) closed at $67, down $1.75.

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