By Lisa Seachrist

Washington Editor

WASHINGTON — Cambridge NeuroScience Inc. and Bayer Corp. have inked a potential $26 million deal to develop recombinant glial growth factor 2 (GGF2) as a therapy for neurodegenerative diseases such as multiple sclerosis (MS).

For Cambridge NeuroScience, the deal will free up resources at the company to focus on its small molecule and ion channel blocker programs.

"We've worked with Bayer for over a year now on GGF2," said Harry Wilcox, president and CEO of the Cambridge, Mass.-based company. "As is, this deal essentially removes all of the financial responsibility for the development of GGF2."

Under the terms of the agreement, Bayer will pay Cambridge NeuroScience an up-front fee, reimbursement for research already conducted on the program and milestone payments, plus royalties. The exact breakdown of the potential $26 million was not disclosed.

Bayer will receive exclusive worldwide manufacturing and marketing rights to GGF2.

With this deal, Wilcox estimates that the company will ring out 1998 with two to three years' cash on hand.

GGF2 is a member of the neuregulin family of growth factors. The compound is known to stimulate the growth and differentiation of glial cells, the support cells of the nervous system which form the insulating myelin sheath around nerves.

In MS, this sheath of glial cells is damaged by the body's immune system, causing nerve impulses to short-circuit. In animal-model studies of the compound, human recombinant GGF2 has not only regenerated the myelin sheath, but has delayed the onset of the disease, decreased disease severity and reduced the relapse rate.

"This is the only compound studied to date that is capable of remyelination," Wilcox said.

Bayer will conduct a large preclinical toxicology study of the drug before it can be tested in humans, but Wilcox said the collaborators are planning to finish that study by the end of next year, and have the compound in human testing in early 2000.

Focus Shifts Back To CNS 1102, Formerly Cerestat

With Bayer shouldering all development costs associated with GGF2, Cambridge NeuroScience will focus on getting its stroke drug CNS 1102 (formerly known as Cerestat) back on track.

CNS 1102 is a small molecule N-methyl-D-aspartate (NMDA) ion channel blocker that protects cells by preventing calcium overload, which is triggered by loss of blood flow to the brain and causes a damaging ionic imbalance.

The company reported equivocal interim clinical trial results in September 1997 and over the ensuing year, cut its staff in half, sold some of its technology assets and lost its corporate development partner for the drug. (See BioWorld Today, Sept. 17, 1997, p. 1, March 11, 1998, p. 1, and July 14, 1998, p. 1.)

However, Wilcox pointed out that, for a large subset of the patients suffering from a moderate ischemic stroke, the drug improved their chances of living independently afterward.

"For a very large subgroup of that study this drug was beneficial," Wilcox said. "We would like to do another clinical study in that group alone. We are talking to potential partners and looking into government funding and those sorts of things."

In addition, Wilcox said the company would focus on expanding its collaborations in small molecules aimed at ion channels. Allergan Inc., of Irvine, Calif., is paying Cambridge NeuroScience to apply its knowledge of glutamate ion channels, such as NMDA, and sodium channels to protect optic nerve cells from the same kind of damage suffered by brain cells during an ischemic stroke. The deal, begun in 1996, was valued at up to $20 million and calls for Cambridge NeuroScience to provide the compounds for Allergan to screen.

"We are looking into more deals like the Allergan one," Wilcox said.

Cambridge NeuroScience's stock (NASDAQ:CNSI) closed Monday at $1.187, unchanged. *