Allelix Schizophrenia Program Partnered With J&J Subsidiary Allelix Schizophrenia Program Partnered With J&J Subsidiary

By Jim Shrine

Special To BioWorld Today

Allelix Pharmaceuticals Inc. parlayed last year's purchase of Trophix Pharmaceuticals Inc. into a new collaboration in schizophrenia, its second targeting that disorder, with Janssen Pharmaceutica NV.

Allelix said its deal with Janssen covers the research, development and marketing of compounds arising from Allelix's glycine reuptake inhibitor program, which targets the GlyT-1 gene - a new approach to the disease, not targeting the dopamine or serotonin receptors.

Allelix, of Mississauga, Ontario, will receive C$6.2 million (US$4 million) up front, plus research funding for at least two years, milestone payments for clinical progress and "very attractive royalty rates," said James Howard-Tripp, Allelix's senior vice president of neuroscience.

Janssen, of Beerse, Belgium, is a wholly owned subsidiary of New Brunswick, N.J.-based Johnson & Johnson (J&J).

"We're delighted with the deal," Howard-Tripp told BioWorld Today. "Economically, it's very good for us, and it gives us all the pieces we wanted. The choice of J&J is excellent, as well. Janssen has the No. 1 schizophrenia drug in the world [Risperdal]."

The deal was made with Allelix's U.S. subsidiary, Allelix Neuroscience Inc., of South Plainfield, N.J. Allelix acquired the neuroscience subsidiary in June 1997 with its $23 million purchase of Trophix, of South Plainfield. That purchase initially was valued at $24 million but, since nearly 90 percent of that total was tied to Allelix stock, is worth considerably less now. (See BioWorld Today, June 20, 1997, p. 1.)

Clinical Testing Could Come Before 2000

Howard-Tripp said the GlyT-1 program is in the late discovery/preclinical stage. A lead candidate is expected to be chosen next year. "We would like to be in the clinic by the end of next year, if possible," he said.

"The glycine transporter approach is a particularly novel approach to schizophrenia, and the first [approach] outside serotonin and dopamine in the last two decades," he added.

"The current approach is to attack positive symptoms, and it is less effective against negative symptoms [such as depression] and cognitive ability," he said. "The glycine transporter approach targets first of all the cognitive aspects, then negative symptoms, then positive symptoms. It has potential to be used as monotherapy or adjunctive therapy with the current set of drugs. You have to deal with the cognitive aspect if you are going to return patients to some form of higher functioning in society."

Specifics of the deal with Janssen call for half the C$3.2 million to be paid by Janssen as a cash license fee and the other half as purchase of preferred shares that will be converted later into common stock by Johnson & Johnson Development Corp., since Allelix does not want the dilution that would result from the current depressed price, Howard-Tripp said. J&J already owned 288,000 Allelix shares, or 1.6 percent of the approximately 18 million outstanding.

Janssen will pay research expenses, covering 10 full-time employees for two years, with the option to extend the agreement after that. Undisclosed milestone payments are tied to standard clinical development. Howard-Tripp said Allelix also was able to negotiate a favorable royalty rate and one that was additive, not reduced by earlier milestone payments. Janssen gained worldwide rights, except for a co-promotion option Allelix has in Canada.

"What was really important to us in this deal was the amount of actual cash we would get at the front end, particularly years one and two, and the money we would get on the back end," he said. "We also wanted to make sure we had a voice in the research and development." Allelix accomplished this through negotiating a "50-50" voice in the development process, he said.

The deal also accomplished 60 percent of Allelix's annual partnering objectives, just two months into its fiscal year, Howard-Tripp said.

The company already had a collaboration in place for schizophrenia, with Hoechst Marion Roussel, of Bridgewater, N.J. Allelix completed its research component, centered around dopamine-D4, and turned over further development to Hoechst.

The new deal marks Allelix's second with Janssen, which had a collaboration in place with Trophix for neuropathic pain, focused on genes that regulate specific sodium channels. That program is in late discovery, Howard-Tripp said.

The glycine transporter program has a second side, GlyT-2, which is centered around the spinal cord and brain stem and could be useful in developing drugs for spasticity and pain.

Allelix also has three products in the clinic, all of which are candidates for partnering. The furthest along is the human parathyroid hormone ALX1-11, which last month showed good results in a 217-patient Phase II trial in post-menopausal women. Allelix got full rights back when former partner Astra AB, of Sodertalje, Sweden, backed out in September as a result of corporate restructuring. (See BioWorld Today, Sept. 28, 1998, p. 1.)

Allelix's stock (TSE:AXB) closed Tuesday at C$5.75, up C$0.25. n