By Randall Osborne
As its parent firm, Monsanto Co., prepares for a merger, G.D. Searle & Co. has backed out of a deal worth up to $80 million with CoCensys Inc. to develop insomnia drugs.
"I guess our program became expendable," said Richard Nichol, president and CEO of CoCensys, which netted $10 million of the potential total amount as an up-front payment, and has been sharing development costs with Searle.
Searle is a subsidiary of St. Louis-based Monsanto, which agreed to a $33 billion stock buyout by American Home Products earlier this year. (See BioWorld Today, June 2, 1998, p. 1.)
Monsanto already markets Ambien for insomnia, and American Home — through its pharmaceutical division, Wyeth-Ayerst Laboratories — filed a new drug application in February with the FDA for another insomnia drug, Sonata (zaleplon).
Peter Jansen, vice president and chief financial officer of CoCensys, said Searle is providing no explanation to the company.
"I think it's just a question of putting two and two together," he said. "Why would Wyeth-Ayerst want a third [insomnia] compound?"
Two years ago, CoCensys and Searle, of Skokie, Ill., entered the collaboration focused on CCD 3393, which is one of a class of drugs called epalons, designed to enhance the activity of gamma-immunobutyric acid, an inhibitory neurotransmitter in the central nervous system. (See BioWorld Today, May 22, 1996, p. 1.)
Under the terms, Searle made an up-front payment of $10 million — a $7 million investment in preferred convertible stock and a $3 million license fee — with the remainder of the potential $80 million to be paid over the following six years. The companies agreed to share development costs.
"We've been spending money on it, as has Searle, and this relieves us from making payments of about $2 million over the next couple of years," Jansen said.
Nichol said the deal's "heavy back-end load" means its conclusion could result in better things for CoCensys, which is not putting its insomnia program to sleep. CoCensys regains all rights to the drug.
"We wouldn't have seen major benefit for at least three years and we've gained a lot of information about the compound," he said. "We just got the official notification [from Searle] late Wednesday and we'll have teams at Searle next week to retrieve all the data."
In Phase I trials, CCD 3393 showed no adverse side effects and was well tolerated at high doses. As a result of the work done with Searle, CoCensys may get an even better partnership deal — maybe one without development obligations — the next time around, Nichol said.
"I'm in no hurry today to rush out and repartner," he added. "We're not ready for that."
The company plans to be ready for another deal on CCD 3993 in the first quarter of next year, Nichol said. Meanwhile, it does not want to take resources away from its migraine program focused on ganaxolone, also based on epalon technology.
Two Phase II trials of ganaxolone are under way, Nichol said.
"We promised we'd have the first data by December," he said. "We're way ahead of schedule in that clinical trial, but I'm not committing to any earlier releases."
CoCensys' stock (NASDAQ:COCN) closed Friday at $1.531, down $0.031. *