By Lisa Seachrist

Washington Editor

CytoTherapeutics Inc. and Cognetix Inc. are joining forces to develop cell and gene-based therapies to treat central nervous system disease. CytoTherapeutics said Thursday it will take a "significant equity position" in Cognetix.

Under the agreement, CytoTherapeutics, of Providence, R.I., will provide its proprietary drug delivery system and Cognetix, of Salt Lake City, will contribute its library of highly potent and very specific conopeptides in an effort to develop new therapies for neurological disorders.

"Cognetix is a new company with an exciting library of compounds," said Seth Rudnick, chairman and CEO of CytoTherapeutics. "They don't have a lot of financial wherewithal to develop these compounds and we have a unique delivery system. So the collaboration makes a lot of sense from our perspective."

The companies are not releasing full financial details, however Rudnick told BioWorld Today that CytoTherapeutics will "make a 20 percent equity investment in Cognetix over the next year."

Cognetix's library of conopeptide compounds comes from a variety of species of predatory sea snails known as conus snails. These conopeptides are small neurotoxin molecules that are specific for different receptors and their ion channels. As specific agents, they may produce extremely precise and potent therapies, and because they are small molecules they are much more likely to be bioavailable.

"There are over 500 species of these marine snails," said R. Tyler McCabe, vice president of research and development for Cognetix. "And in each species there are between 50 and 200 distinct compounds to explore."

CytoTherapeutics has developed a system of genetically engineering both human and animal cells to produce a desired protein or peptide, then encapsulating the cells in a hollow fiber approximately the size of a grain of rice. The hollow fiber containing the cells is then implanted into the fluid-filled spaces in the brain or central nervous system, where it delivers the peptide or protein directly to the area that needs it. As a result, the system circumvents the immune system and provides a sustained release of the agent.

"The system can produce the therapeutic for more than a year," Rudnick said. "With Cognetix's compounds, their potency means that we may be able to use less cells and smaller devices."

"This is a potentially synergistic effect between therapy and delivery," McCabe said. "The collaboration may allow us to increase target site specificity and reduce an already low toxicity profile with these two technologies working together."

The companies will share development costs and subsequent profits for any products that come to market. They are conducting studies to determine which conopeptides to advance to further testing. McCabe said that the initial studies target central nervous system disorders such as epilepsy, Parkinson's disease, stroke and spinal cord disorders.

"This collaboration is unlikely to have any immediate effect on the stock," said Marc Ostro, an analyst with UBS Securities, in New York. "But, for the long term, it expands CytoTherapeutics' armamentarium of products."

Ostro noted that CytoTherapeutics, as a drug delivery company, was stymied in its ability to develop products because it had to rely on companies with the rights to compounds to express interest in their drug delivery system. Last year, the company struck its first collaboration with Genentech Inc., of South San Francisco, to use the system to deliver neural growth factors.

"As long as the price is reasonable, and I don't know what this deal cost them, it is a wise move for them to obtain the rights to compounds," Ostro said. "I also believe that the company has the most commercially viable method to deliver drugs to the central nervous system." *