Neurogen Corp., which already has two drug discoverycollaborations with Pfizer Inc. targeting anxiety and sleepdisorders, entered another partnership with thepharmaceutical firm worth up to $60 million fordevelopment of an obesity treatment.
The third alliance with New York-based Pfizer initially isfocused on Neurogen's NGD 95-1. The orally activesmall molecule drug is aimed at inhibiting neuropeptideY1, which is a neurotransmitter believed to beresponsible for stimulating appetite. By blocking theneuropeptide receptor, the drug is designed to inducesatiety.
Harry Penner, president and CEO of Branford, Conn.-based Neurogen, said in rat studies neuropeptide Y1 hasproved it triggers eating.
In return for worldwide rights to NGD 95-1, Pfizer madea $16.5 million equity investment in Neurogen and paid$3.5 million in license fees. Pfizer's purchase of 750,000shares at $22 per share re-establishes the 21 percentequity stake it held in Neurogen prior to the company'sAugust 1995 follow-on public offering of 2.87 millionshares. The stock sale, priced at $16 per share, generatednet proceeds of $43.3 million.
In addition to $20 million in equity payments and licensefees for the obesity collaboration, Pfizer agreed to payNeurogen $12 million in research funding over five yearsand another $28 million tied to achievement ofmilestones.
Penner said another feature of the agreement is a profit-sharing option in which Neurogen can boost substantiallythe amount it receives from sales of the drug in NorthAmerica by contributing to clinical development andmarketing costs.
Penner added negotiating the obesity alliance gaveNeurogen an opportunity to revise some terms of theother two Pfizer collaborations, particularly with respectto his company's role in clinical development.
Neurogen now will have greater input on clinicaldevelopment in the anxiety and sleep disorders programs.In the obesity collaboration, Penner said, Neurogen willconduct the Phase I clinical study.
"We anticipate having an investigational new drugapplication filed [for NGD 95-1] by the end of the year,"he said. "Clinical trials would begin in 1996."
Neurogen's other two collaborations with Pfizer areworth up to more than $70 million. While the obesitydrug discovery program is based on neuropeptide Y1receptors, the anxiety and sleep disorders programs targetsubtypes of gamma aminobutyric acid receptors.
In July Neurogen entered a potential $70 million dealwith Schering-Plough Corp., of Madison, N.J., to developdrugs targeting specific dopamine receptor subtypes. Theinitial effort is aimed at a treatment for schizophrenia.
Neurogen said it ended the third quarter with $72.3million in cash and a net loss for the three months ofabout $1 million. A $14 million license fee paid bySchering-Plough, helped Neurogen achieve a net incomeof $9.5 million for the first nine months of 1995. Thecompany has 11.6 million shares outstanding.
Neurogen's stock (NASDAQ:NRGN) closed Monday at$22.75, up $1. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.