Neurogen Corp. and Pfizer Inc. said Friday that they have agreed on asecond collaboration that will bring $17 million to Neurogen, andpotentially more than $20 million, for development of drugs to treatsleep disorders.New York-based Pfizer is buying $9.9 million worth of Neurogenstock _ 1.1 million shares at $9 per share (the June 6 closing price) _and paying Neurogen $7.1 million over three years for research anddevelopment. Neurogen, of Branford, Conn., will receive milestonesthat total $3.25 million upon filing of a new drug application (NDA)for any product to come from the collaboration. Any subsequent NDAwould be worth $3 million.Pfizer will get an exclusive worldwide license to market products fromthe program, and Neurogen will get royalties. The deal is subject to a30-day waiting period because the equity investment increases Pfizer'sstake in Neurogen to 21 percent _ 2.1 million shares of theapproximately 10.1 million outstanding.In February 1992, Pfizer bought an 11 percent stake in Neurogen bybuying 1 million shares for $13.75 million, and paid $4.6 million inboth 1992 and 1993 for research, with the same amounts scheduled forpayment this year and in 1995. That initial collaboration focused ontreatments for anxiety and cognition enhancement, and thepartnership's first compound, NGD 91-1, started a Phase I trial foranxiety in April.While the collaborations are separate, they both focus on diseases ofthe central nervous system and on Neurogen's receptor-specifictechnologies in the gamma-amino butyric acid (GABA) area."The premier drugs on the market for treating sleep disorders . . . dowork on GABA receptors," Harry Penner Jr., president and CEO ofNeurogen, told BioWorld. "But we believe we have a proprietaryknowledge of the various GABA receptor subtypes, and we can make acompound that will target those subtypes we consider to be mostimportant."To hit only those subtypes would result in fewer, or no, side effects,such as those that come from The Upjohn Co.'s Halcion and G.D.Searle & Co.'s Ambien, Penner said. He said the first therapeutic goalof the collaboration is development of a sedative hypnotic, but thatsomething more eventually could result.Part of the agreement stipulated that Pfizer could not increase it stakein Neurogen to more than 21 percent without Neurogen's approval."The major reason is that we're looking to conclude alliances withother companies in our other areas," foremost in the schizophreniaarea, Penner said. "Potential partners could be concerned about agrowing and unfettered interest in the part of any one company."Neurogen's next milestone, Penner said, is the filing of aninvestigational new drug application, hopefully in the fall, for acompound _ dopamine 4 antagonist _ to treat schizophrenia.Neurogen (NASDAQ: NRGN) stock closed Friday at $8.63, down 25cents.

-- Jim Shrine

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