Addex and Merck to Collaborate
On Parkinson's Drug Development
By CASSANDRA PETRAKIS ZWAHLEN
December 3, 2007 12:01 p.m. [WSJ]
ZURICH -- Addex Pharmaceuticals SA said Monday it entered an exclusive collaboration and license agreement with Merck & Co. to develop a new class of drugs for the treatment of Parkinson's disease -- and potentially others -- for up to $170.5 million in upfront and milestone payments.
Geneva-based Addex said it will receive a $3 million upfront payment from the Whitehouse Station, N.J., company, and is eligible for research, development and regulatory milestone payments of up to $106.5 million for the first drug developed with multiple indications.
Addex said it is also eligible for additional milestone payments of up to $61 million if second and third products are developed, as well as undisclosed royalties on sales of drugs created through the partnership.
"This is validating Addex's research in this area of drug development," said Helvea analyst Olav Zilian, of the collaboration. He added that Addex is at the forefront of the allosteric modulation approach to creating therapies, and with its broad experience in the field, is like a reference company for big pharmaceuticals. He rates the shares at "buy," with a 66 Swiss francs ($58) price target.
Addex's allosteric modulation approach is unique because instead of turning a receptor on or off like a light switch, it works like a dimmer switch to control the degree of impact a drug will have. Compared with the approach of classical drugs, the allosteric modulation technique offers a more sophisticated level of control of the receptor, resulting in potentially higher efficacy and fewer side effects, said Chris Maggos, head of investor relations and communications at Addex.
The allosteric modulation approach to treat Parkinson's disease -- a brain disorder -- would also target a different class of receptors than the therapies already on the market. Currently available drugs use dopamine replacement, or dopamine receptor stimulation strategies. Addex's approach targets metabotropic glutamate receptors. The approach doesn't depend on the dopamine neurons, which is critical because in Parkinson's patients, these neurons are dying, so treatments requiring the use of dopamine neurons lose effectiveness over time.
"Allosteric modulators seem to have been recognized by Merck of the U.S. as a potential interesting pathway to treat Parkinson's disease in a non-dopaminergic fashion," said Vontobel analyst Andrew Weiss in a report published Monday.
"Addex has made exceptional progress in the area of mGlu -- metabotropic glutamate -- receptor allosteric modulation," said Darryle Schoepp, senior vice president and franchise head of Neuroscience at Merck Research Laboratories.
"This partnership is key to us jointly establishing a leadership position in the promising area of mGluR4 receptor modulation for Parkinson's disease. Merck scientists are excited to work with Addex to extrapolate the full value of this novel mechanism for a range of neuroscience disorders."
Vontobel's Mr. Weiss added that if the Parkinson's drug could be used as a companion to current standard treatments in patients with early and late stages of the illness, it could easily fetch $1 billion in revenues. The bank has rated the shares at "buy," with a 73 Swiss francs price target.
Addex shares recently were up five Swiss francs, or 13.7%, at 41.50 Swiss francs, in a slightly lower broader Swiss market.
"The market is potentially very, very large," said Addex Chief Executive Vincent Mutel, in an interview with Dow Jones Newswires.
Due to an aging population, side-effects of current therapies on the market, and the fact that marketed therapies don't slow the progression of Parkinson's disease, Mr. Mutel said the global market potential is seen at $2.5 billion per annum. According to a research report from Lehman Brothers, it could grow to $3.8 billion by 2010.
It is estimated that 60,000 new cases of Parkinson's disease are diagnosed each year in the U.S. alone. About 1.5 million Americans suffer from the disease. Symptoms include tremors, rigidity and slowness.
Addex, founded in 2002, is also in collaboration with Ortho-McNeil, a company belonging to Johnson & Johnson of the U.S., to develop a different metabotropic glutamate receptor for conditions that could include schizophrenia and anxiety.
Addex raised 137 million Swiss francs in its initial public offering on the SWX Swiss Exchange in the Spring.
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