UPDATED: Allergan bags NMDA depression drugs in $560M-plus Naurex buyout

Allergan CEO Brent Saunders

The big news in biopharma this weekend centered on reports that Allergan ($AGN) is selling its generics business to Teva ($TEVA). But Allergan execs didn't let the $40.5 billion deal distract them from another goal of CEO Brent Saunders': building the pipeline.

Early Sunday, Allergan put out word that it is buying Evanston, IL-based Naurex for $560 million upfront and an unspecified set of milestones.

The buyout gives Allergan two high-profile antidepressants, a field that has bedeviled a slate of Big Pharmas, many done in by unexpectedly high placebo responses and a continuing uncertainty over exactly how to manage a disease that afflicts tens of millions of people. The lead drug, GLYX-13, is poised for a late stage study while a follow-up program is headed into a Phase IIb trial.

Naurex CEO Norbert Riedel tells me that Allergan's sole interest is in the two lead drugs for depression. Now the Naurex team is free to take the development platform and its expertise in NMDA modulation and start another company that will go after a large number of additional CNS targets. Given the fact that they just sold the company for $560 million in cash and what Riedel calls a "significant" back-end interest, after raising a total of $163 million for Naurex, chances are they'll have an enthusiastic set of backers ready to move on.

The deal makes sense for a lot of reasons, adds the CEO. Allergan has the resources to execute on a late-stage program for both drugs, and Naurex gets to do what it does best: discovering new meds and pushing on to proof-of-concept data.

Naurex has been working on the NMDA target, a class of therapeutics that has fascinated academics and industry insiders alike for years. Investigators have repeatedly found that when you use ketamine on patients, many experience an almost instantaneous lifting of even the most severe types of symptoms of depression and bipolar disease. But the drug, often abused in party circles under the name Special K, is also known for only a transitory effect with a host of side effects.

A number of developers--including J&J--have taken a shot at NMDA, but Naurex has distinguished itself with a lead therapy that has demonstrated quick action and a durable effect in a Phase IIb study. Company execs say that was the result of designing an NMDA modulator that was calibrated to give just the right tweak to the system.

Investigators gave GLYX-13 to 386 people who had failed to respond to other drugs and continued until a clinical response was seen, which happened in 53% of patients. More than two-thirds of patients relapsed within two weeks and were put on to a weekly dose of either GLYX-13 or placebo. The one-third of people who were slower to relapse started a biweekly dosing schedule. Almost half of people who received biweekly doses of GLYX-13 were in remission--as defined by the HDRS scale--at the end of six weeks of treatment. Across the whole trial population, GLYX-13 outperformed placebo. 

Those data helped the biotech raise $80 million in its most recent round, and also pointed the way to a late-stage program that may not require the big numbers of patients that have been a standard feature in depression for years. And that appears to have provided a convincing case to Allergan that they should add this drug to their late-stage pipeline.

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