Allergan's depression drug bags a 'breakthrough' tag on the way to Phase III

Allergan CEO Brent Saunders

The star of Allergan's ($AGN) pipeline, a ketamine-like drug for depression, secured the FDA's coveted breakthrough therapy designation, guaranteeing the company access to top agency officials as it moves toward late-stage development.

The drug, picked up in Allergan's $560 million deal for Naurex last year, is an intravenous treatment that modulates the brain's NMDA receptors. Investigators have repeatedly found that dosing patients with ketamine, an oft-abused NMDA booster, leads to rapid improvements in even the most severe forms of depression, but the drug carries a host of cognitive side effects that have hampered its therapeutic development.

Allergan's rapastinel, however, has so far replicated ketamine's swift effects on major depressive disorder in clinical trials without the hallucinogenic and psychosis-like after effects that have plagued other efforts, according to the company. Those results convinced the FDA to confer its breakthrough tag on the drug, bringing it into a program designed to speed along therapies that could alter the standard of care in serious diseases.

Now Allergan is planning to move its antidepressant into Phase III trials later this year, hoping to come through with a blockbuster treatment in a field that has long bedeviled drug developers.

Allergan, on the verge of a $160 billion merger with Pfizer ($PFE), has been fighting the perception that its commitment to drug R&D lags behind its peers. The company announced plans to spend $1.7 billion on research in 2015, but with revenue anticipated at about $23 billion for the year, that puts Allergan well below the industry average for R&D budgets as percentage of total sales, which is 17.9%, according to PhRMA.

CEO Brent Saunders, who has in the past disparaged the idea of pharma spending big on R&D, has more recently embraced the provenance of building a pipeline. And Pfizer R&D boss Mikael Dolsten has come to the defense of his soon-to-be colleagues at Allergan, saying earlier this month that the company's drug prospects are "underappreciated," pointing to rapastinel, the gastrointestinal drug relamorelin, a uterine fibroid therapy called Esmya and a migraine treatment acquired from Merck ($MRK) as therapies that could bring in more than $1 billion in annual sales at their peak.

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