Shares in Cerecor leaped after the biotech licensed an antidepressant candidate to Johnson & Johnson, bringing in additional cash to advance its pipeline.
Cerecor's president and chief executive Uli Hacksell announced his immediate retirement from those roles, saying that with the new $45 million deal and recent $5 million fundraising, "I can be optimistic about a bright future for the company." The cash injection gives the Baltimore-based biotech operating cash through "at least 2018," he added.
Hacksell will be replaced in the interim by Chief Business Officer John Kaiser and will stay on as chairman of the Baltimore-based company for the time being.
J&J's Janssen pharmaceuticals unit is paying $25 million upfront for rights to CERC-501, just a few months after Cerecor reported disappointing results for the kappa opioid receptor (KOR) antagonist in a phase 2 nicotine addiction study. Cerecor has deposited a $3.75 million tranche into a 12-month escrow to meet any future obligations to Janssen.
J&J is primarily interested in the CERC-501's potential in depression—although it has negotiated rights to the drug in all indications including alcohol dependency—and has promised another $20 million in milestone payments if its development plans for the drug pan out.
Originally discovered by Eli Lilly, CERC-501 has shown efficacy in multiple mood and addiction animal models. The KOR system is thought to play a role in stress and mood for example, with stress causing levels of KOR to rise in the brain. Drugs that block KOR have the potential to improve mood, according to Cerecor.
Hacksell said the sale gives Cerecor the resources it needs to push ahead with the development of its pipeline, currently headed by glutamate NMDA antagonist CERC-301, a ketamine-like drug which has been tested in two phase 2 depression trials but didn't show any activity on symptoms.
While depression is no longer in scope for the drug, Cerecor thinks it has potential in other "orphan neurological conditions," without going into details. Prior studies have suggested NMDA antagonists could have a role to play in a number of neurologic and psychiatric disorders, including Alzheimer's, schizophrenia and autism.
It also plans to spend the new funding on two early-stage programs—AMPA receptor antagonist CERC-611 for epilepsy and CARC-406, a COMT inhibitor that it thinks has potential as a treatment for cognitive impairment.