German pharma giant Boehringer Ingelheim is wagering up to $262 million on a discovery-stage project with the struggling Arena Pharmaceuticals ($ARNA), hoping to spotlight new treatments for central nervous system disorders.
Under the agreement, the pair will work to identify potential drug candidates that target G protein-coupled receptors, or GPCRs, which play a wide range of roles related to brain function and are key to a slew of approved therapies. Arena is eligible for as much as $262 million in milestone payments tied to the deal, and Boehringer will get exclusive rights to any therapies that stem from the collaboration.
Boehringer isn't disclosing its disease targets in the partnership, saying only that it has a particular interest in how GPCRs relate to mental illness.
For Boehringer, the early-stage deal is reflective of a companywide embrace of external R&D over the past few years, as the drugmaker has been gradually decentralizing its research operation and relying more and more on partnerships to build out its pipeline. Last year, Boehringer disclosed plans to spend €11 billion on R&D over the next 5 years, which works out to 17% less per year than what it spent in 2014. But the company has promised to get more from less, touting an expanded reliance on academic and biotech partners that the company believes will lead to more efficient drug development.
As for Arena, whose obesity drug Belviq has painfully underperformed expectations, pairing up with Boehringer gives the company a chance to create some much-needed value. Arena has watched its share price fall nearly 70% over the past 6 months, letting go of founding CEO Jack Lief and about 35% of its staff as it curtails research to maximize cash savings. The focus now, interim CEO Harry Hixson has said, is to partner up when possible to accelerate Arena's pipeline assets, and the Boehringer deal falls in line with that strategy.
"This agreement reflects our new corporate focus to enter into collaboration opportunities at various stages of development," Hixson said in a statement. "Collaborations are an essential part of our drug discovery and development efforts, so we are pleased to be part of this shared goal to identify novel drugs targeting an orphan CNS receptor with Boehringer Ingelheim, who possesses demonstrated capabilities in research, development, manufacturing, and marketing of pharmaceutical products."
- read the statement