Solo again, Allergan strikes a $3.3B deal on Heptares' Alzheimer's portfolio

Just hours after Allergan ($AGN) backed away from a $160 billion merger with Pfizer ($PFE), the company bounced back with a $3.3 billion licensing deal for global rights to a portfolio of drugs for neurological disorders from the U.K.'s Heptares.

Heptares gets $125 million upfront, $665 million in milestones for clinical development and up to $2.5 billion in sales milestones. Aside from double-digit royalties, Allergan will also fuel a $50 million joint R&D program to get clinical candidates through Phase II. Allergan will take sole charge of the development work from Phase IIb.

Coming fast on the heels of the demise of its megamerger with Pfizer, triggered by new Treasury rules aimed at derailing the mammoth tax inversion, the deal sends a clear, quick signal that Allergan CEO Brent Saunders plans to barrel ahead with new pacts to beef up the company's pipeline. And he's tackling one of the toughest diseases on the planet, which has defied a slew of ambitious attempts over the past decade.

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The object of Allergan's R&D affection are small molecule agonists targeting muscarinic M1 and M4 receptors in the brain, including a pair of M1 agonists--HTL9936 and HTL18318--which were in Phase I. Those M1 agonists are designed to treat cognitive declines associated with Alzheimer's, while the M4s are directed at neurobehavioral symptoms through a different mechanism of action used by antipsychotics. Each would make natural combinations, provided they work.

Phase I provided "evidence you could get a well tolerated compound in the CNS that showed evidence of target engagement, pointing to therapeutic levels that were clearly separated from levels that would give you side effects," Heptares CEO Malcolm Weir tells me.

No deal like this occurs overnight, adds Weir, who can trace back conversations on the program with Allergan predecessor company Forest Labs. 

"It was good timing we could announce now," he adds, as the deal "reaffirms Allergan's commitment to open science."

That "open science" strategy depends heavily on letting the innovators like Heptares do the heavy lifting on early research--sorting winners from losers--with a team at Allergan in place to handle late-stage development and regulatory efforts.

This isn't the first attempt to use an M1 to go after Alzheimer's. Eli Lilly ($LLY) took a shot in the '90s, only to back off after side effects derailed the effort--like some many other programs for the memory wasting disease. Heptares, as FierceBiotech reported in February, believes it's ready for a mid-stage program after seeing evidence in Phase I that their approach had the kind of target selectivity that could avoid spurring the kind of safety issues Lilly experienced. And if the company is right, the drug would also be useful in schizophrenia as well as Lewy body dementia.

In a Twitter exchange Wednesday night, I noted to Saunders that he seems attracted to tough targets, singling out their NMDA program, a Holy Grail in depression research, and Alzheimer's.

"Fair point," he responded, "though it is about finding cures in areas where there is true unmet need, which as you know is never easy."

The focus at Heptares will continue to center on new partnerships, says Weir, but there will also be a lot more work on a proprietary pipeline that a mid-sized biotech can take to market alone. That will take a somewhat bigger staff, says Weir, who expects to see the staff swell from about 80 now to around 100 by the end of the year.

Heptares is a subsidiary of Sosei, which acquired the company for $400 million. The investment is paying off.

- here's the release

Special Report: FierceBiotech's 2009 Fierce 15 - Heptares Therapeutics

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