Proximagen Neuroscience plc - Strategic update
01 Feb 2010
Proximagen Neuroscience plc, the biotechnology company focused on diseases of the central nervous system ("CNS"), today issues a strategic update.
Since the £50m fundraising in June 2009, the Company has seen a period of unprecedented corporate activity and undergone a notable transition. During this time, the Company has evolved from specialising mainly in Parkinson's disease related programmes to the wider area of the CNS in general. The purpose of this announcement is to update shareholders on the progress made since June 2009.
Key points
· £50m raised in June 2009 to
fund the acquisition of CNS companies and drug development
programmes;
· As the Group continues to deliver
on its acquisition and consolidation strategy, the Group's
portfolio has grown from five programmes at the beginning of 2009
and now consists of a broad portfolio of 14 programmes, from
discovery, through pre-clinical and clinical stages;
· The recently announced offer for
Minster Pharmaceuticals plc would bring an additional two clinical
stage assets, tonabersat and sabcomeline, into the Group, which
have the potential to treat epilepsy and schizophrenia
respectively;
· Dr Jackie Hunter, currently the
Senior Vice President and Head of Science Environment Development
at GlaxoSmithKline (GSK) and formerly the Senior Vice
President and Head of the Neurology & GI Centre of Excellence
for Drug Discovery (CEDD) at GSK, has joined the Board of
directors;
· Dr Tim Sparey, formerly in
Business Development at Merck Serono and Merck & Co, Inc., has
been appointed as Proximagen's Head of Business Development;
· Consolidation and integration of
acquisitions is expected to deliver cost savings of an estimated
£1.7m in 2010; and
· Cash resources at 30 November 2009
of over £55.5m.
Objective and strategy
Proximagen's
objective is to become one of the world's leading companies
developing therapeutics for patients suffering from diseases of the
CNS. To achieve this, the Company is establishing a pipeline
of CNS programmes spanning all phases of development.
We are taking a flexible approach to how far we develop our programmes before partnering or monetising them. In taking these decisions, we are mindful of a number of factors, including development risk, the progress of competitor programmes, our financial position and our belief that the retention of rights to certain territories is an important long-term value driver.
In order to achieve our objectives, we have developed the
following five strategic priorities: ·
expand our pipeline within CNS through acquisition, in-licencing
and partnering, thus building quality and critical mass in research
and development;
· structure innovative deals and defer
consideration where possible;
· with respect to our pipeline,
either
- invest in programmes where the value
inflection point is identifiable (such as establishing clinical
proof of concept) and where such investment is justified by the
potential returns, and then out-license the programme with the
retention of rights in certain territories; or
- out-license programmes prior to
significant investment where it is commercially viable to do
so;
· reduce duplicated costs through sector
consolidation and integration; and
· build closer relationships with 'Big
Pharma' in our specialist areas.
Proximagen's pipeline
Proximagen's pipeline now comprises programmes derived from
in-house discovery activities, outright purchase of assets, and
purchases of assets through corporate acquisition on success-based
terms. Below are details of six of the 14 programmes in our
pipeline:
PRX00933 (5HT2c agonist for obesity) PRX00933 (formerly BVT933)
belongs to a new
class of drug candidates that effect weight loss through selective
activation of 5HT2c receptors located in the brain. PRX00933
demonstrated significant weight loss in a Phase II clinical trial
and is the next most advanced 5HT2c agonist in clinical development
(Source: MedTrack). PRX00933 has been shown to be safe and well
tolerated in over 400 patients. The compound is now entering
further development, including non-clinical combination studies for
obesity and diabetes.
PRX00023 (5HT1a agonist for epilepsy): 5HT1a receptor loss has been implicated in epilepsy and is associated with the brain atrophy that occurs in epileptic patients with depression. It is thought that by activating 5HT1a receptors, seizure incidence and depressive symptoms in epileptics may be reduced. PRX00023 was shown to be safe and well tolerated in over 400 patients and is now entering into further development to determine its utility in epilepsy. If successful, Proximagen will open discussions with funding agencies in the US to support a broader clinical development programme.
Compounds that activate the 5HT1a receptor are also thought to inhibit dyskinesia by regulating abnormal activity of certain neurologic pathways which co-ordinate movement. The reversal of dyskinesia has been shown using other 5HT1a agonists, both in functional models of the disorder and in clinical trials. We are undertaking studies in models of Parkinson's disease to determine PRX00023 utility in alleviating dyskinesia. If successful, PRX00023 would advance the PRX2 programme, designed to reduce the involuntary movements associated with Parkinson's disease, to a Phase II ready clinical programme.
5HT6 antagonist programme for cognition/pain:Proximagen acquired a set of 5HT6 antagonists from Biovitrum, the most advanced being a Phase II ready compound for cognition. Scientists at Proximagen determined that back-ups within this set showed superior pharmacokinetic characteristics, and in line with our strategy of investing in the best drug candidates, although not necessarily the most advanced, we are advancing a pre-clinical backup compound. 5HT6 receptors have also been implicated in the control of pain.
PRX1 programme for Parkinson's disease: Drug candidates from the PRX1 programme have the potential to become the first choice in the treatment of Parkinson's disease, having the efficacy benefits of L-DOPA, considered the best symptomatic treatment available, with advantages over L-DOPA's side-effect profile. This programme is subject to a $232 million licensing agreement with Upsher-Smith. As part of the agreement, Upsher-Smith is responsible for the worldwide development and commercialisation of PRX1. PRX1354, the lead candidate in the PRX1 programme, has shown an improvement over L-DOPA, with prolonged activity and a reduction in unwanted dyskinesia in models of the disease. Whilst PRX1354 demonstrates an improvement over L-DOPA in these models, back-up compounds from the same series are being identified with superior properties, thus potentially strengthening the programme considerably. Work on a back-up series is nearing completion and thereafter the best candidate will be taken into IND-enabling studies. Evaluating back-up compounds, in addition to the lead PRX1354, is expensive and time consuming, but demonstrates Upsher-Smith's commitment to develop drug candidates that represent the best chance of generating significant commercial value for both themselves and Proximagen.
Vascular Adhesion Protein-1 (VAP-1) programme for inflammation: The VAP-1 programme has the potential to deliver a blockbuster drug that regulates the movement of immune cells from the blood into sites of inflammation. This novel small molecule represents a new class of anti-inflammatory for the treatment of several CNS disorders including multiple sclerosis. The drug candidate may also have utility in the treatment and prevention of the acute and chronic inflammation found in inflammatory bowel disease (Crohn's disease and ulcerative colitis), respiratory distress syndrome, psoriasis and chronic obstructive pulmonary disease.
TrkA programme: The TrkA programme is a novel, small molecule programme for pain therapy. TrkA is a target of great interest, particularly as antibodies to NGF have demonstrated clinical efficacy. There have been significant licensing deals for antibodies to NGF (e.g. Abbott-PanGenetics $190m deal of which $170m was upfront for P110, currently in Phase I for osteoarthritis), but given the challenges associated with developing antibodies there is an opportunity to develop small molecule modulators of this pain pathway.
Other programmes
Research and development
at Proximagen has always been a streamlined process, with
programmes showing the most visible commercialisation opportunities
competing for resource and investment. In accordance with this
strategy, a regular assessment is made of all Proximagen
programmes. This evaluation led to the deprioritisation of our
early stage PRX4 programme, wherein the neuroprotective effects of
the full-length PRX4 gene product were not reproduced when
undertaken in a large scale study. However, we are sufficiently
encouraged by the developments of our other neuroprotection gene
product, such that it will receive development resource in
2010. Whilst it is disappointing when we are unable to
justify significant allocation of funds to certain programmes, the
Company has long been an advocate of only investing shareholders'
funds where there are justifiable reasons for doing so and then
towards the most promising programmes. Programmes not meeting our
stringent investment hurdles will be divested or closed down.
Compared with many other biotechnology companies, Proximagen now
has a rich and
growing pipeline, reflecting the Company's ability to pursue
treatments for various therapeutic indications in later stages of
development. We expect to continue to make significant
investment in the development of our pipeline, whilst adhering to
our merit-based approach to research and development.
Consolidation overview
Many biotechnology
companies have seen their market valuations depreciate over the
past two years and many companies appear attractively priced.
However, identifying attractively priced companies in the sector is
the easy part; finding companies with strong technologies and good
science is more challenging. The Company reviewed over 40
opportunities worldwide in the second half of 2009 alone and
undertook detailed due diligence on 20, completing one company
acquisition and one asset acquisition during 2009. An offer on a
third acquisition, Minster Pharmaceuticals plc, was made in early
2010.
Proximagen believes that significant value creation opportunities can arise by building critical mass, reducing the cost base, and focusing resources on a more promising pipeline where tough decisions will be taken to discontinue weak programmes.
Ongoing acquisition activities
On 4 January 2010, Proximagen announced a cash offer for Minster
Pharmaceuticals plc ("Minster") which has two clinical stage
assets, tonabersat and sabcomeline. Worldwide rights to both
compounds were acquired by Minster from GlaxoSmithKline ("GSK") and
these compounds benefit from comprehensive safety tolerance data as
a result of investment by GSK.
Proximagen is interested in tonabersat for epilepsy and if utility is demonstrated, Proximagen would pursue the strategy stated above and look to partner tonabersat for this indication in 2010, whilst retaining some territorial rights.
Management team
The Company has made a
number of key appointments in the last twelve months to help it
deliver on its growth strategy.
· Peter Allen, who was appointed
Chairman in February 2009, brings extensive sector and transaction
experience to the Group.
· Dr Jackie Hunter has recently
joined Proximagen as a Non-Executive Director. Jackie is
currently the Senior Vice President and Head of Science Environment
Development at GlaxoSmithKline (GSK) and until March 2008, she was
the Senior Vice President and Head of the Neurology & GI Centre
of Excellence for Drug Discovery (CEDD) at GSK.
· Our business development team has
been strengthened with the appointment of Dr Tim Sparey as our Head
of Business Development. Tim joined Proximagen after 15 years
in the industry, first at Merck & Co. and latterly with Merck
Serono.
· We are also pleased to have
appointed Dr Maeve Duffy as Senior Clinical Project Leader.
Maeve brings a wealth of clinical development experience to the
Group.
Intellectual property
Over the past six months, Proximagen has significantly expanded its
patent portfolio. As a result of the recent acquisitions, the Group
now owns the rights to 26 patents and patents pending relating to
our drug programmes in pre-clinical and clinical development.
Balance sheet
Balance sheet strength remains of paramount importance for
executing our acquisition and drug development strategy. To
date, our innovative deal structures, coupled with the ability to
take advantage of the challenging funding environment in the
biotechnology sector have resulted in only a relatively small
amount of our capital having been used for consideration.
As at 30 November 2009, Proximagen had cash resources of GBP55.5m. We expect to invest these funds over the next two to three years in acquiring assets and developing our programmes.
The outlook
We have broadened our
pipeline, both in terms of therapeutic indications addressed and
the development profile, and we have a flexible, scalable operating
infrastructure that can accommodate further programmes without
replicating overhead costs.
We look forward to updating shareholders as we progress our acquisition and partnering strategy. The Company is expected to announce its preliminary results for the year ended 30 November 2009 in March 2010.
Commenting on the strategic update, Kenneth Mulvany, CEO, said: "Proximagen made significant strategic progress in the second half of last year and is well positioned to capitalise on that progress during 2010. With a strong Board, senior management team and balance sheet, as well as a greatly enhanced asset portfolio, we look forward to building on this platform to deliver further significant improvements in the Company's long term prospects this year."
Enquiries:
Proximagen Neuroscience
plc
Phone: +44 (0)20 7848 6938
Kenneth Mulvany, Chief Executive
Officer
James Hunter, Finance
Director
Evolution Securities Limited
(NOMAD)
Phone: +44 (0)20 7071 4300 |
Stuart Andrews, Bobbie Hilliam, Tim
Redfern
Pelham Bell
Pottinger
Phone: +44 (0)20 7861 3800 Charles Cook, Dan de Belder, Zoë
Pocock
