Benzinga | Nov 22, 2021 08:09AM EST

Neurocrine Biosciences And Sosei Heptares Announce Collaboration To Develop Novel Muscarinic Receptor Agonists For Schizophrenia And Other Neuropsychiatric Disorders

Neurocrine Biosciences, Inc. (NASDAQ:NBIX) and Sosei Group Corporation ("Sosei Heptares"; TSE: 4565) announce the signing of a strategic collaboration and licensing agreement to develop novel muscarinic receptor agonists, which Neurocrine Biosciences intends to study in the treatment for schizophrenia, dementia and other neuropsychiatric disorders.

Under the terms of the agreement, Neurocrine Biosciences gains development and commercialization rights to a broad portfolio of novel clinical and preclinical subtype-selective muscarinic M4, M1 and dual M1/M4 receptor agonists discovered by Sosei Heptares in development for the treatment of major neurological disorders. The most advanced program, HTL-0016878, is a selective M4 agonist. Neurocrine Biosciences plans to submit an Investigational New Drug (IND) application and initiate a placebo-controlled Phase 2 study with HTL-0016878 as a potential treatment for schizophrenia in 2022.

Sosei Heptares retains the rights to develop M1 agonists in Japan in all indications, with Neurocrine Biosciences receiving co-development and profit share options.

Muscarinic receptors are central to brain function and validated as drug targets in psychosis and cognitive disorders. Sosei Heptares has discovered selective muscarinic M4, M1 and M1/M4 dual agonists that offer the potential to deliver therapeutic effects while avoiding both the harmful side effects caused by non-selective agonists and efficacy issues experienced in some older patients caused by positive allosteric modulators that require cooperativity of diminishing levels of acetylcholine. Sosei Heptares achieved this through application of its world leading G protein-coupled receptor (GPCR) stabilized receptor platform (StaR(r)) and subsequent translational medicine studies.

"Our partnership collaboration with Sosei Heptares to advance their selective muscarinic agonist portfolio leverages the strengths of both our organizations with one goal in mind, to bring important medicines to patients who need better treatment options," said Kevin Gorman, Ph.D., Chief Executive Officer at Neurocrine Biosciences. "We continue to add potential best-in-class compounds to our growing pipeline, which further positions Neurocrine Biosciences as a leading neuroscience-focused biopharmaceutical company."

Shinichi Tamura, President and CEO of Sosei Heptares, added: "We are delighted to partner with Neurocrine Biosciences to advance our selective muscarinic receptor agonist portfolio. The deal highlights the significant potential value within this portfolio and brings to bear the substantial expertise of the Neurocrine team, which is highly experienced in developing and commercializing novel products for patients with neurological and psychiatric diseases globally. It also enables Sosei Heptares to retain rights in Japan, where we are confident that we can make important progress leveraging our own expertise to advance novel candidates that aim to address this major unmet need. Overall, the deal is a great example of our strategy to combine our drug design and early development capabilities with those of later stage development and commercialization partners, while also providing significant funding to expand and advance our own pipeline."

Collaboration Details

Under the terms of the agreement, Neurocrine Biosciences will be responsible for development costs associated with the programs globally, except for M1 agonists being developed in Japan. The agreement will be subject to the following terms:

* Upfront License Payment: Sosei Heptares will receive a total of $100 million USD in upfront cash.

* Development and Regulatory Milestones: Sosei Heptares is eligible to receive up to approximately $1.5 billion USD related to the successful progression of licensed candidates through to regulatory approval.

* Commercial Milestones: Sosei Heptares is eligible to receive up to $1.1 billion USD upon achieving certain global sales milestones of any products developed under the partnership.

* Product Royalties: Sosei Heptares is eligible to receive tiered royalties ranging from high single digit to mid-teen percentage on future net sales of any products developed under the partnership.

* R&D Collaboration: The R&D collaboration will be conducted jointly by Neurocrine Biosciences and Sosei Heptares to advance preclinical candidates through Phase 1 clinical studies. The R&D collaboration will be funded by Neurocrine Biosciences.

* Sosei Heptares M1 Agonist Rights in Japan: Sosei Heptares retains rights to develop M1 agonists in Japan for any indication, with Neurocrine Biosciences receiving co-development and profit share options.

This transaction is subject to customary clearances under the Hart-Scott-Rodino Antitrust Improvements Act. Assuming this transaction completes by December 31, 2021, the $100 million USD upfront payment will represent a material positive revenue impact to Sosei Heptares, and is expected to be recognized as revenue in the fourth quarter of the financial year ended December 31, 2021, subject to agreement with the Group's auditors.

BofA Securities is acting as financial advisor to Sosei Heptares. Gowling WLG and Orrick Herrington & Sutcliffe LLP are serving as legal counsel to Sosei Heptares.