BiolineRX and Cypress cancel schizophrenia drug agreement

Cypress Bioscience bought the rights to BL-1020 for further development of the drug, which was due to begin a Phase IIb clinical trial.

BiolineRX Ltd. (TASE:BLRX) and Cypress Bioscience Inc. (Nasdaq: CYPB) have cancelled their June 2010 agreement to jointly develop BiolineRX's treatment for schizophrenia, BL-1020.

Cypress bought the rights to BL-1020 and was responsible for further development of the drug, which was due to begin a Phase IIb clinical trial (multi-center efficacy trial). BiolineRX was due to receive payments from Cypress, which could have totaled hundreds of millions of dollars, when the product reached market.

Instead, BiolineRX has bought back BL-1020, and will continue its development independently, or with a different partner. BiolineRX still has $30 million in cash from Cypress' down payments. If another company commercializes the product, BiolineRX will pay Cypress 10% of milestone payments received up to $10 million, plus 1% of royalties on sales up to $80 million.

Concerns arose that the BL-1020 deal would be cancelled when Cypress was acquired by private equity funds Ramius LLC and Royalty Pharma in December 2010. Ramius was already a shareholder in Cypress when the deal with BiolineRX was signed, and opposed it from the outset. Cypress' new owners initially sought to allay BiolineRX's fears, and in January, the company said that it believed that Cypress would continue development of BL-1020.

Royalty Pharma said at the time that BiolineRX's drug could suit its strategic profile, and that it intended to support Cypress' team to develop this and other products.

BiolineRX CEO Dr. Kinneret Savitsky told "Globes" today, "I cannot say if they really intended to continue development of the product or not. In truth, it didn’t fit their strategy."

"Globes": In your opinion, what changed since January?

Savitsky: "They wanted more time to evaluate the process, but we didn’t want to delay the trial by even one day."

BiolineRX estimates the cost of completing the clinical trial of BL-1020 at $10-12 million. Although the company has $37 million in cash, easily enough to cover the cost, it says that it prefers a partner for this purpose. Given that it originally sold the drug to Cypress rather than a larger company, and given that Cypress opted to give it back without a fight, suggests that BiolineRX will have trouble finding the partner it wants.

However, if BiolineRX also tries to find an interim partner for the Phase IIb trial of BL-1020, and if the trial is a success, i.e. clearly shows that is effective in treating the cognitive problems of schizophrenia, the picture could change later. BiolineRX also has a gel, Bl-1040, to rebuild heart muscles after a heart attack, which it licensed to Ikaria Holdings Inc., and several other products in the pipeline.

BiolineRX's share price fell 4.4% today to NIS 2.07, giving a market cap of NIS 270 million.

Published by Globes [online], Israel business news - www.globes-online.com - on May 11, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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