EP Vantage Interview - Newron Eyeing US Acquisition

November 04, 2008 EP Vantage Interview - Newron eyeing US acquisition

Amy Brown

Newron Pharmaceuticals is actively looking at potential acquisition targets in the US, with the long-term aim of buying a sales force to sell its experimental neuropathic pain drug ralfinamide, chief executive Dr Luca Benatti told EP Vantage today.

The Italian company ultimately wants to co-promote ralfinamide alongside a larger partner, and establishing a commercial arm is part of Newron’s broader strategy to become a fully integrated pharmaceutical company. Buying a US company with an existing sales force and existing products, sold in a similar market, would help to achieve that aim quickly.

Dr Benatti declined to reveal whether a deal was on the near horizon, but said the company is “actively looking”. “Any acquisition we made now would be geared towards becoming a fully integrated company, building the pipeline is not a priority,” he said.

Stefan Weber, Newron’s chief financial officer, said he would ideally like to pay for any deal in shares, although some cash could be raised if the right deal was found.

Low back pain

Swiss-listed Newron is sitting on around €50m in cash which is earmarked for R&D; enough to last two years and fund the first phase IIb/III trial of ralfinamide.

The drug is a potent inhibitor of the neuronal sodium channel Na(v)1.7, and a phase II trial in a mixed population with peripheral neuropathic pain generated strong efficacy. Use in neuropathic low back pain is being pursued, a specific indication for which there is no approved therapy.

This means that any pivotal trial will not have to have a comparator arm, Ravi Anand, Newron’s chief medical officer said, meaning the studies can be conducted faster and more cheaply. The company plans to do two large phase IIb/III trials, in 400 patients each, which may be sufficient as pivotal studies. The first one will commence before the end of the year, and last about 12 months.

A second pivotal trial will be required, and the plan is for a licensing partner to fund it. “We have the money and experience to conduct the first trial, and if it is successful that will be a tremendous value creating event for Newron, and we will be in a very strong position to partner,” Dr Benatti said.

Therefore a deal is more likely to materialise after the results are known, at the end of next year, particularly as funding is not an issue. Meanwhile, the choice of partner and type of deal will depend entirely on whether it allows Newron to pursue its goal of becoming a fully integrated company, he said, and will have to include a co-promote option in the US.

Short-term interest

Because of its early stage, analysts are not yet forecasting sales for ralfinamide, but many believe the drug represents a bigger opportunity than the group’s lead compound safinamide; a phase III Parkinson’s disease drug which is already partnered with Merck Serono.

While ralfinamide is driving the company’s longer term ambitions, safinamide is more likely to provide near term interest. The programme is being run by its partner, who should announce results from a phase III trial of the drug, as an adjunctive therapy to levodopa in mid-to-late stage Parkinson’s, late this year or early 2009. At the same time, timelines on further trials and filing plans should be announced.

Hopefully for Newron, this will be positive news, which is sorely needed to boost its share price. Like other companies in the sector the stock has drifted downwards this year, losing half its value so far to currently trade at around Sfr25, giving the company a market value of Sfr136m ($117m). With well-capitalised big pharma and biotech companies already taking advantage of weakened smaller players in these current cash-strapped times, Newron clearly wants to join the party. As buying its way into the US seems to be the preferred option, over building a sales force with the help of a licensing partner, a lift in the stock price would certainly help Newron to pursue its US ambitions and use paper in any acquisition.