Allergan To Buy Antidepressant Maker For $560 Million With Hopes Of Preventing Suicides

Allergan ,the drug giant that is famed for Botox but also makes antibiotics and an Alzheimer's treatment, will spend $560 million to purchase Naurex, an Evanston, Ill.-based developer of antidepressants that can work in hours, compared to weeks for existing depression pills. The drug giant says it sees opportunity in a depression drug that works in a new way, and hopes Naurex's experimental medicines might someday be shown to prevent suicidal people from killing themselves.

"The bottom line is it's an incredibly exciting opportunity to change the paradigm in mood disorders particularly in depression and perhaps suicidality," says Brent Saunders, Allergan's chief executive. "Depression remains one of the largest unmet areas of medical need. When you think about existing therapies, they have modest effects with lots of side effects."

Allergan will pay Naurex's owners additional undisclosed amounts if R&D and regulatory milestones are reached.

The chance of proving a reduction in suicides rests on the idea that the two drugs Naurex has in the later stages of clinical trials appear to help patients who have not responded to existing antidepressants very quickly.  The finding will need to be confirmed in larger trials, and the studies that could prove a suicide reduction benefit are barely in the design stage. Allergan is not the only big company working on a fast-acting antidepressant. Johnson & Johnson is developing an inhaled version of the anesthetic ketamine that might be used in much the same way. And the potential of a drug to prevent suicide is what has outside researchers excited about these medicines. “These drugs have much greater potential as anti-suicidal treatments than they do as antidepressants,” says David V. Sheehan, a professor emeritus at the University of South Florida College of Medicine.

Psychiatry, an area that most big drug companies had abandoned, is undergoing a small renaissance. Last year, the amount of money put into n beeneuroscience-based companies tripled to $4.6 billion, the highest level in a decade, according to NeuroPerspective, a newsletter. This year so far, $4.3 billion has already been put into such firms, not including this deal. Among the beneficiaries have been neuroscience-based companies like Sage Therapeutics and Intracellular therapies.

Discussions for the deal began late last year, when David Nicholson, chief of research and development at Allergan (then called Actavis ) reached out to explore a potential partnership with Naurex. “We need new mechanisms in depression,” says Nicholson. “There hasn’t been anything new in more than two decades.”

When Naurex first started looking to change that, there was little interest. In 2004, an experiment with ketamine showed it helped depression in 12 of 17 patients who did not respond to other therapies. Naurex chief executive Norbert Riedel, who had been chief scientific officer of Baxter International , was fascinated. But what if a drug could be found that lacked ketamine's side effects of dissociation and hallucinations? But a Northwestern scientist, Joseph Moskal, had been working for years on medicines that affected the same receptor as ketamine -- N-methyl-D-aspartate, or NMDA.

Moskal founded Naurex in 2008. At first it was slow going. For three years the company subsisted on grants and seed funding. Psychiatry drugs seemed to be failing more and more often, and neither large companies nor venture capitalists seemed to want to get into the field. But in 2011, Naurex raised $18 million from investors including Adams Street Partners, Genesys and Lundbeck. The next year it raised another $38 million, and then extended that round with another $25 million. Last year, it was able to raise $80 million, bringing its total take to $163 million.

The money came because of results in clinical trials. The first drug that Moskal invented had to be given by an IV. In January, I wrote about Cindy Kelly, a 48-year-old mother of two who had participated in a clinical trial of Naurex’s intravenuous antidepressant. She hadn’t responded to existing drugs.  “Within 15 minutes my symptoms were gone, and it was like magic,” she said then. The effect wore off a week later, and she fought to get into a second study that would allow her to take the medicine again. She did, and, again, it seemed to make her depression go away. That drug, GLYX-13, is now ready to start late-stage trials, and the need to fund those studies is one of the factors that led Naurex to sell.

But GLYX-13's future was limited because patients had to be hooked up to an IV to get it. The next challenge was to create a pill. Working with a Naurex chemist named Amin Khan, Moskal was able to create such a medicine, called NRX-1074. Data on the pill were released in January showing that it reduced ratings on the Hamilton Depression Scale, a survey used to measure the severity of a patient’s illness, by 7 points more than placebo. A press release quoted the study’s lead investigator, Susan McElroy of the University of Cincinnati College of Medicine, as saying the reductions were “among the most substantial I have observed in antidepressant clinical development.”

That also came as Allergan was already courting Naurex, trying to convince its management to do a deal. Part of what sweetened it: Riedel and Moskal will be able to quickly get back to discovering more medicines as an independent company.  Naurex’s research assets will be spun out, and the still unnamed new firm will be run by Riedel. The new company and Allergan will collaborate, but Allergan doesn’t actually want to be in the business of inventing drugs. “It fits with our model of not doing research in-house,” Nicholson says. (For more on Allergan's philosophy, see my February cover story on Saunders.)

Allergan will pay $460 million when the deal closes, which should happen sometime this year. It will pay another $100 million by January of 2016, and will pay further undisclosed amounts when the drug hits R&D and regulatory milestones.

Correction: An earlier version of this story indicated that Riedel, not Moskal, founded Naurex. I regret the error.