BioWorld International Correspondent

Diamyd Medical AB is banking $500,000 as an up-front payment and, from 2008 onward, will receive an annual user fee of $75,000 from Neurologix Inc., of Fort Lee, N.J., in return for granting the latter company a nonexclusive license for developing treatments for Parkinson's disease based on glutamic acid decarboxylase 65 (GAD65).

Diamyd, of Stockholm, Sweden, also would receive milestone payments and royalties on sales of products emerging from the agreement.

The deal is the first concerning GAD65 that Diamyd has signed, but it is talking to other companies about additional applications, including mood disorders and other movement disorders, such as epilepsy, CEO Anders Essen-Mollen told BioWorld International. "It's a nonexclusive deal. That's why it is limited in size," he said.

Diamyd licensed worldwide therapeutic rights to the GAD65 gene from the University of California at Los Angeles (UCLA), and has a drug development program under way in diabetes based on that intellectual property. GAD65, which is released from injured beta cells, is a major autoantigen associated with autoimmune diabetes.

Later this month, the company will release data from a Phase II trial of a therapeutic based on GAD65, called Diamyd, that is in development for autoimmune Type I diabetes. It also plans to release data on a Phase II trial of the compound in autoimmune Type II diabetes in June 2007. In total, the company aims to target about 20 percent of diabetic patients with the product.

Because of its enzymatic activity - GAD65 catalyzes the conversion of the excitatory neurotransmitter glutamate to the inhibitory transmitter GABA - the product has potential in multiple disorders of the central nervous system. Diamyd itself plans to investigate its role in pain, following its acquisition late last year of Pittsburgh-based Nurel Therapeutics Inc., which had been developing a GAD-based product for chronic pain associated with diabetes and spinal cord injury.

The company currently has about $9 million in cash, Essen-Mollen said. It would gain an additional $7 million through the full exercise of a warrants program associated with its last rights issue, which is due to expire on Aug. 31. It would need to raise additional funding to undertake a Phase III trial of Diamyd in-house, Essen-Mollen said.