AGY Therapeutics Inc. acquired rights to a clinical-stage compound the company plans to study for its ability to improve a patient's functional recovery after stroke.

More specifically, the South San Francisco firm gained exclusive rights to develop and commercialize the sigma receptor agonist, which it has labeled AGY-94806, from M's Science Corp. AGY's rights are for the compound's use in post-stroke recovery and other indications; M's Science retains other rights to the drug, which it calls SA4503, and plans to continue developing it in other central nervous system indications.

In the long term, both privately held companies would coordinate the compound's worldwide development in a range of indications. But in the short term, the acquisition provides AGY with its first development-stage drug candidate.

"It's an area that we have been interested in from the beginning," Cynthia Ladd, AGY's president and CEO, told BioWorld Today. "And it gave us the opportunity to redirect a drug that was already in clinical trials. So [the deal marked] a beautiful combination of an area of interest for us, plus an ability to get into the clinic very quickly."

She said AGY, which opened its doors in 1998 as a functional genomics company that planned to develop therapeutics for central nervous system disorders from its platform technology, conducted early animal model research into targets for functional recovery after stroke. From those investigations, the company discovered the sigma receptor's role, and then filed patents on the receptor as a target for post-stroke recovery as well as on the use of compounds to target it.

"That makes [potential in-licensing] conversations a lot easier," Ladd said, "when you can say, If you're interested in this at all, we will hold the IP.'"

For AGY, which also gained AGY-94806's rights for traumatic brain injury and spinal cord injury, as well as rights to license additional central nervous system indications, the transaction provides an immediate development upside - the compound has proved safe in a prior clinical trial.

That Phase I study, which evaluated AGY-94806 for depression, produced positive safety data. Based on those clinical findings and prior preclinical data demonstrating post-stroke recovery activity, AGY plans to begin a dose-ranging Phase IIa trial of AGY-94806 by early next year.

"We have done some in vitro work where we have seen that when you culture cells with these compounds, you'll get additional and accelerated dendrite outgrowth," Ladd said, adding that in vivo studies are under way to prove such a mechanism of action. "And when you give animals this drug, the undamaged regions of the brain compensate and take over for the functions of the damaged regions of the brain."

In contrast, AGY said current approaches to stroke treatment focus on saving neural cells and must be delivered within a narrow time frame. Still, many stroke survivors are left with functional impairments that limit their daily living activities and mobility.

No drug therapies are approved to enhance recovery of the brain following stroke. The company's initial clinical work will evaluate the orally delivered small molecule's safety as a primary endpoint, while secondary efficacy endpoints will evaluate its ability to restore motor function through an as yet undetermined scoring scale.

In the next few months, AGY plans to begin animal studies to test AGY-94806's use in other indications. Kobe, Japan-based M's Science retains rights to the compound for depression, Alzheimer's disease and drug abuse.

In exchange for gaining access to AGY-94806, AGY agreed to pay M's Science an up-front payment followed by milestones and royalties, should the product hit the market. More specific financial terms were not disclosed.

But Ladd said that M's Science indicated that its plans include an initial public offering in Japan next year, and the licensing deal gives the company added exposure in advance of that potential milestone.

In addition to AGY-94806, AGY's other small-molecule therapeutic drug programs also are focused on central nervous system disorders. The company, which is exploring two targets for cognition and schizophrenia in one program, has advanced that research to lead identification. Also, a more traditional stroke program focused on neuroprotection is investigating three targets for their ability to prevent death in as many cells as possible. The most advanced of the three is in lead optimization. AGY is looking to out-license an oncology antibody program that came from a glioblastoma program.