Associate

Some might remember Memory Pharmaceuticals Corp.'s signing of a July 2002 deal centered on Alzheimer's disease and depression and valued at up to $150 million with F. Hoffmann-La Roche Ltd.

Those companies have done it again, as Roche, of Basel, Switzerland, expanded the work to include a new target, providing another up-front payment to Memory and, assuming all milestones are met, another $150 million in total. The deal includes Roche taking an equity position in Memory, which also would receive royalties.

While Memory CEO Tony Scullion said the "big news here is the faith and trust and testimony in our capabilities that Roche has shown by taking the expanded license," gauging the growth of Roche's confidence in Memory requires examining both deals.

The first deal focused on nurturing drug candidates from Memory's preclinical compounds with a goal of developing a product for Alzheimer's disease in the neurologic field and a second product for depression in psychiatric diseases. Once the products reached the clinic, Roche would take over and guide development. If both products were approved, Memory would have received a total of $150 million in payments. (See BioWorld Today, July 31, 2002.)

The expanded part of the relationship focuses on a new target and gives Memory more control. The companies are again looking for two products, this time "initially, in schizophrenia in psychiatric diseases and Alzheimer's in neurological disease," Scullion said. However, here Memory will have research and development control through Phase IIa. Also, while Roche will have an option for worldwide rights to further develop and commercialize products, Memory will have co-promotion rights, Scullion said.

Work on the original deal has progressed well, Scullion said, as MEM 1414 has moved into Phase I work for Alzheimer's disease. Things could move just as quickly in the expanded collaboration.

"We would hope to move one product into the clinic next year," Scullion said.

MEM 1414 is the first drug candidate from a class of compounds designed to inhibit phosphodiesterase, the enzyme that breaks down cAMP levels in the brain.

As it stands now, Memory's near-term future appears to be funded and it will lock its sights onto the goal of producing in total at least four approved products from the Roche alliances, which means it would have received $300 million in total payments. Although unwilling to disclose how far into the future the Roche work (and funding) should last, Scullion told BioWorld Today that normally similar deals can run a "couple of years," but noted that extensions are possible.

"Last year's is still formally running," he said. "It entered its second year, and this [expanded] program will commence right now for an equivalent amount of time."

Privately held Memory has raised about $78 million to date, including a $40 million financing in March 2002. The equity position Roche is taking is a "small, minority interest, but significant," Scullion said, but added that the price Roche paid per share was an undisclosed premium to the shares Memory sold in the financing last March. (See BioWorld Today, March 26, 2002.)

Recent months have seen a line of product-sporting companies filing to test the initial public offering market. Memory has clinical products: MEM 1414 as well as its un-partnered product, MEM 1003, a candidate for Alzheimer's disease and other indications, which has just concluded Phase I work. Now that the company has signed and expanded a large deal with big pharma, first glance might suggest Memory has what it takes to join that list of would-be public companies.

"We are certainly monitoring very, very carefully the [IPO] situation," Scullion said. "We don't need to go public, but we see the attraction. We'll be prepared should a window of significance open."

For now, though, Memory has work to do - both with Roche and on its own - enough for management to be burning the midnight oil. Speaking in the wee hours from Tokyo, Scullion said that although Roche has twice put its stamp on Memory's research, his company is "not tied to Roche in any way."

"The reason I'm in Japan is that we are in collaboration discussions on other discoveries with other companies," he said. "We now have two target alliances with Roche, but we are actively pursuing discussions with other companies as well."