Prothena of South San Francisco Gets Head Start as Elan Spinoff

1/9/13Follow @Tansey_Xconomy

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primary amylodosis and a related disease, secondary amyloidosis. In this disorder, the damaging protein deposits may have been triggered by another illness, such as an infection. About 8,000 patients in the US and Europe suffer from secondary amyloidosis.

Although the Phase I trial will focus primarily on the safety of NEOD001, Schenk says Prothena may glean some early hints about efficacy by looking at subsets among the trial participants who exhibit certain biomarkers.

Next in Prothena’s pipeline is NEOD002, an antibody designed to block the effects of misfolded forms of the protein synuclein, which have been linked to neurological disorders including Parkinson’s disease.

Elan, when it first announced the demerger plan on August 13, estimated that the new R&D company to be created would have an annual burn rate of $50 – $60 million. Schenk says Prothena could operate for as much as three years from its existing funds. But he says it’s likely that Prothena can start bringing in revenues from licensing deals and partnerships.

The spinoff deal creates no right of first refusal for Elan as a preferred partner for Prothena. Schenk says the new company is most likely to seek pharmaceutical company partners where its experimental drugs show promise against large disease indications such as Parkinson’s.

“The smaller, orphan indications—I think we can do those on our own,” Schenk says.

Elan, in turn, is free to take on drug development projects that might compete with Prothena’s. While Elan has ended work on early stage drug discovery, it continues its research on ELND005, a small molecule drug candidate now in Phase II testing for bipolar disorder. The company retained that project because it could yield results quickly, unlike the earlier-stage programs transferred to Prothena, Elan’s CEO Kelly Martin said in an August 13 conference call with analysts about the demerger plan.

Industry observers speculated that Elan had decided to spin off its R&D unit after the news earlier in August of disappointing results for bapineuzumab, a drug candidate for Alzheimer’s Disease that Elan was helping to fund as part of a joint venture. Johnson & Johnson announced Aug. 6 that it was discontinuing Phase III development of bapineuzumab because the drug did not meet its did not meet the clinical goals researchers had set for it. J&J unit Janssen Alzheimer Immunotherapy, Pfizer, and Elan were part of the joint project.

Elan CEO Kelly Martin maintained during the Aug. 13 conference call that the Prothena demerger had been contemplated for more than a year, and was not triggered by the bapineuzumab news. The purpose of the restructuring was to give investors a choice to invest either in a profitable commercial company—Elan—or an R&D unit with the potential for long-term gains, he said.

Another commercial company marketing a multiple sclerosis drug is also discontinuing its R&D programs and spinning out its drug candidates to startups. Merck Serono, the largest division of German drug giant Merck and maker of the MS drug Rebif (interferon beta-1a), announced in July that it had created Prexton Therapeutics, which will carry on research on therapies for Parkinson’s disease. Prexton received seed funding of about $2.7 million from Merck Serono, which plans to spend a total of about $39.2 million to create startups based on its R&D discoveries. The Merck division’s stated aim is to buffer the impact of its restructuring on unemployment at its Geneva, Switzerland location.

Prexton, which also receives government support in Geneva, may someday become one of Prothena’s rivals in the intensely competitive field of research on neurodegenerative disorders.

Meanwhile, Prothena CEO Schenk, who has previously managed large research groups, says he’s enjoying his role as a first-time CEO at an independent startup.

“There’s a wonderful excitement, and also you can move very quickly,” he says.

 

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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