Switzerland’s Addex Pharmaceuticals has signed a worldwide licensing agreement worth over $700 million with US drugs giant Merck & Co which will see the firms develop a new treatment for schizophrenia.

The two firms will collaborate to develop ADX63365, a positive allosteric modulator that targets the metabotropic glutamate receptor 5, may be able to act as an antipsychotic and reverse cognitive dysfunction of schizophrenia, Addex noted, plus other undisclosed indications.

Under the terms of the deal, the Geneva-based group will receive an upfront payment of $22 million and is eligible for $455 million in milestones for the first product developed for two indications. Addex may also receive up to an additional $225 million if a second product is developed for two indications and as part of the deal, it also has a co-promotion option for certain European countries.

This is the second partnership to be signed by the two drugmakers. In December, they signed a $170.5 million deal to develop a new class of oral drugs to treat Parkinson’ disease. Darryle Schoepp, Merck's franchise head for neuroscience, said that through this second collaboration with Addex, “we have now gained access to a promising drug candidate targeting this receptor that potentially allows us to address an area of high medical importance where current therapies are clearly inadequate".

Addex chief financial officer Tim Dyer added that the firm now expects its 2008 cash burn to be in the range of 25-30 million Swiss francs.

Worse news for ADX10059
Less good news for the Swiss firm came when it announced that another compound, ADX10059, did not reduce acute anticipatory anxiety in a small Phase IIa study in 50 patients with dental anxiety. However chief executive Vincent Mutel said that “these data do not have any impact on the potential of ADX10059 in migraine or gastroesophageal reflux disease”, adding that Phase IIb testing of the drug in both GERD and migraine will begin in mid-2008.