Pfizer’s crusade to find its next blockbuster has led to a $725 million deal with San Francisco company Medivation for its Russian allergy drug to fight Alzheimer’s disease.

Recent studies have shown Dimebon (dimebolin) significantly improves key aspects of Alzheimer’s disease and has shown promise in other neurodegenerative conditions, making it an attractive drug for Pfizer to add its struggling blockbuster pipeline.

The deal, which represents the ninth for the drug giant this year, sees Medivation receiving an up-front cash payment of $225 million with milestone payments of up to $500 million.

Dimebon is currently in Phase III trials in patients with mild-moderate Alzheimer’s disease.

Under the terms of the contract, the companies will share all the US development and commercialisation expenses along with the US profits/losses on a 60/40% basis, with Pfizer assuming the larger share.

Pfizer will have responsibility for development, regulatory and commercialisation outside the US, while Medivation will co-promote Dimebon to speciality physicians in the US.

“After a rigorous process that garnered substantial interest, we believe that Pfizer is the ideal partner, sharing our vision for Dimebon and capable of maximising its potential globally,” said Dr David Hung, President and Chief Executive of Medivation.

“As one of the leaders in Alzheimer’s disease, Pfizer is an optimal partner because of its extensive experience developing new medicines; its marketing and commercialisation track record; and its significant global capability to effectively reach primary care physicians, who today prescribe the vast majority of Alzheimer’s disease medications in the US.”

Pfizer already manufactures Aricept (donepezil) and with more than 18 million people worldwide suffering from the dementia-causing disease, analysts have estimated the market could be worth $20 billion by 2012.

“Though Alzheimer’s disease is a difficult-to-treat disease, this deal looks like a positive risk-reward opportunity for Pfizer,” Miller Tabak analyst Les Funtleyder was quoted by Bloomberg.com. “Pfizer needs to continue to be aggressive if it is to compensate for the major revenue cliff in the next few years.”

Dimebon has been around for about 25 years as an allergy medication. Preclinical models have shown the drug can inhibit brain cell death in Alzheimer’s and Huntington’s disease. Other preclinical data shows Dimebon can improve the function of mitochondria, which are cell organelle vital for maintaining brain cell health, growth and function. The drug has also been found to stimulate the outgrowth of nerve cells from brain cells, which is believed to be important in restoring or generating new brain cell connections.

Clinical trial results published in July showed significant improvements in memory and thinking, activities of daily living, behaviour and overall function in patients with Alzheimer’s disease. At the end of 12 months, Dimebon-treated patients were on average functioning as well or better than they had been at the start of the study on each of five clinical endpoints.

Clinical trials have also shown improved cognition in Huntington patients.