Pfizer Inc., Medivation enter into Alzheimer’s drug development deal worth up to $725 million

Pfizer Inc. and Medivation Inc. announced last Thursday that the companies entered into an agreement to develop and commercialize Dimebon, Medivation’s investigational drug for the treatment of Alzheimer’s disease and Huntington’s disease.

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NEW YORK—Pfizer Inc. and Medivation Inc. announced last Thursday that the companies entered into an agreement to develop and commercialize Dimebon, Medivation's investigational drug for the treatment of Alzheimer's disease and Huntington's disease. Under the terms of the agreement, Medivation will receive an up-front cash payment of $225 million. Medivation also is eligible to receive payments of up to $500 million upon the attainment of development and regulatory milestones, plus additional undisclosed commercial milestone payments. Dimebon currently is being evaluated in an international, confirmatory Phase III trial in patients with mild-to-moderate Alzheimer's disease.

Medivation and Pfizer will collaborate on the Phase III program in Alzheimer's disease, Huntington's disease development and regulatory filings in the United States. The companies will share all U.S. development and commercialization expenses along with U.S. profits/losses on a 60 percent/40 percent basis, with Pfizer assuming the larger share of both expenses and profit/losses. In addition, Medivation will co-promote Dimebon to specialty physicians in the U.S. Pfizer will have responsibility for development, regulatory and commercialization outside the U.S. and will pay Medivation tiered royalties on commercial sales outside of the United States.

"With more than 18 million people worldwide suffering from the debilitating and ultimately fatal effects of Alzheimer's disease, Pfizer has made this devastating illness one of our highest priorities," says Dr. Martin Mackay, president of Pfizer Global Research and Development, in a statement announcing the deal. "We are working to develop new medicines that improve memory and halt or significantly slow the disease's progression. We look forward to collaborating with Medivation to bring Dimebon to patients as rapidly as possible."

Dimebon is an orally-available, small molecule that has been shown to inhibit brain cell death in preclinical models relevant to Alzheimer's disease and Huntington's disease, which also makes it a potential treatment for these and other neurodegenerative conditions. Based on preclinical data, Dimebon appears to improve the function of mitochondria, the energy generators in cells that play a vital role in governing brain cell health, growth and overall function. Dimebon also has been shown to stimulate the outgrowth of nerves from brain cells, or neurites, a process that is believed to play an important role in restoring or generating new brain cell connections.

"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 commercialization 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 U.S.," says Dr. David Hung, president and chief executive officer of Medivation.

The deal couldn't have come at a better time for Medivation. According to the company, its capital burn rate was roughly $15 million a quarter, while its balance sheet only carried $33 million. With such a short runway, and data still coming in on the efficacy of Dimebon, the company put the drug out to bid, with Pfizer coming out on top.

RBC Capital Markets analyst Michael Yee told the San Francisco Chronicle that such a large commitment as this indicates the intense interest pharma has in potential Alzheimer's and neurodegenerative disease treatments.

"If you hit something, it's a multiple-billion-dollar opportunity compared to the few hundred million you have to offer up front," Yee told the Chronicle.

At the same time, should a drug fail to show significant benefits, the large sums of money paid upfront amount to a measured gamble.

For Medivation, it was the right drug at the right time to keep the ship afloat, as the upfront payment will increase its cash on seven-fold and lengthen the company's runway almost immeasurably. DDN

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