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ATHENA NEUROSCIENCES FILES IND FOR TIZANIDINE PHASE III TRIAL, EXTENDS LILLY ALZHEIMER's RESEARCH PACT ON EVE OF $ 35 MIL. INITIAL PUBLIC OFFERING

Executive Summary

Athena Neurosciences is preparing to begin Phase III trials of tizanidine for the treatment of spasticity associated with multiple sclerosis, the neuroscience R&D start-up said in a Sept. 30 registration statement for an initial public offering. The firm reports filing an IND for the trials on Sept. 27. South San Francisco-based Athena licensed the compound from Sandoz in April ("The Pink Sheet" May 6, In Brief). The company hopes to file an NDA by the end of 1992 or early in 1993. The company will conduct one multicenter Phase III trial in the U.S. and submit data from a recent Phase III trial in the U.K. conducted by Sandoz, the prospectus states. "Preliminary analysis [of the U.K. data] by Sandoz suggests that there was significant improvement in muscle tone in these [multiple sclerosis] patients, as well as significant secondary measures of improvement," the prospectus says. Tizanidine is currently marketed by Sandoz in 23 countries as Sirdalud. Athena, founded in 1986, will be the fourth neuroscience company to go public this year, following Regeneron, Cephalon and Cambridge Neuroscience, all earlier-stage companies. Athena, in contrast, has substantial research revenue commitments in place, two in-licensed products in clinicals, and a branded generics business ready to commence operations. Athena has extended its centerpiece Alzheimer's R&D collaboration with Lilly for an additional five years, the prospectus says. The extension was signed Sept. 16, Athena said. The new agreement extends until Dec. 31, 1996 -- succeeding a 1988 deal that was due to expire Oct. 31. The extension provides for an "increased level of funding" from Lilly, Athena said. Lilly may pay a total of $ 27.2 mil. over the time of the agreement, the prospectus says. Lilly had paid out $ 1.5 mil. in R&D expenses through June, the prospectus says. The research, which focuses on amyloid enzyme inhibitors and amyloid neurotoxicity inhibitors, is in preclinicals. Lilly also has upped its equity stake in Athena to 7.7% with a $ 4 mil. purchase of shares. Lilly owns 828,484 shares, for which it paid a total of $ 7 mil., according to the prospectus. Athena also is working with Lilly subsidiary Hybritech to develop Alzheimer's diagnostics. Athena has a second corporate partnership in place. In August, the company announced a three year deal with Wyeth-Ayerst ("The Pink Sheet" Aug. 21, T&G-4). Parent American Home Products is committed to spend $ 6.5 mil. on research in the partnership, the prospectus says. That amount, however, should be offset by the $ 6.5 mil. Athena will pay for the anti-convulsant AN-051 (formerly AHR-11748) which was licensed from the AHP subsidiary A. H. Robins. Athena also paid Robins $ 2 mil. up front to license AN- 051 that was returned to the company as a $ 2 mil. payment from AHP for 200,000 shares of common stock, the prospectus says. AN- 051 is in Phase II. Athena's third product is botulinum toxin, which is being developed in collaboration with the Michigan Department of Public Health. The A serotype is marketed by Allergan as Oculinum. Athena hopes to file an IND for a non-A serotype in 1992 with an initial clinical target of focal dystonia. Athena is seeking to net approximately $ 35 mil. with a 3.5 mil. share offering at a proposed price of $ 11 per share. Athena will use about $ 3 mil. of the proceeds to establish a sales force to market branded generics to neurologists, the propectus says. Athena expects to begin marketing its Athenaline branded generics in 1992, the prospectus says. The company's first three products will be Atretol (carbamazepine), Atrofen (baclofen) and Atarin (isometheptene mucate, dichloralphenazone and acetaminophen). Athena has deals with two undisclosed multisource companies, the firm said. Athena expects to hire about 25 sales reps to detail the products to "the 4,000 office-based neurologists which, market research indicates, account for approximately 90% of the total prescriptions written by all office-based neurologists," the prospectus says. Athena will support its branded generics business with a full- service mail-order pharmacy distribution system, dubbed Athena Rx, the prospectus says. Athena Rx will distribute a full line of generics and brandname drugs prescribed by neurologists, Athena said. The company said it does not intend to compete against the large mail-order firms; instead it hopes to provide prices below pharmacy charges while giving neurologists the confidence that patients will be properly monitored in the compliance. Richard Lukasko, formerly head of Longs Drug's mail-order business, has been hired to direct Athena Rx, Athena said. The company expects to build the program to about 12 pharmacists and maintains it will have more pharmacists per prescription than the industry average. The mail-order business will operate independently from the detail force, Athena said. Athena will spend another $ 7 mil. of the proceeds from the offering on "payment of product and technology in-license fees," the prospectus says. An additional $ 3 mil. will be used to expand facilities, possibly including the development of the company's first manufacturing facilities. The balance of the money raised in the offering will be reserved for general corporate purposes. Athena employs 70 people, the prospectus says. Former Smith Kline & French International President John Groom is CEO. Exec VP- Research Paulette Setler, PhD, joined the company from Janssen, where she was executive director of biological research. Athena Chairman Brian Dovey, elected in June 1991, was previously Rorer group president and is currently a general partner of the venture capital firm Domain Associates. Athena co-founder Lawrence Fritz, PhD, has served as VP-research since the company was founded. He was formerly a senior scientist at California Biotechnology. Heading the business side is VP-Sales and Marketing Michael Coffee, who was formerly VP-marketing and sales at Miles. Coffee was most recently general manager of Elan's O'Brien-KMI medical nutrition business, and he started in sales with Sandoz. Athena's chief financial officer is former Genelabs Director of Operations Matthew Megaro. Athena has raised a total of $ 36.5 mil. in private placements, the prospectus says, including a $ 13 mil. offering in February ("The Pink Sheet" Feb. 18, "In Brief"). The company has over $ 10 mil. in cash and equivalents. Chart omitted.
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