UPDATE 2-Addex set for partner deal after drug hits target

* Lead drug hits main target in mid-stage trial

* May set up partner deal on potential billion dollar seller

* Addex expects more mid-stage data in next few months

* Shares rise 16 pct

(Adds shares, comment, company details)

By Sam Cage

ZURICH, Nov 16 (Reuters) - Swiss biotech group Addex Pharmaceuticals' (ADXN.S) said its lead drug candidate met its main target in a mid-stage clinical trial in heartburn, potentially paving the way for a lucrative partnering deal.

Analysts say positive data on ADX10059 sets the stage for a deal with a bigger drugmaker, which would provide much-needed funds for Addex, a start-up company that does not yet have a product on the market. [ID:nLJ303561]

"With good phase IIb data Addex's next step is to license the drug to a larger pharmaceutical company. We reckon this process has already started, thus would expect a deal in 2010," said Andrew Weiss, analyst at Swiss bank Vontobel.

Addex shares had jumped 16 percent to 37 Swiss francs by 0821 GMT on Monday, compared with an almost flat European healthcare sector .SXDP.

In a Phase IIb trial, the drug increased the number of symptom-free days fivefold when used as a monotherapy in gastroesophageal reflux disease (GERD), which causes heartburn, the company said on Monday.

Drug discovery groups like Addex are aiming to match the success of Actelion (ATLN.VX), which has developed its own billion dollar selling drug, but many have fallen by the wayside as medicines fail to live up to potential and cash runs short.

The problems of such small start-up biotechs are shown by Addex's stock, which had lost 16 percent this year before Monday, underperforming a stronger European sector.

TECHNOLOGY PLATFORM

In contrast to some of its rivals, Addex has a relatively wide portfolio of new products and a novel technology platform known as allosteric modulation.

The drugs would work in cooperation with the body's own agents, potentially giving better therapeutic control over disease than traditional medicines, which can be more disruptive to natural functions.

That approach is reinforced by existing partnership deals with two big U.S. healthcare companies, Merck & Co (MRK.N) and Johnson & Johnson (JNJ.N), while Britain's GlaxoSmithKline (GSK.L) has a 5 percent stake.

Addex expects to report data from a second Phase IIb trial of ADX10059 -- a possible billion dollar seller -- in GERD in January 2010 and more mid-stage data in migraine in the second quarter.

The drug could be first in a class of medicines which includes rivals from Roche (ROG.VX), Novartis (NOVN.VX) and AstraZeneca (AZN.L). (Editing by Will Waterman)