Merck in $700 million schizophrenia deal

By Sam Cage

ZURICH (Reuters) - Swiss biotech company Addex Pharmaceuticals SA (ADXN.S: Quote, Profile, Research, Stock Buzz) said it could receive more than $700 million from Merck & Co Inc (MRK.N: Quote, Profile, Research, Stock Buzz) for a licensing deal on its ADX63365 drug to treat schizophrenia, lifting its shares.

Addex will receive $22 million up front from Merck for the schizophrenia deal -- which also covers other undisclosed indications -- and is eligible for up to $680 million in milestone payments, it said on Thursday.

Geneva-based Addex also said its lead compound ADX10059 had failed to meet its main target in a mid-stage clinical trial in acute anxiety.

Addex shares rose 6.5 percent to 42 Swiss francs by 4:12 a.m. EST, versus a 1 percent drop in the DJ Stoxx European drugs index, as the boost from the Merck deal outweighed the impact of the clinical trial failure, analysts said.

Deals between major drugmakers such as Merck and smaller biotech partners are becoming increasingly common, as big pharma invests in medicines to fill drug pipelines.

Addex, the latest of a series of biotechs to list in Switzerland, is also eligible to receive royalties on sales of any products resulting from the Merck collaboration.

Addex could receive up to $455 million in milestones for the first product developed in two indications, plus a further $225 million for any second product.

"Importantly, beyond the usual royalty structure, which given the stage of development of the drug and recent deals we expect is somewhere between 5-15 percent, Addex has retained co-promote rights in certain EU countries," PiperJaffray analysts said in a note.