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Alpha-7 dog: Roche buys out Memory Pharmaceuticals for $50 million
12-08-2008
by Chris Anderson  |  Email the author
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MONTVALE, N.J.—In a deal that locks up its rights to a pair of alpha-7 agonist drug candidates targeting Alzheimer's disease and schizophrenia, Roche announced in late November that it signed a definitive merger agreement to acquire all the shares of Memory Pharmaceuticals Inc. for 61 cents per share. The price marked a premium more than 300 percent over the previous day closing price for Memory, but appeared to be more of a move by Roche to protect its investment in the alpha-7 agonists, R3487/MEM 3454 and R4996/MEM 63908, which were being developed under a partnering agreement between the two companies that dates back to 2002.

"Acquiring Memory Pharmaceuticals will enable Roche to secure the future development of its promising nicotinic alpha-7 agonists," said William Burns, CEO Division Roche Pharmaceuticals, in a press release announcing the deal. "The innovative work carried out by the scientists at Memory Pharmaceuticals will be fully integrated into Roche's R&D portfolio with the aim of providing new hope for patients and caregivers affected by devastating diseases such as Alzheimer's."

For Memory, the deal was the last gasp of a company that had made progress in its CNS research specialty. While the markets have been unkind to virtually all companies in the past couple of months, it has been especially harsh on small cap companies that are losing money. Over the past year, the company has reported losses of nearly 60 cents per share and as of the end of its last quarterly report the company was more than $20 million in debt.

But the trouble for Memory began earlier this year. In February, after the company's stock price declined nearly 70 percent in four months, the company named Vaughn M. Kailian as the company's interim president and CEO replacing Jim Sulat, who had served in that role since 2005. In support of naming of Kialian to head the company, Memory four largest institutional investors, approved a six-month lock-up agreement. But it was not enough to keep the company afloat in what had become a very hostile market once the lock-up agreement expired.

By agreeing to be bought out by Roche, Memory both salvaged some cash for its investors, but more importantly, provided a way for its promising CNS alpha-7 agonist candidates. R3487/MEM3454, is the most advanced having recently completed Phase IIa studies for Alzheimer's and is currently in Phase IIa for schizophrenia, while R4996/MEM63908 is in Phase I studies also for Alzheimer's.

In addition, Roche picks up Memory's other Phase IIa program MEM1003, which targets Alzheimer's, mild cognitive impairment (MCI) and vascular dementia. The only other program in the clinic is for MEM1414, a PDE4 inhibitor, also targeted for Alzheimer's. All other programs at the company are currently still in the preclinical phase including one program focused on PDE10 inhibitors for undefined neurologic and psychiatric disorders, currently partnered with Amgen.

In announcing the sale of the company, Jonathan Fleming, chairman of the board of directors of Memory noted: "Since founding Memory Pharmaceuticals in 1998, we have focused on developing medicines that could make a real difference to the lives of CNS patients. I am proud of the progress our dedicated team has made and I am confident that Roche's capabilities and experience in the CNS field will enable our research to realize its full potential." DDN

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