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Editors' Note: This article covers stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

This morning, Amarantus Bioscience Holdings, Inc. (OTCQB:AMBS) announced that it has entered into a licensing agreement to acquire the rights to eltoprazine from PGI Drug Discovery LLC (formerly PsychoGenics Inc.) in return for cash and future undisclosed cash and stock milestones. Amarantus intends to push eltoprazine forward in a Phase 2b clinical study during the second half of 2014 for the treatment of levodopa-induced dyskinesia (LID), a common treatment-related adverse event that develops in patients with Parkinson's disease (PD). This is a keen area of interest for the company, and one that we wrote extensively about in the past.

...Background on Eltoprazine...

Eltoprazine is a selective 5-HT1A/1B partial receptor agonist previously studied for the alleviation of involuntary movements, including dyskinesias, in Parkinson's disease patients who experience side-effects of their levodopa medication. In fact, the Michael J. Fox Foundation (MJFF) has funded human clinical proof-of-concept studies with eltoprazine as recently as 2012. The National Institutes of Mental Health (NIMH) in Cognitive Impairment Associated with Schizophrenia (CIAS) has also funded work on eltoprazine. Clinical data also shows statistically significant effects in adult ADHD patients.

In June 2012, PsychoGenics Inc. announced positive results from a clinical study of eltoprazine in Parkinson's disease levodopa-induced dsykinesia (PD-LID). The trial was a double-blind, randomized, placebo-controlled, dose-finding study conducted at two sites in Sweden, the Lund University Hospital and the Karolinska Hospital Huddinge. In the study, twenty-two patients were given single doses of eltoprazine or placebo along with a challenge dose of levodopa at each of the five treatment visits and assessed for parkinsonian and dyskinesia symptoms over a period of three hours post-treatment. The assessments were video-taped and scored by two independent blinded raters.

Eltoprazine met the primary objective of the study by exhibiting a statistically significant reduction in LID at the 5 mg dose (p = 0.0007) and the 7.5 mg dose (p = 0.0467), without adversely affecting levodopa efficacy. The primary efficacy was measured using the Clinical Dyskinesia Rating Scale (CDRS) and the Unified Parkinson's Disease Rating Scale (UPDRS). Secondary endpoints included the Rush Dyskinesia Rating Scale and evaluation of the patients' mood using the Hospital Anxiety & Depression Score (HADS) and Montgomery-Asberg Depression Rating Scale (MADRS). Eltoprazine was also well tolerated in this study and there were no serious adverse events.

According to PsychoGenics, pre-clinical data from multiple models of PD show that eltoprazine effectively reduces LID. Chronic administration of eltoprazine for 45 days suppression of LID symptoms and excellent tolerance, along with protection from development of further dyskinesias. In addition, other preclinical and clinical data support the use of eltoprazine to treat the non-motor symptoms of PD such as cognitive impairment and depression.

The MJFF has made a concerted effort to repurpose drugs for the treatment of Parkinson's disease, and one of the drugs they list in their December 2012 presentation (slide 13) on this subject is eltoprazine. This is not the first clinical trial to show efficacy of eltoprazine in this indication. The MJFF has funded additional work testing eltoprazine in combination with other candidates for PD-LID, including amantadine. We have found evidence that eltroprazine has been studied in several clinical trials to date and has amassed safety data in several hundreds (the news release from Amarantus says 700) of subjects without serious adverse events that would impede future development. The drugs' preclinical data is also extensive, with a safety database goes back over two decades. The MJFF has made a concerted effort to repurpose drugs for the treatment of Parkinson's disease, and one of the drugs they list in their December 2012 presentation (slide 13) on this subject is eltoprazine.

Why This Makes Sense For Amarantus

In June 2013, we wrote an article discussing Parkinson's disease and the problems that exist for patients as the disease progresses, including psychosis and the development of levodopa-induced dyskinesia. One of the companies we highlighted in the article was Addex Therapeutics (OTC:ADDXF) and their Phase 2b ready drug candidate, dipraglurant, for LID. We encourage investors to view that article for a background on the PD-LID market opportunity.

In brief, LID is a major side effect of levodopa use. LID is characterized by hyperkinetic movements, including chorea (abnormal involuntary movement), dystonia (sustained muscle contraction, abnormal posture), and athetosis (involuntary convoluted movements). It is most common at times of peak levodopa plasma concentrations (peak-dose dyskinesia), although it may also occur when plasma concentrations rise and fall (diphasic dyskinesia) or during off-time (off-period dystonia).

There are no approved treatment options for LID. Approximately 50% of PD patients will experience LID after 4 to 6 years on levodopa therapy. The number rises to 90% after 10 to 15 years. It is a significant problem for patients and physicians seeking treatment for PD. In fact, a survey of key opinion leaders in the Parkinson's treatment space showed that dyskinesia is the most important unmet medical need in the treatment of PD after a disease modifying agent (Datamonitor 2011). In the U.S., there are an estimated one million people with Parkinson's disease.

On May 22, 2013, Amarantus entered into a letter of intent to in-license a Phase 2 drug candidate in levodopa-induced dyskinesia in patients with Parkinson's disease from an undisclosed third party. Today is the realization of that strategy by the company with the licensing of eltoprazine. In our view, this shows good execution by management. Coupled with the recent progress on LymPro and Amarantus seems to be efficiently executing on its business plan since we started following the company in early 2013.

Below we highlight some of the competition for Amarantus in this new venture:

  • Amantadine: Amantadine is a generic antiviral that is used off-label for the treatment of LID. Its utility in the treatment of LID has been studied in a series of small clinical trials, many of which were open-label or lacked a control arm. A randomized double-blind trial in 18 patents with LID concluded that it reduced the duration of dyskinesia episodes by 60% and improved quality of life. A second study found that amantadine reduced dyskinesia symptoms by 45%, but that the duration of the effect was only 8 months and patients experienced a rebound of symptoms upon ceasing therapy. The utility of amantadine in the treatment of LID appears to result from its activity as an NMDA antagonist. Privately-held Adamas Pharmaceuticals recently completed an 80 subject Phase 2/3 trial of their extended release amantadine product, Nurelin. In June 2013, they announced that the trial had met its primary endpoint of reduction in LID as measured by the MDS-Unified Parkinson's Disease Rating Scale (MDS-UPDRS). Whether an extended release product will be seen by physicians and patients as adding value is difficult to assess, as the pharmacokinetics of immediate release amantadine are compatible with once daily dosing.
  • Mavoglurant: Mavoglurant (AFQ056) is an antagonist of the glutamate receptor mGluR5 being developed by Novartis (NYSE:NVS) for several CNS indications, including LID. In a 31 patient Phase 2 trial in patients with moderate-to-severe LID, 15 patients were randomized to 25-150 mg mavoglurant twice daily and 16 patients were randomized to placebo. Patients in the active drug group experienced a significant reduction in symptoms as measured by the Lang-Fahn Activities in Daily living scale without negative impact on the effectiveness of the anti-Parkinson's efficacy of their ongoing dopaminergic therapy. Similar effects were seen in the second study, which examined the efficacy of mavoglurant in 28 patients with severe LID and used the Modified Abnormal Movement Scale to measure efficacy. Novartis reports being in Phase 3 studies for PD-LID with mavoglurant.
  • Dipraglurant: Addex Therapeutics is developing dipraglurant, an oral negative allosteric modulator (NAM) of the metabotropic glutamate receptor 5 (mGluR5), for the treatment of PD-LID. Dipraglurant was examined in a randomized, double blind, placebo controlled Phase 2a trial in 83 subjects with moderate-to-severe Parkinson's disease. Results show that dipraglurant was safe and well tolerated with the most important side effects being vertigo, blurred vision, and a drunk feeling but none of these was severe. Results on the modified AIMS scale showed statistically significant improvement on days 1 and 14, with clinically relevant reductions in the dipraglurant group on all three periods tested (days 1, 14, and 28). We note Addex has specifically been looking to out-license dipraglurant for the initiation of a Phase 2b study since 2012.

Eltoprazine's advantage over amantadine may be its duration of action and improved safety and tolerability. Amantadine has been associated with several central nervous system side effects, likely due to the drug's dopaminergic and adrenergic activity, and to a lesser extent, its activity as an anticholinergic. CNS side effects include nervousness, anxiety, agitation, insomnia, difficulty in concentrating, and exacerbations of pre-existing seizure disorders and psychiatric symptoms.

Mavoglurant and dipraglurant are similar drugs that may offer competition to Amarantus in the future. However, Novartis looks to be several years ahead of Addex with mavoglurant development and Addex has been unable to secure a development partner for dipraglurant for the past few years. Addex underwent a major restructuring of its organization in 2013 and dipraglurant looks to be on the back-burner until a partner funds future development. We believe potential dipraglurant partners are keeping a close eye on Novartis' efforts with mavoglurant.

A potential major competitive advantage for Amarantus and eltoprazine is the drugs' secondary benefits, which include potential improvements in cognitive function as seen in the PyschoGenics Phase 2a study noted above. The drug also seems to reduce the onset of future dyskinesia. Eltoprazine has been studied in general anxiety disorder, depression, and aggression. The mechanism of action is well-understood and if Amarantus can confirm these secondary improvements in severely-ill Parkinson's patients the drug has blockbuster potential in our view.

What's Next For Amarantus & Eltoprazine?

Investors familiar with our work on Amarantus know that we upgraded the shares from 'Neutral' to 'Buy' back in October 2013 based on the positive analytical performance data generated by the Custom Technology team at Becton, Dickinson and Company (NYSE:BDX) for LymPro. LymPro is the company's blood test designed to aid in the diagnosis of Alzheimer's disease (AD). According to the company, the data produced begins the process necessary to establish long-term analytical performance to support clinical laboratory launch under CLIA late 2014. Amarantus is also pushing forward with MANF, with a specific focus on targeting orphan disease like Retinitis Pigmentosa (RP).

However, the acquisition of eltoprazine is a game-changer for Amarantus. The company now has its first clinical-stage asset with statistically significant proof-of-concept generated in a potential billion-dollar market like PD-LID. Amarantus picked up eltoprazine cheap, only paying $100,000 to PGI Drug Discovery. PGI Drug Discovery has recently made the decision to partner its clinical drug candidates and focus future efforts on the CRO business. The deal was no-doubt brokered by former PsychoGenics Chief Scientific Officer and current Amarantus Board member, David A. Lowe, PhD.

We expect Amarantus to look to push into a Phase 2b clinical trial with eltoprazine during the second half of 2014. Given the history and interest of the molecule by the MJFF, we would not be surprised to see Amarantus pursue grant funding to help off-set the cost of this study. Amarantus will take ownership of method-of-use patents for eltoprazine, and we suspect the company will look to sure-up the intellectual property (IP) around the drug by enhancing the formulation and/or filing new applications in the near future.

Amarantus exited 2013 with roughly $1.85 million in cash on the books. We note from recent financings that the company's financial position was greatly improved during the third and fourth quarter 2013. Investors can view our article highlighting these fundamental improvements for additional information; however, we think it is important to note that with Amarantus stock now trading above 8 cents per share, there are $5.0 million worth of warrants currently in-the-money. No doubt Amarantus will have new costs associated with pushing eltoprazine forward, but funding is becoming less of an issue as the stock price rises.

Over the next few months we believe the company will update investors on the clinical path for eltoprazine, as well as LymPro and MANF. We expect to provide investors with a better assessment of eltoprazine and the market opportunity at that time. In the meantime, we believe the fundamental improvements taking place at the company along with pending catalysts and a new flag-ship Phase 2b asset are poised to drive the shares significantly higher.

Source: Amarantus Licenses Phase 2b Ready Eltoprazine For PD-LID