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Eli Lilly's (LLY) recent phase 3 failure with its Zyprexa replacement candidate - Pomaglumetad Methionil, brought attention to the problematic schizophrenia drug scene. Current anti-psychotic drugs used for schizophrenia treatment have two major interrelated shortcomings: (1) a wide array of side effects, such as drowsiness, muscle rigidity and spasms, hormonal imbalances and weight gain, and (2) these drugs mostly address only one set of symptoms related to schizophrenia, termed positive symptoms, which include delusions, hallucinations and disordered thoughts and speech. Additionally, less than 50% of treated schizophrenia patients respond well to the current drugs, while around 20% don't respond at all. This all comes down to very low drug compliance rates and high unmet needs in this area, accentuating the requirement for more efficient and safe drugs that also address other schizophrenia-related symptoms, such as lack of motivation and "flat" emotions (negative symptoms) as well as the cognitive impairment that affect many schizophrenia patients.

The multi-billion schizophrenia drug market, as well as the schizophrenia drug patent cliff, which threatens the majority of the current bestsellers (Lilly's Zyprexa, AZ's Seroquel, BMS's Abilify and Pfizer's Geodon among others), pose an attractive opportunity, both for big pharma looking to replace drugs going off-patent, and smaller biotechs looking to out-license their in-house developments. However, the massive generification of anti-psychotic blockbusters and consequent price drops mean that new anti-psychotic drugs should either provide noticeable advantages to older ones (increased efficacy and safety and/or higher compliance rates), or differentiate from the mainstream approach by addressing the negative and cognitive symptoms of the disease.

Lilly's so far unsuccessful attempt at a new anti-psychotic drug involved utilizing a relatively new class of molecules - metabotropic glutamate (mGlu) receptor agonists. A second registration clinical trial with Pomaglumetad Methionil is currently ongoing and interim results are expected later this year.

Apart from Eli Lilly, several other companies are in mid- to late-stages of clinical development of new anti-psychotics for schizophrenia. It is interesting to review the different approaches taken by different companies in this area:

Lundbeck (OTC:HLUKF)

Lundbeck's candidate, Zicronapine, is a dopamine D(1), D(2) and 5-HT(2a) receptor antagonist, currently in the first of several phase 3 studies. Zicronapine's mechanism of action is the closest to the current, second generation anti-psychotics, which are dopamine D(2) and 5-HT(2a) receptor antagonists. This means Zicronapine has the potential to be more easily accepted in the market if approved, but will need to show significant advantages over the current, and not significantly distinct, drugs. Lundbeck is expected to release the results of the ongoing trial during the upcoming weeks.

Targacept (TRGT)

Targacept's TC-5619 is a small molecule selective for the alpha7 neuronal nicotinic receptor - a promising target in the development of treatments for cognitive dysfunction in schizophrenia. TC-5619 is an augmentation therapy for schizophrenia, intended for use in conjunction with an anti-psychotic drug. In December 2011 Targacept initiated a Phase 2b study of TC-5619 as a treatment for negative symptoms and cognitive dysfunction in schizophrenia. According to the company's announcements, results are anticipated in mid 2013. Positive results are essential for the company, whose stock lost 80% of its value after the phase 3 failure of its depression drug, TC-5214, co-developed with AstraZeneca (AZN).

Bioline Rx (BLRX)

BL-1020 is Bioline's anti-psychotic drug indicated for the treatment of schizophrenia, including cognition deficits, that is currently in a Phase 2/3 clinical trial in Europe and India. BL-1020 is a GABA-enhanced typical anti-psychotic that combines dopamine antagonism with GABAergic activity. In a previous phase 2b study, BL-1020 has demonstrated high efficacy and safety with minimal motoric and no metabolic side effects, while exhibiting an improvement in patient cognition. While in the ongoing phase 2/3 CLARITY study, Bioline is focusing primarily on cognitive function, the main advantage of BL-1020 is its potential ability to address both the positive and cognitive symptoms of schizophrenia. Data from the CLARITY is expected in 1Q of 2013, and positive results will most likely attract big pharma collaborations.

Addex Therapeutics (OTC:ADDXF)

Addex's approach to a new schizophrenia drug is similar to Lilly's, but is based on the company's Allosteric modulators platform. As such, it is a metabotropic glutamate receptor 2 (mGluR2) positive allosteric modulator, targeting both the positive and negative symptoms of schizophrenia. The drug has been licensed to J&J (JNJ) and is developed by Janssen under the name JNJ-40411813 (formerly ADX71149). Janssen has initiated a phase 2a study in 2011 for evaluating the drug's safety and efficacy both as monotherapy and as add-on therapy, and results are projected to be available towards mid-2013. Trial success means that Addex will be eligible to receive development milestone payment, and a likely surge in the company's stock price.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: The Race For The Next Blockbuster Schizophrenia Drug