The Vision Thing

Putting all of one’s corporate chips on a single therapeutic program is seldom, if ever, a wise strategy. Even if the product moves forward, a company’s longterm viability depends on a periodically replenished pipeline. While this is a well-documented dynamic for Big Pharma, the same principle holds true for small companies, and the conflict between nearterm and longterm perspectives there is even more highlighted. A current case-in-point is presented by Newron. Newron went through its own acquisition dance last year with BioTie, BioTie exiting when Merck Serono dropped their option on Newron’s adjuct for Parkinson’s, safinamide. Zambon then partnered safinamide this past April, paying $26 million upfront in exchange for 9.1% of the Company. Safinamide has had a checkered Phase III history, but Newron hopes to file the NDA for its adjunctive use in PD next year. However, they also recognize that safinamide is in itself not a franchise. and would not provide critical mass for Newron’s development going forward. They thus decided to acquire NeuroNova for $20 million in equity, thereby gaining two Phase I/II programs using icv delivery of trophic factors to spur regeneration in Parkinson’s and ALS. NeuroNova’s programs are uniquely positioned in the neurodegeneration space, and while NeuroNova has been anything but forthcoming regarding the results from the trials done so far, NIR has been told by other sources that at least one trial did provide evidence of benefit. However, Zambon disagreed with the acquisition plan, preferring a sole focus on safinamide, and expanded its ownership enough that they were able to defeat the acquisition plan by blocking Newron’s management from receiving the 66.67% vote they needed for approval–they only received 66.32%. Thus, even though they held barely more than a third of the votes, Zambon was able to kill the buyout, which is now apparently demised. Besides the inanity of requiring a two-thirds mandate–a threshold that has not worked out too well for California in recent years–this leaves NeuroNova adrift, and Newron is again overly dependent on a single Phase III asset that has not been overwhelming in its clinical trial history. In our view, it is a shame that a management group that was willing to invest in a highly innovative, clinical-stage technology could be thwarted by a short-sighted minority partner/investor. It is exactly this lack of longterm perspective that led to Big Pharma’s descent into crisis over the past twenty years, and those who fail to learn from history will most likely repeat it.

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