A new anti-obesity drug that works in the same way as Sanofi-Aventis's Acomplia has advanced in clinical trials, triggering a $25 million payment to Belgian drugs, chemicals and plastics maker Solvay.
Solvay said on Friday it had started further Phase II clinical tests of its SLV319 drug following encouraging early results, prompting the payment from its partner Bristol-Myers Squibb Co.
"Clinical and preclinical studies involving this class of drug have shown that blocking the cannabinoid type 1 (CB1) receptor results in reduced food intake," Solvay said in a statement.
The $25 million will be booked into the fourth quarter 2006 figures but Solvay Pharmaceuticals is increasing its R&D and marketing spending by a similar amount.
"Consequently, the guidance given to the markets on October 27, 2006 concerning Solvay Pharmaceuticals' full year expected results and margins remains basically unchanged," Solvay said.
Drugs like SLV319 and Acomplia work by switching off the same brain circuits that make people hungry when they smoke cannabis.
Sanofi's Acomplia, which is viewed by analysts as a potential multibillion-dollar-a-year seller, is already on sale in Europe but is still awaiting approval in the United States. The French group said earlier on Friday it expected to hear back from U.S. regulators by April 26.
KBC Securities said in a research note that it had already increased its launch probability for SLV319 to 40 percent from 20 percent in early October after Solvay's investor day.
"Note that we have assumed launch of SLV319 in 2010 with peak sales of 400 million euros," KBC said.
It added it would slightly adjust its earnings model for the fourth quarter of 2006 to take into account the milestone payment, but would keep its "Buy" rating and 130 euro price target.
Solvay's shares were off 0.4 percent at 112.40 euros at 0900 GMT, while the Dow Jones European chemicals index was off 0.2 percent and the health index off 0.7 percent.
source - Reuters