Celgene Corp. (CELG) is paying $20 million to San Diego-based Abide Therapeutics Inc. to fund development of its lone investigational drug, ABX-1431, intended for treating patients with neurological diseases, including multiple sclerosis.

Multiple sclerosis (MS) is a disease in which the protective covers of nerve cells in the brain and spinal cord are damaged, leading to disruption in communication between the body and the brain. Neurotransmitters are the chemicals which allow the transmission of signals from one neuron to the next, and form an integral part of communication. Along with inflammation, neurotransmitter imbalance is a major feature of the disease. Abide’s ABX-1431 drug is intended to modulate the neurotransmitter balance and inflammation, leading to disease control.

More than 400,000 people in the United States. and around 2.5 million people across the globe are reported to have MS. Around 200 new cases are diagnosed each week in the United States, indicating the large-sized market for the drug.

The payment is through an option exercise, part of the deal Celgene signed with Abide in February 2014 when it took an undisclosed equity stake in Abide by paying $50 million upfront.

Following the option exercise, Celgene will obtain ex-U.S. rights by spending $20 million to Abide’s only clinical candidate, ABX-1431. It will handle all development expenses starting from Phase II onwards for neurological indications, in particular multiple sclerosis. Abide will continue to hold the U.S. rights. (For more, see Celgene's Big Bet May Pay Off.)

Celgene’s Interest

Celgene has indicated increased interest in neurology by exercising the Abide option. The company is hopeful that the drug therapy mechanism offers a wide therapeutic potential for a variety of neurological diseases. It also holds the right to second option from Abide’s pipeline at the end of Phase Ia data expected in the next 12 to 18 months.

Abide will use the proceeds to fund its Phase Ib studies. The company reported success in an earlier study, confirming that the molecule successfully penetrates the brain without any abnormalities or tolerance issues. (For more, see Celgene Outspends Big Pharmas in Deals.)

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