Bionomics licenses BNC375 for up to $558m

Bionomics (ASX:BNO) has secured a deal worth up to US$526 million ($558.2 million) to license Alzheimer's disease candidate BNC375 to Merck.

The companies have signed a research collaboration and licence agreement covering the development of BNC375 for the treatment of cognitive dysfunction associated with Alzheimer’s disease and other central nervous system conditions.

As part of the deal, Merck (MSD in Australia) will fund all further R&D for the BNC375 program, including clinical development. It will also assume responsibility for the worldwide commercialisation of any products developed through the collaboration.

Bionomics will receive an initial lump sum of US$20 million, and will be eligible for milestone payments worth up to a further US$506 million. The deal also entitles the company to undisclosed royalties on any product sales.

BNC375 and related compounds have displayed efficacy in animal models of cognitive impairment, outperforming benchmark alternative treatment Donepezil. The compounds are positive allosteric modulators of the alpha-7 nicotinic acetylcholine receptor.

Bionomics is also working with Merck on research focused on the discovery of new small molecule treatments for neuropathic pain.

Under the deal, which is worth up to US$172 million to Bionomics before royalties, Merck will have the option to exclusively license another compound from the company.

Bionomics (ASX:BNO) shares were trading 17.24% higher at $0.51 as of around 1 pm on Tuesday.