Bionomics signs up to US$172m deal with Merck


By Dylan Bushell-Embling
Wednesday, 31 July, 2013


Bionomics signs up to US$172m deal with Merck

Bionomics (ASX:BNO) has signed a research and option licensing agreement with Merck focused on the discovery of new small molecule pain treatments.

The deal could be worth as much as US$172 million ($190.3 million) to Bionomics, before any royalties on net sales.

Under the agreement, Merck will have the option to exclusively license a compound from Bionomics to develop and commercialise for the treatment of chronic pain, including neuropathic pain. The initial research program will last two years.

Bionomics will use its ionX drug discovery platform to identify potential drug candidates for Merck and will retain the right to develop any compounds for which Merck does not exercise its option.

Bionomics CEO Dr Deborah Rathjen said with the deal, the company “is continuing to deliver on its business model of strategic partnering for the development and commercialisation of selected programs within its pipeline”.

In a research note, Bell Potter Securities said the deal with a major pharmaceutical company such as Merck is a huge endorsement of Bionomics’ drug discovery capabilities.

The collaboration will focus on sodium ion channel Nav1.7, “which is a new and promising clinically relevant target for pain and is generating a lot of excitement in the industry”, Bell Potter said.

The size of the deal for an early-stage asset is also an indication of the profit potential of such a product, the firm added.

“With this deal, BNO’s business model and technology has now been validated by two global companies - [the other] being the specialist pharma company Ironwood.”

Bell Potter has a price target on Bionomics of around $1.53 base case and $2.07 optimistic case. This would be a significant gain on the $0.495 price the shares were trading at as of around 2 pm on Wednesday.

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