Swiss biotech Addex Pharmaceuticals extended a research deal with U.S. drugmaker Merck & Co by a year, seeking to develop a treatment for Parkinson's disease.
Addex's lead drug ADX10059, which targets heartburn and migraine, recently hit its main target in a late-stage trial, potentially paving the way for a lucrative partnering deal, and Wednesday's news helped boost the stock to a one-year high.
Today's news comes as a surprise to us as it seems to underline Merck & Co's strong interest in advancing this collaboration beyond its current level, said Olav Zilian, analyst at Swiss brokerage Helvea.
Merck would provide an additional $1.8 million of funding over a year from the start of December, in addition to already-established financial terms, Addex said.
The Merck deal focuses on drugs targeting mGluR4 -- a receptor involved in learning, memory, anxiety and perception of pain which Addex believes could play an important role in alleviating symptoms of Parkinson's disease in humans. Addex may receive drug sales resulting from the collaboration.
Addex shares rose 3 percent to 40.05 Swiss francs by 1349 GMT, versus a 0.5 percent rise in the DJ Stoxx European healthcare index .SXDP and having earlier hit a one-year high at 40.50 francs.
In contrast to some of its rivals, Addex has a relatively wide portfolio of new products and a novel technology platform known as allosteric modulation, factors which analysts say make it a potential star of the Swiss biotech sector.
The drugs would work in cooperation with the body's own agents, potentially giving better therapeutic control over disease than traditional medicines, which can be more disruptive to natural functions.
That approach is reinforced by another existing partnership deal with a second big U.S. healthcare company, Johnson & Johnson, while Britain's GlaxoSmithKline has a 5 percent stake.
(Additional reporting by Catherine Bosley; Editing by Jon Loades-Carter)