Neurogen Corporation Announces Third Quarter 2009 Financial Results and Updates Operations

Business Wire, Nov 06, 2009

Announces Agreement to Sell Real Estate and Aplindore RLS Study Top Line Interim Results

BRANFORD, Conn. -- Neurogen Corporation (NASDAQ: NRGN), a drug development company historically focused on drugs for psychiatric and neurological disorders, today announced financial and operating results for the quarter ended September 30, 2009. The Company also announced its analysis of results from a previously suspended Phase 2 study of aplindore in Restless Legs Syndrome (RLS) and that it has entered into an agreement to sell all real estate owned by the Company.

Stephen R. Davis, President and CEO said, "While we saw indications of efficacy in the RLS study of aplindore, our analysis of both efficacy and tolerability - when considered in the context of observations from similar clinical studies with drugs currently on the market - suggest the partial agonist profile of aplindore would not be differentiated from the full agonists which either are or will be generic by the time aplindore could be launched.”

Mr. Davis continued, “We are pleased to have recently entered into an agreement to sell our real estate at a price higher than we previously estimated and to have concluded the third quarter with financial results in line with our expectations.”

As previously announced, the Company has signed a merger agreement with Ligand Pharmaceuticals, Inc. (“Ligand”) pursuant to which the Company will become a wholly-owned subsidiary of Ligand. The Company expects the merger to close during the fourth quarter of 2009, subject to receipt of Company shareholder approval and the satisfaction of other customary closing conditions. In the merger, Company shareholders are entitled to receive shares of Ligand common stock with an aggregate market value of up to approximately $11.0 million, as adjusted for the Company’s net cash position shortly before the shareholder special meeting and subject to a share cap of 4,200,000 shares, which, if not waived by Ligand, would cause Company shareholders to receive less than $11.0 million in Ligand stock. Company shareholders also will receive four Contingent Value Rights (“CVRs”) in the merger under applicable CVR agreements, which would entitle Company shareholders to the net proceeds from the sale or licensing of certain Company assets, including its aplindore program and real estate holdings, and the achievement of a specified clinical milestone. The Company expects to send to Company shareholders a proxy statement/prospectus in connection with the merger in the near future, which will contain additional information regarding the merger.

Facilities Sale

Neurogen also announced today that it has entered into an agreement with a commercial real estate developer to sell the Company’s real estate holdings, including all laboratory and office facilities, for a gross selling price of $3.5 million. Neurogen expects to realize approximately $3.1 million in net proceeds upon closing of the deal which, subject to the satisfaction of customary closing conditions, is expected to occur in the first quarter of 2010. Net proceeds from the sale of Neurogen’s real estate will be eligible for payment to Neurogen’s stockholders through a Contingent Value Right to be issued upon the closing of Neurogen’s pending and previously announced merger into Ligand.

Aplindore

This Phase 2 RLS study was a randomized, placebo-controlled, double-blind, multi-center, parallel-group study designed to assess the efficacy, safety and tolerability of multiple doses of aplindore compared to placebo. The 5 treatment groups in the study were aplindore 0.05 mg, 0.1 mg, 0.25 mg, 0.5 mg and placebo, and subjects received a total of 4 weeks of treatment. The lowest doses (0.05 mg and 0.1 mg) were not titrated, while the higher doses were titrated over 4 days (0.25 mg) and 7 days (0.5 mg). The 0.5 mg treatment group was discontinued after approximately 2 months of enrollment. Enrollment of patients in the study was suspended after randomization of 60% of the planned 195 subjects. The primary efficacy endpoint was the mean change in the International Restless Legs Syndrome Rating Scale (IRLS) from baseline. In this study, aplindore achieved statistically significant results versus placebo overall and at the 0.05 mg and 0.25 mg doses, but not at the 0.1 mg dose. In this study, aplindore was well tolerated at the lower doses.

The study enrolled 118 subjects with moderate-to-severe RLS. The Modified Intent to Treat (mITT) population was 116 subjects with 14 early terminations, of which 6 were due to aplindore-related adverse events. Eighteen subjects received the discontinued 0.5 mg dose. These subjects were not included in the efficacy analysis, but were included in the safety population. The primary outcome (IRLS) showed a statistically significant improvement overall (ANCOVA p=0.0355) with statistically significant pairwise comparisons to placebo for the 0.05 mg dose (-5.8; p=0.0168) and the 0.25 mg dose (-6.3; p=0.0097). The 0.1 mg dose showed a lower numeric improvement over placebo (-3.1; p=0.2025), which did not reach statistical significance, resulting in a “V”-shaped dose-response curve. The most common adverse events included nausea, somnolence, headache, and fatigue. The incidence of these events in the non-titrated doses was considered comparable to or higher than those reported with the dopamine full agonists currently on the market. In a single subject there were two Serious Adverse Events (“SAE’s”). Neither SAE was considered to be drug-related.