AbbVie Inc. ABBV announced that it has signed a collaboration and option-to-license agreement with New York-based privately held biotech Gilgamesh Pharmaceuticals to research and develop next-generation therapies for treating various types of psychiatric conditions, including mood and anxiety disorders.

Per the agreement, AbbVie will make an upfront payment of $65 million to Gilgamesh. The latter is also eligible to receive up to $1.95 billion in aggregate option fees and milestone payments from ABBV. Gilgamesh is also entitled to receive royalties ranging from mid-single to low-double digits if a product is commercialized from the above collaboration.

AbbVie will solely lead all development and commercialization activities following the exercise of the option.

With this partnership, the companies are looking to leverage AbbVie's strong expertise in psychiatry along with Gilgamesh's innovative research platform to identify and discover novel neuroplastogens, the next-generation versions of psychedelic compounds.

Classic psychedelic compounds offer novel mechanisms to develop therapies for mental health disorders. However, these first-generation compounds may prompt profound psychoactive effects like hallucinations, necessitating in-office administration and concomitant supportive care. Neuroplastogens may potentially help in mitigating these challenges seen with first-generation compounds.

Shares of AbbVie have risen 4.1% in the year-to-date period compared with the industry’s rally of 13.4%.

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AbbVie has been actively pursuing partnership deals and collaborations for candidates across several therapeutic areas to drive long-term growth. The above deal is likely to strengthen AbbVie’s neuropsychiatric and neurodegenerative disorder portfolio.

In its neuroscience portfolio, AbbVie markets Vraylar, which was approved for treating major depressive disorder in the United States in December 2022. The drug has witnessed strong uptake so far and generated $694 million in sales in the first quarter of 2024, increasing 23.6% on a year-over-year basis.

We remind investors that in December 2023, AbbVie inked a definitive agreement to acquire neuroscience drugmaker Cerevel Therapeutics CERE for $8.7 billion.

The acquisition will strengthen AbbVie’s neuroscience pipeline by adding CERE’s novel candidates that are being studied across a range of psychiatric and neurological disorders, including schizophrenia, Parkinson's disease and mood disorders.

The transaction is expected to close in mid-2024, subject to shareholder and regulatory approval.