Newron Pharmaceuticals SpA, the
Italian company developing a drug for Parkinson’s disease with
Merck KGaA, is in talks to be bought by Santhera Pharmaceuticals
Holding AG, a person familiar with the situation said.

A deal to buy Bresso, Italy-based Newron may be reached
within weeks, said the person, who declined to be identified
because the discussions aren’t public. Stefan Weber, Newron’s
chief financial officer, and Thomas Staffelbach, a spokesman for
Santhera in Liestal, Switzerland, declined to comment. Newron
has a market value of 55.2 million Swiss francs ($58.2 million).

A combination would bring together two companies that had
lost two thirds of their market value in the past year.
Newron, which is listed on the Swiss stock exchange, plunged in
May after saying the experimental painkiller ralfinamide was no
better than a placebo in helping patients with back pain. The
same month, Santhera sank after its Catena drug failed a study
against Friedreich’s ataxia, a rare inherited disease that
damages the nervous system.

Newron rose 1.20 Swiss francs, or 19 percent, to 7.60
francs at the 5:30 p.m. close of trading in Zurich, the biggest
advance in almost three years. Santhera rose 25 centimes, or 2.9
percent, to 8.93 francs.

Santhera, based in Liestal, Switzerland, plans to ask
regulators to approve Catena as a treatment for Leber’s
hereditary optic neuropathy, a rare genetic disease that leads
to blindness.

Share Sale

Newron last month raised 3.5 million Swiss francs by
selling shares at 5.25 francs each in a private placement to
Great Point Partners LLC. Newron had 13.1 million euros ($17.8
million) in cash at the end of the first half of 2010, and has
an option to sell 27.5 million euros of stock to YA Global
Investments LP.

Newron sold rights to the Parkinson’s drug, safinamide, in
2006 to Serono SA, now owned by Darmstadt, Germany-based Merck,
for as much as $200 million. The medicine also is being tested
for use against Alzheimer’s disease.

Santhera said in October it would take back North American
rights to the Fipamezole investigational drug candidate for a
Parkinson’s-related condition from Biovail Corp., which now
belongs to Valeant Pharmaceuticals International Inc. Santhera,
which had 39.5 million francs in cash at the end of June,
reached a licensing agreement in September with Ipsen SA to
develop and sell the medicine outside North America and Japan.

To contact the reporter on this story:
Dermot Doherty in Geneva at
ddoherty9@bloomberg.net

To contact the editor responsible for this story:
Phil Serafino at
pserafino@bloomberg.net