The company has high hopes for the compound, BL-1020, based on initial studies depicting the new drug having greater efficacy and a more tolerable side-effect profile than current antipsychotic drugs.

BioLineRx puts this down to its novel mechanism of action; so far it is the only antipsychotic with the potential to increase the activity of GABA (gamma-aminobutyric acid), which is a neurotransmitter in the central nervous system that appears to be deficient in schizophrenia patients.

This is in addition to the more conventional antipsychotic approach of counteracting excessive dopamine activity in the brain.

Preliminary studies indicate BL-1020 does not cause the extrapyramidal symptoms or metabolic side effects that can compromise treatment with current array of medicines for schizophrenia. The drug is a conjugate of perphenazine, and older drug for schizophrenia, and GABA itself.

To date, the development of GABA as a standalone therapy has been held back by difficulties in getting it to cross the blood brain barrier. BioLineRx seems to have overcome this challenge since their pharmacokinetic studies prove that BL-1020 provides effective transport of GABA into the brain.

The trials were designed as a single-center, randomized, open-label, sequential cohort clinical conducted jointly with the contract research organization (CRO) Hesperion in Switzerland.

BioLineRx will now press on with Phase II studies of BL-1020 by the end of June. These will study the safety and tolerability of the compound in 60 schizophrenia patients and also further elucidate the nature of the clinical binding properties of BL-1020 to the dopamine and GABA receptors.

The company believes that BL-2020's increased GABA activity might reduce anxiety and improve cognitive function, common symptoms in patients suffering from schizophrenia which are poorly addressed with available drugs.

Various compounds targeting GABA are on the market for indications such as anxiety, insomnia and epilepsy, but this is thought to be the first time that GABA itself has been proposed as a therapeutic.

In March, one of these GABA-acting compounds, gaboxadol was shelved after Phase III studies unveiled undesirable side effects which included disorientation and hallucinations. The drug was being jointly developed by Lundbeck and Merck & Co.

But BioLineRx is very confident in the safety of its new drug "From our Phase I study with healthy volunteers, BL-1020 was well tolerated up to 40mg. The drug caused no anxiety, depression, Parkinsonism, akathisia or any laboratory or ECG abnormalities," according to BioLineRx' spokesperson.

The current generation of anti-schizophrenia drugs is effective in less than 60 per cent of the patients who suffer from the illness, about 1 per cent of the world's population.

Even in these patients, the current medication produces adverse effects that cause the patients to discontinue medication. In 2002, the overall cost of schizophrenia in the US alone was estimated at $62.7bn (€46.6bn), and the market for schizophrenia therapy in the US is estimated to reach approximately $10bn in 2012.