German research points way to better anxiety drug

* New mechanism targets biological "don't panic" button

* Encouraging results in Novartis-backed Phase I tests

* Compound now handed over to Dainippon Sumitomo Pharma

By Ben Hirschler

LONDON, June 18 (Reuters) - German scientists believe they may have found a better anxiety drug that can counteract panic attacks without the side effects caused by existing treatments like Valium.

Anxiety drugs such as Valium work well but produce side-effects that include drowsiness, forgetfulness and clumsiness and, when taken over time, can induce dependency.

The new compound, XBD173, appears to avoid these problems by targetting a different biological "don't panic" button, making it a good potential candidate for use as a safe and fast-acting anxiety pill.

Researchers published details of their experimental drug in the journal Science on Thursday, including encouraging results from an initial Phase I clinical study, which was sponsored by Swiss drugmaker Novartis (NOVN.VX: Quote, Profile, Research).