Friday, April 12, 2013

Deals of the Week: Ante Up For Antisense, Pharma Places Another Isis Bet

Isis Pharmaceuticals has been on a roll of late. The antisense platform play is busy highlighting its incredibly deep line-up of candidates and partners, now that it secured an FDA approval for Kynamro (mipomersen) to treat homozygous familial hypercholesterolemia (HoFH). And investors seem to like what they see; Isis shares are up 84% this year and may be poised to exceed an all-time high price set in 2001. But any long-term success the company hopes to enjoy depends on eventually ramping up commercial revenue.

The biotech has 28 clinical and preclinical candidates; nine of which will have Phase III or “important” Phase II data by early 2014. To develop this embarrassment of pipeline riches, Isis has a large roster of partners. This week it added a new one, Roche, bringing the number of major biopharma partners to seven. The others are AstraZeneca, Biogen Idec, Bristol-Myers Squibb, Eli Lilly, Sanofi’s Genzyme and GlaxoSmithKline.

Isis has raised about $2 billion through partnerships, much more than its $834 million in net proceeds from equity sales or $784 million borrowed in long-term debt deals. The biotech expects to finish this year with $325 million in cash. Last year, Isis did four major biopharma deals, three with Biogen Idec and one with AstraZeneca.

From those four deals alone, in 2012 Isis received $96 million in up-front payments with the potential to earn more than $2 billion in milestone payments and licensing fees. At year-end, all told, Isis had the potential to earn as much as $5.1 billion in future milestone payments.

Its latest option deal with Roche is for Huntington’s disease treatments; it brings to the table Isis’ antisense oligonucleotide technology (ASO), as well as Roche’s brain shuttle technology, a method to deliver oligos into the central nervous system. The initial research will focus on blocking all forms of huntingtin (HTT) protein. In addition, the partners will also work to block production of disease-causing forms of HTT protein and to treat asymptomatic patients.

Roche will pay Isis $30 million upfront, as well as tiered double-digit royalties on any products that result. Isis is eligible for $252 million in development milestones, including a large payment at the end of Phase I. Roche will also pay $80 million in commercial milestones. Isis will be responsible for discovery and development through Phase I, at which time Roche has an option to license all compounds that result from the collaboration and take over global development and commercialization. Products under the collaboration are expected to be IND-ready by the end of 2014.

“Isis now has a stronger balance sheet where it can be much more selective in choosing partners, and can choose when to partner,” noted Dallas Webb of BB Biotech, a major Isis investor that held 7.9% of its shares at Dec. 31. “Additionally, the company has a clear focus on rare diseases, where its technology can be used to target previously un-addressable disease mechanisms.”

Isis plans to put about three to five candidates into the clinic annually. It’s defined five major research areas as its primary territory: cardiovascular disease, severe and rare diseases, metabolic diseases, cancer and inflammation.

While early stage research partnerships continue to pay the bills, to make it on its own Isis needs to start banking some serious product revenue. Wall Street isn’t particularly optimistic that will materialize in the near-term. The consensus estimate for 2013 Isis revenues is just $110 million, with $116 million expected for 2014. Even without Kynamro, in 2012 Isis had $102 million in revenues and a $68.9 million operating loss. Still, Isis says it has five products it could bring to market within the next five years.

These include ISIS-TTR to treat transthyretin (TTR) amyloidosis, a severe and rare genetic disease in which the patient produces a misfolded form of TTR that progressively accumulates in tissues, and ISIS-SMN to treat spinal muscular atrophy (SMA), a severe motor-neuron disease that is a leading genetic cause of infant mortality. The former is partnered with GSK and is in a Phase III trial, while Biogen Idec has an option to the latter, which is slated to start a Phase II/III trial in infants before year-end with another Phase II/III trial in children scheduled for the first quarter of 2014.

Isis also has two ongoing Phase II trials for ISIS-APOCIII, to treat severe hypertriglyceridemia. The unpartnered candidate will have data from one trial in the next few months and the other by year end. A Phase III trial is expected to start late this year or early next year.

Webb said investors are currently focused on SMN and will follow the asset closely in the next 12-18 months. He noted the upcoming APOCIII data and he expects TTR will move more into the spotlight in the next year or so. “These compounds on top of the Kynamro approval should lead to an increased focus on the pipeline, where we believe a lot of value remains to be unlocked,” he said.

In addition, Isis is hoping to bulk up its Kynamro label. Isis and partner Genzyme have an ongoing Phase III/IV trial in severe heterozygous familial hypercholesterolemia (HeFH) patients with data due late next year. Not only is the patient population much larger for HeFH, but the subcutaneous drug is dosed 3x weekly rather than the 1x a week with HoFH patients. However, Webb sees the true value of Kynamro as the validation of Isis’ technology and an establishment of FDA’s willingness to approve an antisense compound.

Other Isis investors as of Dec. 31, 2012 include top-flight mutual fund groups Fidelity Management (14.9% of shares outstanding) and T. Rowe Price (2.2%), as well as hedge fund BlackRock (3%). In the fourth quarter, only two of its top 10 holders trimmed positions and each only by single-digit percentages. But another seven added to positions, four of them by double- or triple-digits. Fidelity held pat in the fourth quarter as the largest Isis holder.

Isis/Roche wasn't the only deal of the week, of course. In fact, it wasn't even the only antisense deal. Keep reading for the rest of the week's deal-making highlights in this week's edition of  . . .

Sarepta/University of Western Australia: Another company developing new antisense drugs deepened its commitment to commercializing academic research in this area on April 11, when Sarepta Therapeutics. agreed to license a portfolio of patented technologies addressing Duchenne muscular dystrophy from the University of Western Australia. For $7.1 million in up-front and milestone payments, as well as a low single-digit royalty on sales of any approved products that come from the collaboration, Sarepta will receive intellectual property concerning exon-skipping technology, which is used to excise a key piece of dystrophin RNA during the transcription process, resulting in functional dystrophin that gives strength to muscle fibers. The Cambridge, Mass.-based company already uses the technique in its lead candidate eteplirsen, a Phase II drug for DMD, which repairs exon 51; Sarepta obtained the exon-skipping technology for that drug from Perth-based UWA under a 2008 agreement. The company also has three other preclinical drugs that address exons 45, 50 and 53. Sarepta says that by combining the newly obtained patents with its own phosphorodiamidate morpholino oligomer technology, it can create exon-skipping drugs capable of treating the majority of DMD patients worldwide. One in 3,500 boys is born with the muscle-wasting disorder, which usually leads to death by age 30. -- Paul Bonanos

GlaxoSmithKline/A*STAR: GlaxoSmithKline and Singapore’s Institute of Chemical and Engineering Sciences Agency for Science, Technology and Research are working together to develop new formulations of existing medicines specifically for emerging markets. The collaboration, which the organizations announced on April 9, will continue for five years and focus on development of “evidence-based formulations,” or EBFs, of GSK’s off-patent drugs, in order to improve patient outcomes in emerging markets. ICES is part of Singapore’s A*STAR network, which is charged with helping to grow Singapore’s economy by building and maintaining a world-class scientific research infrastructure. A*STAR oversees 14 biomedical, physical and engineering sciences institutes and six consortia in Singapore. ICES and GSK have been working together since 2003, and GSK also works with other divisions of A*STAR. ICES is contributing expertise in synthesis, formulation and process development, while GSK will provide drug candidates, and optimization and product development skills. Through the alliance, ICES will be able to enhance its knowledge of drug formulation, analytical capabilities, and scale up and will develop a pool of local expertise in specialized formulations.  The aim, from GSK’s perspective is to bring affordable medicine to more people. Terms were not disclosed, but the deal enhances Singapore’s position as a regional hub for drug development. Singapore is the regional headquarters for a number of multinational pharma companies, including GSK, Abbott Laboratories (now AbbVie), Roche, Merck & Co., Bayer, Pfizer, and Novartis. -- Wendy Diller

Resverlogix/RVX Therapeutics: Unlike Isis, which is embracing its platform, Resverlogix  is spinning out its platform into a separate private company, temporarily named RVX Therapeutics. The publicly listed Canadian biotech said it wants to make the move in anticipation of its own potential takeout following June Phase IIb data for lead candidate RVX-208, a BET bromodomains inhibitor. RVX-208 is designed to treat atherosclerosis by increasing serum levels of apolipoprotein A-1, a building block that makes up 70 percent of HDL cholesterol. RVX-208 is also in Phase II testing to treat diabetes and will soon be in a Phase II trial for Alzheimer’s disease. In the spin-out, RVX Therapeutics will get the epigenetics platform, excluding any ApoA-1 and RVX-208 technology. The platform is based on targeting BET (Bromodomain and ExtraTerminal Domain) proteins. Resverlogix compounds bind to BET bromodomains and prevent them from engaging proteins associated with DNA called histones. The newco would either be supported by a royalty from a potential Resverlogix acquirer or it would perhaps IPO. The spinout is subject to a shareholder vote, which will likely be at the end of May. Shareholders would receive one share in the new company for each Resverlogix share they hold at a date of record in late April. Investors haven’t exactly embraced the deal, sending shares down about 12% since the April 8 announcement. -- Stacy Lawrence

Aeterna Zentaris/Ergomed Clinical Research: The Canadian biotech and the European contract research organization partnered to conduct a Phase III trial for AEZS-108 in endometrial cancer. Structured to share risk with Ergomed Clinical Research, the deal calls for the CRO to assume 30%, or up to $10 million, of the clinical and regulatory costs associated with the trial that are estimated to total about $30 million. In return, Ergomed stands to receive a single-digit percentage of any net income to Aeterna Zentaris for AEZS-108 in this indication, up to a pre-specified maximum amount. The trial for the doxorubicin peptide conjugate will be of 500 patients and have a primary endpoint of overall survival.
Aeterna Zentaris had a major disappointment in March, when an independent Data Safety Monitoring Board recommended the discontinuation of a Phase III trial for perifosine to treat multiple myeloma since it was deemed highly unlikely the study would achieve a significant difference on progression-free survival, the study’s primary endpoint. Aeterna Zentaris shares are down 22% this year, giving it a market cap below $50 million. -- S.L.

GlaxoSmithKline/Academic Institutions: GlaxoSmithKline will dedicate $1 million in prize money and research funding of an undisclosed amount for up to 40 researchers across 20 academic and other nonprofit institutions to answer early questions about the possibility of using extremely focused electrical impulses to modulate the neural signals that control vital organs. With so-called “electroceuticals,” the aim is to do with electrical information what drug makers currently try to do with biologics and small molecules: control blood pressure, cytokine production, glucose function, or any number of biological functions that lead to disease when out of whack. “Correcting disorders with treatment in their own electrical language” is how Kristoffer Famm, the vice president in charge of GSK’s new bioelectronics group, and his co-authors describe their goal in the latest issue of Nature. Before treatments come to light, there are years of work ahead in mapping the neural activity associated with various diseases. Famm says the funding, to be parceled out to two researchers per lab, is aimed at jump-starting the mapping projects or building upon works in progress.
The field is gaining momentum with the new U.S. brain-mapping initiative and a Stanford University breakthrough that creates see-through brains that allow researchers to highlight and study networks of neurons as they fire. At the end of 2013, GSK expects to convene a meeting where researchers will zero in on a key hurdle the field needs to overcome; GSK will then put up $1 million as a prize to the group that solves the problem. -- Alex Lash

Photo Credit: Ramberto Cumagun

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