Alexion Pumps Up Its Rare Disease Portfolio With Enobia Acquisition

Alexion could pay as much as $1.08 billion for access to Enobia's mid-stage rare disease compound asfotase alpha.

Alexion Pharmaceuticals Inc. announced on Dec. 28 that it has agreed to pay up to $1.08 billion for privately held Enobia Pharma Inc. in a transaction that includes both upfront and milestone payments. The acquisition will broaden Alexion's presence in the ultra-rare disease treatment space; an area in which it already has acquired considerable expertise.

Under the terms of the agreement, Alexion will pay $610 million upfront in the all-cash transaction, as well as another $470 million to Enobia shareholders should the company's lead compound, asfotase alpha, achieve certain undisclosed regulatory and sales milestones. The acquisition is expected to close in the first quarter of 2012 and will be financed through Alexion's cash on hand, as well as $300 million in debt.

In exchange for the cash payments, Alexion will receive the worldwide development and commercialization rights to Enobia's asfotase alpha, a mid-stage compound meant to treat an ultra-rare genetic disorder called hypophosphatasia (HPP). Enobia has identified about 2,600 patients worldwide and analysts estimate peak sales of about $500 million. Alexion has said that it expects to enter the market in the second half of 2014; first in a pediatric indication and then in adults. The time between now and then will be spent scaling up the manufacturing process.

"Our expanded development team will then be able to accelerate our ongoing programs with Soliris (eculizumab) and other innovative compounds while also expediting the development of asfotase alfa for patients suffering with HPP," said Alexion CEO Leonard Bell on an investor call.

The disorder usually develops at birth and leads to mortality in 50% of infants; in those who do survive, children and adults live with severe muscle weakness, bone pain, fractures, renal and respiratory problems. HPP is caused by a genetic defect that leads patients to have a deficiency in an enzyme known as tissue non-specific alkaline phosphatase. The enzyme deficiency leads to problems with phosphate and calcium mineral metabolism. Asfotase alpha, which could be the first treatment for the disorder, works by normalizing the metabolic process, thus preventing or reversing the complications of the disease.

Asfotase alpha has completed an open-label Phase I study in adult HPP patients, a Phase I/II study in severely affected infants with HPP, as well as a six-month Phase II study in juvenile patients with HPP. It has shown benign safety affects so far and promising efficacy results. Phase II studies have only been conducted in a small number of patients, approximately 24 patients. The compound is expected to advance into a Phase III study in adults.

"Asfotase alfa is on track to be the first and only therapy to specifically address the underlying pathology of HPP through a targeted enzyme replacement therapy and therefore could dramatically alter the course for patients with this disease," said Stephen Squinto, Alexion's co-founder and head of R&D, during a Dec. 29 conference call.

Enobia previously earned about $173 million in cash through venture fundraising and a private placement.

Developing Treatments For Rare Diseases

Enobia is Alexion's third acquisition in 2011; it also bought Taligen Therapeutics Inc. and Orphatec Pharmaceuticals GMBH.

Under the deal announced Jan. 31 with privately held Taligen, Alexion gained a portfolio of preclinical product candidates, including lead candidate TT-30, a recombinant fusion protein to replace defective complement factor H, which has potential as a treatment for age-related macular degeneration as well as in several smaller orphan diseases [ (Also see "Alexion Buys Taligen, Adding A Complement To Its Research Pipeline" - Pink Sheet, 31 Jan, 2011.)]. Alexion paid $111 million upfront and agreed to pay further milestones as the programs progressed.

On Feb. 10, it announced it would add the assets of German company Orphatec [[See Deal]]. Alexion paid just $3 million upfront for the German company's assets, which include patents surrounding a treatment for molybdenum cofactor deficiency (MoCD) type A, an ultra-rare disorder affecting infants for which there is no approved treatment.

"The [Enobia] acquisition makes strategic sense given asfotase alpha fits into Alexion's sweet spot in rare disease and is leveraged by the business model in addition to introducing a new late-stage asset," said Collins Stewart analyst Salveen Richter.

All three acquisitions added to Alexion's portfolio of ultra-rare disease drugs, including its only currently marketed product Soliris for treatment of paroxysmal nocturnal hemoglobinuria (PNH) and, more recently, for atypical hemolytic uremic syndrome (aHUS). The drug is one of the highest priced on the market with a price tag of $400,000 annually. First sold in the U.S. and Europe in 2007 for PNH, Soliris has received regulatory approval in Australia in 2009 and Japan during the third quarter of 2010. In addition, the company aims to add Turkey, Brazil and Russia by the end of 2012. Soliris received approval in the U.S.and Europe for aHUS in September 2011.

Moreover, Alexion is pursuing additional hematological and neurological indications for the drug, a monoclonal antibody that binds to a protein critical to the complement system's destruction of cells, a process that is part of the body's innate immune system. Soliris is the first approved complement inhibitor on the market [ (Also see "Alexion's Soliris Gains New Orphan Indication But Limited Sales Expectations" - Pink Sheet, 26 Sep, 2011.)].