Somewhat Late To The HCV Race, Novartis Licenses NS5A Inhibitor From Enanta

The Phase I-ready compound joins alisporivir, a cyclophilin inhibitor licensed from Debiopharm in 2010, in Novartis’ rather slight portfolio of HCV candidates.

Apparently, the market for a new and improved therapeutic regimen for hepatitis C is so lucrative – estimated at $20 billion annually by some market analysts – that Novartis AG felt it would be better to enter the race late rather than practically not at all. Paying a $34 million upfront fee, the Swiss pharma in-licensed a Phase I-ready NS5A inhibitor (EDP-239) from Enanta Pharmaceuticals Inc. on Feb. 21, doubling its current portfolio of clinical candidates for hepatitis C.

Biopharmaceutical business development teams have been focused significantly on HCV of late as established companies such as Bristol-Myers Squibb Co., Gilead Sciences Inc. and Roche have been snapping up HCV biotechs and compounds at high premiums (Also see "High-Premium Buyouts Continue In Hepatitis C Space; Are Idenix And Achillion Next?" - Pink Sheet, 16 Jan, 2012.).

A lower-profile, privately held player in the antiviral space, Enanta previously had out-licensed a preclinical protease inhibitor program to Abbott Laboratories Inc. in 2006 for $57 million upfront (Also see "Abbott Wins Rights To Enanta’s Preclinical HCV Protease Inhibitors" - Pink Sheet, 12 Dec, 2006.). One of those compounds, ABT-450, is now in mid-stage development at Abbott, which also has an NS5A inhibitor (ABT-267) and two nucleoside polymerase inhibitors (aka “nucs”) in the clinic for HCV (ABT-333, ABT-072).

In addition to the substantial $34 million upfront for a compound that has not yet entered the clinic, Novartis also is in line to pay Enanta up to $406 million in clinical, regulatory and commercial milestones related to EDP-239. Enanta also can earn tiered double-digit sales royalties should ‘239 reach the market, and holds a co-detailing option in the U.S. Novartis assumes all development, manufacturing, and commercial costs, and will provide undisclosed funding for Enanta’s further research into additional compounds targeting NS5A, taking rights to any compounds it wants.

In an interview, Enanta President and CEO Jay Luly would not comment on whether opting in to help detail the NS5A inhibitor in the U.S. would mean an increased profit-sharing opportunity for the Watertown, Mass.-based biotech. He said the opportunity is more about getting experience in commercialization by working alongside an experienced team from Novartis. “That’s certainly a big benefit, to get the expertise and the training,” Luly said. “You also get to participate in growing the sales, which is an important dimension as well.”

Although it has no commercial products and has not raised funds in the venture capital arena in recent years, Enanta has an ambitious development program – it is working on discovering and developing HCV candidates in four different classes – protease inhibitors, NS5A inhibitors, cyclophilin inhibitors and nucs. Enanta’s last significant fundraising was a $20 million venture round in 2004, led by Techno Venture Management, Oxford Bioscience Partners, and , with participation from Shionogi & Co. Ltd. as a new investor [See Deal].

“For more than five years, we have been running the company exclusively on non-dilutive capital from deal revenues,” Luly explained, estimating his firm currently has several years of runway. “So we haven’t taken venture financing in over five years, which is pretty extraordinary.”

Enanta Hopes To Develop Some HCV Candidates In-House

Although in the Abbott and Novartis deals, Enanta brought preclinical compounds through the IND-enabling stage and then out-licensed them, Luly said that wouldn’t necessarily be Enanta’s modus operandi in coming years. It plans now to push some of its compounds into the clinic on its own, he added.

“We look at the competitive landscape [and] the deal-making landscape at any given point, and we ask the question ‘would we better off entering into a strategic alliance of some sort to enhance our chances of success?,’” Luly said. “Going back to late 2006 when we signed the Abbott deal … we saw consolidation starting to take place and it made sense for us, I think, to also team up with a big player in our development of protease inhibitors.”

In 2006, the focus in HCV was on developing new single agents to improve upon the existing standard of care, ribavirin, an oral antiviral, and pegylated interferon, a weekly injectable. But with the biopharmaceutical industry now looking at practically every possible combination, even with early-stage compounds, to try to develop an all-oral regimen of direct-acting antivirals that would eliminate the need for peg-interferon, Luly and his team felt a need to get into the game in a new way.

“Fast forward a few years, and you see that what’s happening at an unbelievable pace is the performance of combination trials at very early stages of drug development,” Luly said. “Right now, it’s a different landscape where people are trying to figure out what are the best combinations, what is the minimum combination of agents that you can put together to treat the virus and beat down the possibility of resistance. So, that game is on and there have been a number of different kinds of deals of late. We thought it would be good to participate in some of those company/company synergies in making these new combinations.”

Compound Active Against Multiple Genotypes, Should Allow For Once-Daily Dosing

Enanta has obtained IND approval from FDA for the compound and says it demonstrated strong potency against multiple genotypes of HCV in preclinical study. Luly declined to clarify which genotypes ‘239 is active against. The compound also has an excellent safety profile and a pharmacokinetic profile indicating the possibility of once-daily dosing, Enanta said.

EDP-239 was one of 10 infectious disease candidates selected for presentation at the Windhover Therapeutic Area Partnerships conference last fall in Boston (Also see "Hepatitis C, HIV, Antibiotics And Vaccines Headline Infectious Diseases Discussion At TAP Conference" - Pink Sheet, 28 Nov, 2011.). Of the five antivirals presented in the infectious diseases track at the conference, ‘239 was one of three HCV candidates, along with Scynexis Inc.’s Phase II cyclophilin inhibitor, SCY-635, which remains unpartnered, and Anadys Pharmaceuticals Inc.’s Phase IIb non-nucleoside polymerase inhibitor setrobuvir (ANA598), acquired by Roche when it bought out Anadys for $212 million last October (Also see "Roche Agrees To Acquire HCV Biotech Anadys For $230 Million" - Pink Sheet, 17 Oct, 2011.).

Before in-licensing ‘239, Novartis began its efforts to compete in the HCV space with a 2010 deal in which it licensed worldwide rights (except for Japan) to alisporivir (Debio025), a mid-stage cyclophilin inhibitor, from fellow Swiss company Debiopharm International SA[See Deal]. With two clinical candidates for HCV in its pipeline now, the question remains whether Novartis now will pursue other candidates in the protease inhibitor and/or polymerase inhibitor classes, or seek to initiate combination trials with companies that have assets in those classes, but not NS5A or cyclophilin inhibition.