Sosei Buys Heptares To Secure New Drug Creation Platform, Early Pipeline
This article was originally published in The Pink Sheet Daily
Executive Summary
Acquiring Heptares brings Sosei a cutting edge GPCR drug discovery platform and lucrative on-going alliances, and a much needed strategy to grow beyond royalties from Ultibro Breezhaler and Seebri Breezhaler, whose patents expire in 2016.
Japan’s Sosei Group Corp., which is spending up to $400 million to buy U.K.-based biotech Heptares Therapeutics Ltd., says it has thereby identified its future path to growth, using the target’s StaR drug design to create novel drugs and progressing Heptares’s own early assets that target G protein-coupled receptors (GPCRs).
Founded in 1990, Sosei has been searching for a way to diversify beyond its secured revenue stream in milestones and royalties from Novartis AG for two COPD lung products Ultibro Breezhaler (indacaterol/glycopyrronium) and Seebri Breezhaler (glycopyrronium), which the Japanese group acquired when it bought Arakis Ltd. in 2005. It believes Heptares’s GPCR-targeting technology will secure its future via a pipeline focused on highly validated targets spanning neuroscience, metabolic and orphan disease areas, and with it long-term opportunities for internal development and fresh external partnering.
“We saw Heptares as the outstanding fit for us,” said Peter Bains, external director for Sosei Group. “The platform has absolutely enormous potential based on the breadth of targets that it covers and the limitations on current drugs in that [GPCRs] field,” Bains told an analyst’s presentation. [See Deal]
Around 40% of all currently marketed drugs act on one or more of the 826 known GCPRs in the body, which are a large family of cell surface receptors linked to G proteins and cellular signaling pathways which are activated by natural or other molecules and have been found to be critically involved in a broad variety of diseases.
While there has been much success in recent years developing drugs by targeting GPCRs, the process has become much harder. Sosei and Heptares believe their union can surmount that.
“In recent years things have become much more difficult in terms of discovering new drugs with GPCRs and many, many of these proteins are not optimally made into drugs even though they offer great pharmaceutical and medical and commercial opportunities,” explained Malcolm Weir, CEO of Heptares. “What we have to offer is the technology of structure-based design, which enables us to bridge that gap and move to produce selective, safe and orally available and potent small molecule drugs for treatment of many diseases,” he told analysts.
Closely-held Heptares, founded in 2007, has 10 drugs in its clinical and preclinical pipeline targeting diseases with major unmet need including Alzheimer’s disease, attention-deficit hyperactivity disorder (ADHD), metabolic disease, schizophrenia and migraine.
Its M1 agonist for cognitive disorder associated with Alzeheimer’s is furthest advanced in development. Results from Phase Ib testing are due this summer.
Morgan Stanley analysts said that, “although [Heptares’s M1] is still in Phase I, we think the acquisition of several new drugs is positive for the medium and long term [for the group].”
Analysts also welcomed news that Heptares will continue its existing partnerships with leading biopharma companies and expand that activity as assets progress. Heptares has leveraged its proprietary StaR technology through partnerships with companies including AstraZeneca PLC, Cubist Pharmaceuticals Inc. (now Merck & Co. Inc.), Takeda Pharmaceutical Co. Ltd., MorphoSys AG, MedImmune LLC and Novartis.
These partnerships have so far generated more than $30 million in upfront and milestone payments to-date and are expected to continue generating revenues through milestone payments and royalties over the coming years and beyond the expiration of Sosei’s COPD products patents in 2026. New pipeline products and alliance deals will likewise generate income for many years to come.
Under the terms of the deal, Tokyo-based Sosei will pay $180 million upfront and as much as $220 million in milestone and other payments. Weir, a co-founder of Heptares, will remain the U.K.-based group’s CEO and also take on the role of chief R&D officer and responsibility for the combined group’s worldwide research and development outside Japan.