Deal Watch: NASH In The Hot Seat

Regeneron stayed busy during the past two weeks, collaborating and making an equity commitment to CRISPR gene-editing biotech Intellia and signing an immuno-oncology deal with MedImmune. Allergan bounced off the termination of its merger with Pfizer by partnering with Heptares in neurological disease.

"The Pink Sheet" regularly covers business development and deal-making in the biopharmaceutical industry. Below is a roundup of some of the most noteworthy transactions that occurred between April 2-15. Deal Watch is supported by deal intelligence provided by Strategic Transactions.

Gilead/Nimbus

In what might be a chilling thought for the 20-plus other companies working to bring the first drug to market in non-alcoholic steatohepatitis (NASH), Gilead Sciences Inc. has increased its already diversified pipeline in the indication with the announced buyout of Nimbus Therapeutics’ subsidiary Nimbus Apollo and its Phase II-ready acetyl-CoA carboxylase (ACC) inhibitor program.

In the deal announced April 4, Gilead will pay $400m up front plus earn-outs (Also see "Gilead Increases NASH Emphasis With Pickup Of Nimbus ACC Inhibitor" - Pink Sheet, 4 Apr, 2016.). On April 11, another NASH partnership was announced between Tesaro Inc. and South Korea's Dong-A Pharmaceutical Co. Ltd. (see below). Then, on April 14, Synta Pharmaceuticals Corp. and Madrigal Pharmaceuticals Inc. announced a merger creating a new company that will focus on the latter's Phase II-ready candidate for NASH and familial hypercholesterolemia (see below).

Nimbus Therapeutics is an LLC structured entity that establishes C corporations around computational chemistry efforts on various therapeutic targets. One of those, Nimbus Apollo, has advanced NDI-010976, an allosteric inhibitor of ACC, through a series of Phase I studies. The Cambridge, Mass.-based biotech had been planning to move '976 into Phase II later this month before reaching agreement on a sale to Gilead, Nimbus CEO Don Nicholson said in an interview [See Deal].

Just last autumn, Nimbus had out-licensed global rights to its IRAK4 (interleukin-1 receptor-associated kinase 4) inhibitor program for autoimmune disorders and B-cell lymphomas to Genentech Inc. in order to focus its drug development on ACC inhibition, initially in NASH and prospectively in hepatocellular carcinoma down the line (Also see "Potent Selectivity: Nimbus Entrusts IRAK4 Program To Genentech" - Pink Sheet, 20 Oct, 2015.). Nicholson's company had no plans to sell off Nimbus Apollo but ultimately chose Gilead from among several suitors that put in unsolicited bids for the ACC program, the exec said.

"I think it kind of dawned on Gilead as well as a couple of other companies that ACC was really a premier mechanism for the treatment of NASH and they got very interested in a partnership of some sort," he added. "It varied in flavor in terms of the types of deals that we had on the table, there were offers for classic licensing deals, which we were less interested in, [as well as] option deals. But this one, which was an outright acquisition deal, turned out to be most appealing for a number of reasons."

Besides the money, which includes the potential for up to $800m in development milestones, Nicholson said that if his company wasn't going to take '976 through clinical development, it wanted to be sure the molecule was in the hands of a company that could succeed with it. Based on Gilead's prior success in hepatitis C, Nicholson and his team saw the California specialty firm as the partner of choice.

"Gilead's forte is liver disease," Nicholson said. "They are making a major investment in NASH, as you can tell by the other programs they've got in their portfolio, and in meeting both the scientists and the people at Gilead, they really are a remarkable organization. We have a huge amount of respect for them and vice versa. They were just the ideal partner for this program as a consequence of all of those things."

Gilead has three different candidates in clinical development for NASH, as well as a program that is testing two of the candidates as a combination therapy. The pipeline includes simtuzumab, a monoclonal antibody that is in Phase II both in NASH and primary sclerosing cholangitis; GS-4997, an ASK-1 inhibitor also in Phase II for NASH; and GS-9674, a farnesoid X receptor agonist in Phase I. Simtuzumab and '4997 are also in Phase II as a combo therapy for NASH.

Tobira/Dong-A

With two monotherapy candidates having reached Phase III in non-alcoholic steatohepatitis (NASH), combination therapy is driving the next wave of business development activity for the liver disease, as shown by the tie-up announced April 11 between Tobira and Dong-A Pharmaceutical (Also see "Tobira/Dong-A Partnership Will Add DPP-4 Inhibitor For NASH Combo Therapy" - Pink Sheet, 11 Apr, 2016.).

Tobira has cenicriviroc (CVC), which it bills as the only NASH candidate that addresses both inflammatory and fibrotic pathways of the disease, in Phase IIb. The agreement with Seoul-based Dong-A gives Tobira rights in North America, Europe and Australia to work on a fixed-dose combination of CVC with its partner's Suganon (evogliptin), a DPP-4 inhibitor approved in South Korea to treat type 2 diabetes (Also see "Evogliptin Set For First Launch, In Crowded Korean Market" - Scrip, 6 Oct, 2015.).

Each company will work on a program to develop a fixed-dose combo of CVC and evogliptin for NASH, with Dong-A getting all rights to the potential combo in South Korea. The two will also partner on development of CVC as monotherapy in NASH, with Dong-A covering the costs of development in its home country, Tobira Chief Financial Officer Chris Peetz explained in an interview.

There is very little upfront cash involved in the deal; Dong-A gets $1.5m for the rights to evogliptin, while Tobira gets $0.5m up front for the rights it conferred on CVC. Dong-A can realize $25m in Phase III completion and approval milestones for the first indication under the deal and up to $10m on a second indication, covering contingencies for both monotherapy and combination therapy. The South Korean firm can also earn up to $35m in commercial milestones. Tobira can earn up to $2.5m in milestones for Phase III completion and approval in South Korea.

"From a strategic standpoint, we were looking to have as efficient a structure as we could so that we would be deferring payment," Peetz said. "That's how we ended up with a very minimal upfront payment and really nothing until there's a complete Phase III. We can get all the way to an approval dataset before we have to make any of those milestone payments."

The difference in amounts of potential milestone payments merely reflects the relative size of each company's territorial rights under the deal, he added.

Peetz said the deal culminates a lengthy process in which Tobira pondered which types of mechanisms would be most advantageous to combine with CVC, an immunomodulator that blocks the CCR2 and CCR5 chemokine receptors, in NASH.

Synta/Madrigal

Enter another competitor in the already crowded NASH arena: troubled oncology firm Synta and privately held Madrigal Pharmaceuticals are merging in an all-stock deal to develop a selective thyroid hormone receptor agonist for non-alcoholic steatohepatitis, as well as a pair of hypercholesterolemia indications.

Under the transaction announced April 14 and scheduled to close by the end of the third quarter, Lexington, Mass.-based Synta will acquire all outstanding shares in Madrigal, issuing in exchange 253.9 million new shares of Synta common stock (Also see "Synta's Merger With Madrigal Creates New Entrant In NASH Race" - Pink Sheet, 14 Apr, 2016.). The result will be a new publicly traded firm retaining the Madrigal name located in greater Philadelphia. Synta shareholders will own about 36% of the new entity, while Madrigal shareholders will get a 64% stake in the new company.

Until last fall, Synta had been centered around development of the heat shock protein 90 (Hsp90) inhibitor ganetespib in non-small cell lung cancer and other oncology indications, until it terminated a Phase III trial for second-line lung cancer last October due to significant safety issues (Also see "New CEO Will Ready Synta For Commercialization As Ganetespib Begins Phase III In NSCLC" - Pink Sheet, 6 Aug, 2014.).

Madrigal Pharmaceuticals will focus on Phase II-ready MGL-3196, an oral, liver-directed selective thyroid hormone receptor-beta (THR-β) agonist that has demonstrated good safety and tolerability in Phase I testing, as well as the ability to reduce lipids. Beyond NASH, the compound will be developed as a therapy for both heterozygous and homozygous familial cholesterolemia (HeFH/HoFH), executives said during an April 14 investor call.

Current Synta CEO Chen Schor said the combination will create a well-capitalized company with a lead program that offers a significant commercial opportunity in NASH as well as a quick-to-market strategy in cholesterolemia. End of 2015 data are not available, but Synta reported in November that it had $88.3m in cash on hand at the end of third-quarter 2015. In tandem with the merger, an investor syndicate including Bay City Capital, its founder Fred Graves, and a corporation headed by the two executives who will lead the new company – Paul Friedman, who will be CEO, and Rebecca Taub, who will become chief medical officer – committed to invest another $9m in the firm.

In two-week studies in humans, MGL-3196 was shown to reduce several lipid types. The data revealed a 30% reduction in LDL cholesterol, a 28% reduction in HDL cholesterol, a 24% reduction in apolipoprotein-A and up to 60% reduction in triglycerides, Madrigal reported. In preclinical testing, it reduced lipotoxicity related to NASH and potently reduced hepatic triglycerides that are implicated in inflammation and fibrosis. The compound was licensed by Madrigal's predecessor VIA Pharmaceuticals Inc. from Roche in 2008 and has completed single-dose, multiple ascending dose and drug-drug interaction studies to date [See Deal].

Regeneron/Intellia

On April 11, Regeneron Pharmaceuticals Inc. became the latest biopharma to acquire rights to use CRISPR-Cas9 gene-editing technology in its discovery and development work, under a six-year collaboration with privately held Intellia Therapeutics Inc., bringing the biotech $75m up front as well as a $50m equity investment commitment (Also see "Regeneron Looks To Use CRISPR Inside/Outside The Liver With Intellia Pact" - Pink Sheet, 12 Apr, 2016.).

Separately, Intellia announced plans to file for a $120m initial public offering, although pricing is not yet set. Regeneron Senior VP-Strategy and Investor Relations Michael Aberman said that his company's investment is pledged for the next equity raise by Intellia, so if that occurs via an IPO, Regeneron will be participating, apparently with a significant position.

The two companies have agreed to discover and develop new therapeutics against up to 10 targets, with Intellia holding some co-development and co-commercialization rights under the pact. The Boston-area biotech is also in line to earn undisclosed milestone and sales royalty payments from Regeneron.

The first target of the collaboration will be transthyretin (TTR) amyloidosis, with the others not yet disclosed. The companies said the work will focus "primarily" on a range of indications that can be treated by editing genes in the liver, but Regeneron can pick up to five targets outside the liver for the joint R&D work.

Aberman said the collaboration represents Regeneron's efforts to stay on the cutting edge of biotech science and augments the Tarrytown, N.Y., firm's human genetics research.

"There's an interest here, particularly since we may be expanding our ability to find and validate targets through our Regeneron Genetics Center, to also be able to address intracellular targets and that's one reason we want to take different approaches," Aberman continued. "We're just very big believers in the CRISPR field and the advances that it has [yielded] and look at this as very promising.

Aberman declined to discuss plans for addressing TTR amyloidosis via the collaboration, adding that he couldn't say what the first, second or third priorities of the partners' R&D work are, or where it will look beyond the liver. Pfizer Inc.'s Vyndagel (tafamidis) was approved for the related indication of familial amyloid polyneuropathy in Japan in 2013, but no therapies are approved in the US or Europe for TTR amyloidosis, according to BioMedTracker (Also see "Pfizer Launches Vyndaqel For TTR-FAP Treatment In Japan" - Scrip, 26 Nov, 2013.).

"I think there's broad potential with this technology and as you've seen from other companies that are pursuing strategies that involve manipulating intracellular targets, such as siRNA or other [modalities], the liver is certainly a very interesting target," he explained. "It's responsible for making a lot of proteins in the body, it's also potentially more addressable since part of its job is mopping up things from the blood supply, so you can deliver [a therapeutic] through the liver, but that's not the only area of interest. There certainly are other organ systems that could benefit from potential strategies that employ CRISPR."

Regeneron/MedImmune

Back on April 5, Regeneron licensed rights to the use of MedImmune LLC's "warhead-and-linker" technology for developing antibody-drug conjugates (ADCs) against a number of undisclosed cancer targets. The deal will add to Regeneron's research efforts in oncology, a therapeutic area it wants to exploit beyond its current focus in ophthalmology with the macular degeneration therapy Eylea (aflibercept) and in heart disease with the PCSK9 inhibitor Praluent (alirocumab).

MedImmune will receive from Regeneron an undisclosed upfront payment, development and commercial milestone payments, and single-digit royalties on net sales of any products developed. The biotechnology arm of AstraZeneca PLC also gets an option to develop and commercialize certain products created with the technology outside the US.

The agreement is the third that MedImmune has entered into involving its ADC expertise since it picked up the pyrrolobenzodiazepine (PBD)-based warhead-and-linker technology through the acquisition of the UK biotech Spirogen Ltd. in 2013 [See Deal].

MedImmune paid $440m in upfront and contingency payments for Spirogen, with the principal attraction being the technology's ability to deliver cytotoxic agents directly to cancer cells. The acquisition also may have been driven by blockbuster sales forecasts made for one of the pioneering ADC products, Roche's breast cancer therapy Kadcyla (ado-trastuzumab emtansine), that have been partly achieved: in 2015, Kadcyla's sales increased by 51% over those in 2014 to reach CHF 769m ($804m).

In 2014, MedImmune and its first ADC partner, ADC Therapeutics SARL, took their first product into Phase I clinical trials, the potential prostate cancer therapy, ADCT-401, consisting of the antibody targeting the cell surface antigen PSMA linked to a PBD warhead [See Deal]. MedImmune signed its second agreement involving its antibody-drug conjugate technology with Tanabe Research Laboratories USA Inc. just six months ago; the two companies are working on monospecific and bispecific ADCs against certain tumor targets [See Deal].

Allergan/Heptares

With the industry reeling from the news April 6 that Pfizer and Allergan PLC had called off their $160bn mega-merger, news broke that same day that UK biotech Heptares Therapeutics Ltd., now a wholly owned subsidiary and the "R&D engine" of Japanese company Sosei Group Corp., secured a notable licensing deal with Allergan.

Allergan has licensed exclusive global rights from Heptares to a broad portfolio of novel subtype-selective muscarinic receptor agonists to treat major neurological disorders, including Alzheimer's disease [See Deal].

In a deal with a potential ultimate value exceeding $3.3bn, Allergan is paying $125m up front and is committed to up to $665m in development and product launch milestone fees, as much as $2.5bn in sales milestones, plus royalties. Allergan also will provide up to $50m for a joint R&D program to push multiple drug candidates through Phase II trials. In addition, the company will take over development starting with Phase IIb and handle all manufacturing and commercialization for future products. Heptares recently completed a Phase I study of the program's lead candidate, HTL9936 (Also see "Allergan's Back In The (M&A) Saddle Again Post-Pfizer Breakup" - Pink Sheet, 6 Apr, 2016.).

Heptares CEO Malcolm Weir said in an interview that the agreement comprises two Phase I candidates that work against the M1 receptor in cognition indications. "In Phase I, they look very promising at doses which suggested they will be efficacious," the exec said. "At those doses, we are not seeing the side-effect problems that people have seen in the past with muscarinic drugs, and that's because they are selective: we've got rid of the bad side effects of M2 and M3 and kept the efficacy. So they are promising to take into Phase II studies for proof-of-concept in Alzheimer's."

"Then, we've also got M4 agents which should be in the clinic early next year, and dual M1/M4s as well," Weir added. "M4 is directed towards psychosis in Alzheimer's, which is the behavioral disturbances and delusions and agitation that you see in people with Alzheimer's. We plan to move the M1 products into Phase II towards the end of this year."

Tesaro/Janssen

Deriving income from letting somebody else pursue a direction you weren't prioritizing is always a good business strategy, and Tesaro Inc. brought that approach to fruition April 6 by out-licensing rights to its PARP inhibitor niraparib in prostate cancer to Janssen Biotech Inc. while retaining all other rights to the drug (Also see "Monetizing Focus: Tesaro Adds Runway By Out-licensing Niraparib In Prostate Cancer" - Pink Sheet, 6 Apr, 2016.).

A healthy competition to bring poly ADP-ribose polymerase inhibitors to market in cancer was only heightened when AstraZeneca PLC obtained a limited approval for Lynparza (olaparib) in third-line ovarian cancer in late 2014 (Also see "Lynparza Approval Shows Benefit/Risk Contrast In Maintenance, Relapse Settings" - Pink Sheet, 5 Jan, 2015.).

Tesaro plans to continue focusing on niraparib in various types of ovarian cancer as well as metastatic breast cancer and lung cancer, but did not have the bandwidth at present to investigate the candidate in prostate cancer as well, CEO Lonnie Moulder said.

Under the deal, Janssen is paying $40m up front for worldwide rights excluding Japan, with potential for development, regulatory and commercial milestones up to $415m to Tesaro [See Deal]. The Waltham, Mass.-based firm also can earn tiered double-digit royalties if niraparib reaches market in prostate cancer, and Johnson & Johnson Innovation also is taking a $50m equity stake in Tesaro under the deal, with shares priced at $44.24 apiece. Moulder said this will give J&J roughly a 2% stake in his company.

The CEO said Tesaro was interested in looking at niraparib in prostate cancer but not in the timeframe and to the extent Janssen can bring to the effort right now. Janssen has not shared its development plans for the drug with Tesaro, but Moulder said it should be Phase II-ready in prostate cancer. It already has advanced to Phase III in ovarian and breast cancer.

"We would have pursued [prostate cancer] on a much later timeline and not in as expansive a manner compared to what Janssen can do, because we're focused on a very large ovarian cancer program, a breast cancer program and then lung cancer program for niraparib as our highest-priority targets for that compound," he said.

Beyond niraparib, Tesaro is preparing to enter the cancer immunotherapy space, as it is advancing anti-PD-1 and anti-TIM-3 antibodies through IND-enabling work with plans to reach the clinic in 2017. The firm also announced a collaboration with the MD Anderson Cancer Center March 29 to discover and develop small-molecule candidates against undisclosed immuno-oncology targets.

BioMedTracker gives niraparib a 37% likelihood of approval in both ovarian and breast cancer, slightly above the 35% chance it gives Lynparza in breast and pancreatic cancer. The database has yet to estimate niraparib's chances in prostate cancer.

Parker Institute/PsiOxus

The newly established Parker Institute for Cancer Immunotherapy is up and running, with the April 14 announcement of a planned collaboration with PsiOxus Therapeutics Ltd. The institute was launched April 13 with $250m in funding from billionaire tech entrepreneur Sean Parker, and will collaborate with six leading US academic cancer centers and several biopharmaceutical companies and other industry and nonprofit partners with the aim of accelerating the development of more effective immunotherapy drugs.

"The Parker Institute for Cancer Immunotherapy is forging partnerships with key companies and nonprofits to share knowledge, systems and data; harness the latest technologies and platforms; and connect more clinicians and patients," the newly formed organization said.

It said the goal of the collaborative effort is to overcome many of the obstacles that currently prevent research breakthroughs with immunotherapy medicines by breaking down silos and providing researchers with "dedicated and easy access" to the tools and capabilities that will allow them to pursue their work more efficiently.

The Parker Institute said it intends to unify research programs, intellectual property licensing, data collection and clinical trials across the six centers – Memorial Sloan Kettering Cancer Center, Stanford Medicine, the University of California, Los Angeles, the University of California, San Francisco (UCSF), the University of Pennsylvania and The University of TexasMD Anderson Cancer Center – under the umbrella of a single nonprofit biomedical research organization.

Under the pact, the partners have agreed the administration of all intellectual property will be shared – "enabling all researchers to have immediate access to a broad swath of core discoveries," the Parker Institute said. The organization said it would oversee the licensing of the IP to industry. It said the collaboration would take a "flexible and entrepreneurial approach to scientific discovery – cutting across fields to work with all the key actors in cancer immunotherapy."

Immunotherapy pioneer Jeffrey Bluestone, a leading immunologist in the field of T-cell activation, costimulation and immune tolerance at UCSF, has been appointed CEO of the Parker Institute.

The memorandum of understanding announced by PsiOxus the following day covers a planned collaboration to use the biotech's Tumor-Specific Immuno-Gene Therapy (T-SIGn) platform to develop and test novel "armed" oncolytic viral constructs.

"Under the anticipated collaboration, the Parker Institute would convene key scientific and clinical thought leaders from its network to prioritize novel virus designs, including genetic payloads intended to prime or otherwise beneficially modify the tumor microenvironment for immune infiltration," the company said. "PsiOxus would then manufacture the candidate viruses and make them available for research use by Parker Institute researchers, including for Parker Institute-supported clinical trials and other types of studies, as well as in combination with other clinical agents."

It noted that the commercial terms remain under discussion.