Several drenching days of heavy rain and wind from an “atmospheric river” weren’t the only topics of conversation at this past week’s J.P. Morgan (JPM) 41st Healthcare Conference in San Francisco.
The conference began with a trio of billion-dollar range acquisition announcements for target companies that all saw their shares roughly double in price soon after the deals became public—even though none of the transactions even approach the size of the last blockbuster purchase timed to a JPM conference (Bristol Myers Squibb’s $74 billion buyout of Celgene in 2019).
In the largest of the three deals, AstraZeneca (AZN) agreed to acquire CinCor Pharma (CINC) for up to $1.8 billion—to consist of $1.3 billion cash upfront, plus CinCor’s cash, cash equivalents, and marketable securities, which totaled $522.497 million as of September 30.
AstraZeneca said the deal will strengthen its presence in cardiorenal diseases with unmet need by adding to its pipeline baxdrostat (CIN-107), an aldosterone synthase inhibitor (ASI) for blood pressure lowering in treatment-resistant hypertension. AstraZeneca reasons that it can not only develop baxdrostat as monotherapy but also combine it with its blockbuster Farxiga® (dapagliflozin), which has indications in chronic kidney and cafrdiovascular diseases as well as type 2 diabetes.
Boosting AstraZeneca’s case for acquiring CinCor in order to gain baxdrostat is the drug’s meeting its primary endpoint in the BrigHTN Phase II trial (NCT04519658) of a statistically significant reduction in systolic blood pressure (SBP) after a 12-week treatment period among patients with treatment-resistant hypertension, a key focus area.
However as AZ has acknowledged, baxdrostat missed its primary endpoint of a statistically significant reduction in SBP at eight weeks in another Phase II study, HALO (NCT05137002). But as CinCor noted last November, a pre-specified subgroup analysis of non-Hispanic patients (47%, 116 of 249 patients) representing approximately 81-89% of the hypertension population in the U.S. showed a placebo-adjusted reduction in SBP of 12.6 mmHg (nominal p-value = 0.001) at the 2 mg dose.
Baxdrostat was well-tolerated in both the HALO and BrigHTN trials, and remains under study in two other ongoing Phase II studies: Spark-PA (NCT04605549), in hypertensive patients with primary aldosteronism; and FigHtn-CKD (NCT05432167), in patients with uncontrolled hypertension and chronic kidney disease (CKD). CinCor plans to launch a Phase III trial of baxdrostat during the first half of this year in patients with treatment-resistant hypertension.
“With the acquisition, AZN helps bolster its robust cardiorenal portfolio anchored by SGLT2 inhibitor Farxiga, and potentially plans to combine baxdrostat with Farxiga for cardiorenal diseases,” Andrew Berens, MD, Senior Managing Director, Targeted Oncology, and a senior research analyst with SVB Securities, wrote Monday in a research note. “The low levels of hyperkalemia associated with baxdrostat likely facilitate the combination potential with Farxiga and may provide an advantage over other treatment options.”
CinCor investors appeared to agree with Berens, judging from the stock’s performance on Monday when the deal was announced. Shares more than doubled, rocketing 144% from $11.78 to $28.74, then plateauing the rest of this week. Interestingly, CinCor went public a year ago this month, pricing its shares at $16 and raising net proceeds of $193.6 million through an initial public offering (IPO) on the Nasdaq Global Market.
AstraZeneca shares responded to the news by inching up 0.2% over two days, from 11,782 pence (£11.782 / $14.38) on Friday to 11,802 pence (£11.802 / $14.41).
AZ is also seeking to bolster its cardiovascular and kidney pipelines as Farxiga’s U.S. patents are set to start expiring in 2025, running through 2040.
Also announced during J.P. Morgan, privately-held Italian biopharma Chiesi Farmaceutici has agreed to shell out up to $1.48 billion cash to acquire Amryt (AMYT), a publicly-traded biopharma based in Dublin, Ireland, with U.S. HQ in Boston. Chiesi said the deal will benefit it by expanding its rare disease pipeline with Amryt’s approved products, one of which is still trying to win U.S. approval after failing with the FDA.
The FDA in February 2022 issued a Complete Response Letter rejecting Amryt’s NDA seeking approval for the topical gel Filsuvez® (Oleogel-S10) as a treatment for skin wounds in patients with dystrophic and junctional epidermolysis bullosa (EB). At the time, Amryt said the agency requested more data showing that Filsuvez was effective in treating EB, a rare and often devastating group of hereditary disorders of the skin, mucous membranes, and internal epithelial linings characterized by extreme skin fragility and blister development.
Amryt responded four months later in June 2022, by pursuing the Formal Dispute Resolution pathway in the FDA’s Center for Drug Evaluation and Research (CDER). That announcement came a day after Filsuvez won European Commission approval as a treatment for dystrophic and junctional EB in patients six months and older. The European approval helped Filsuvez bring in $219,000 in total revenue during the third quarter.
Amryt’s portfoilio of approved drugs also includes Juxtapid® (lomitapide), indicated along with a low-fat eating plan for adults with homozygous familial hypercholesterolemia (HoFH) who have uncontrolled low-density lipoprotein cholesterol (LDL-C) levels and FDA-approved in 2012, Myalept® (metreleptin), a leptin replacement therapy indicated along with a special diet for leptin deficiency in patients with generalized and partial lipodystrophy (GL and PL), which the agency approved in 2014; and Mycapssa (octreotide), a somatostatin analog indicated for maintenance treatment in acromegaly patients who have responded to and tolerated treatment with the drug or lanreotide, approved by the FDA in 2020.
“These products generate meaningful revenues for Amryt, and the company is seeking label expansion for each product as a way to drive further growth and maintain its leadership position in the face of competition, particularly in HoFH. Edward Nash, Managing Director and Senior Biotechnology Analyst with Canaccord Genuity, write in a research note.
Myalept is Amryt’s biggest selling drug with $121.971 million generated in total revenue during the first three quarters of 2022 (up nearly 12% from $109.312 million a year earlier), including $36.292 million in Q3 (up 4.5% from $36.293 million). Next-highest seller is Juxtapid, which racked up $52.376 million between January-September 2022 (down 7% from $56.172 in Q1-Q3 2021), including $17.185 million in the third quarter (down 7% from $18.538 in the year-ago quarter).
Amryt hopes to reverse the sales slide with a pediatric HoFH indication for Juxtapid—for which the company last week announced positive data from the Phase III APH-19 trial (NCT04681170) showing the drug met its primary endpoint with clinically and statistically meaningful 54% change in LDL-C at Week 24 compared to baseline for the overall 43-patient group.
The sales decrease for Juxtapid reflects the entry to market of two additional options for HoFH. Both prescription drugs were approved in 2021: Evkeeza (evinacumab-dgnb), a fully human monoclonal antibody indicated as an add-on treatment for patients aged 12 years and older marketed by Regeneron Pharmaceuticals in the U.S. and Ultragenyx Pharmaceutical outside the U.S; and Praluent (alirocumab), a proprotein convertase subtilisin kexin type 9 (PCSK9) inhibitor for which a new indication in adults was approved, also marketed by Regeneron Pharmaceuticals in the U.S. but by Sanofi outside the U.S.
During Q1-Q3 2022, Evkeeza generated $33.2 million in net product sales for Regeneron (including $13.6 million in the third quarter), up more than triple from $9.1 million a year earlier (including $6.6 million in Q3 2021), with no revenue recorded by Ultragenyx.
Praluent generated $94.5 million for Regeneron during January-September 2022, down 27% from $130 million in Q1-Q3 2021), including $29.7 million in Q3, down 34% from $44.8 million in the third quarter of 2021.
Mycapssa generated $13.634 million during January-September 2022, (more than nine times the $1.453 million of the first nine months of 2021), including $5.708 million in Q3 2022 (nearly four times or 292% above $1.453 million).
“We believe that by acquiring Amryt, Chiesi’s expansion and development in the rare disease area will be accretive in both the short-term and long-term.”
“Amryt’s pipeline is a great addition to Chiesi’s portfolio,” Nash added.
Chiesi agreed to buy all outstanding shares of Amryt for $1.25 billion upfront and up to $225 million in Contingent Value Rights (CVRs). The upfront cash will consist of $14.50 per American Depositary Share (ADS) of Amryt, with each ADS representing five Amryt ordinary shares at $2.90 per share) cash—while the CVRs are priced at up to $2.50 per ADS (up to 50 cents per ordinary share), tied to Chiesi achieving undisclosed milestones related to Filsuvez®.
The $1.25 billion upfront represents a 107% premium based on Amryt ADS’ closing price of an even $7 on January 6, the Friday before the deal was announced.
Those numbers sat well with investors, who sent Amryt shares more than doubling, spiking 107% to $14.53. Shares crawled up from there the rest of the week, rising another nearly 1% to $14.66 on Thursday.
Another rare disease deal shines
The smallest of the three deals brought the smallest jolt, but no less of a significant rise, to the acquired company involved. Investors of Albireo Pharma (ALBO) roared their approval of the company’s planned $952 million-plus cash buyout by Paris-based Ipsen Group (IPN). Alberio shares on the Nasdaq Capital Market nearly doubled, leaping 92% on Monday from $22.82 to $43.85, then inched up another roughly 1% to $44.10 on Tuesday before plateauing the rest of the week. Ipsen shares on Euronext Paris, by contrast, only rose 2% over two days, from €102.20 ($110.94) to €104.70 ($113.65) on Tuesday.
Ipsen said its deal for Albireo focused on Bylvay® (odevixibat), the first-approved treatment in progressive familial intrahepatic cholestasis (PFIC) in the U.S. and European Union, with potential in other rare diseases.
Ipsen said the acquisition aligned with its long-term strategy of expanding its rare disease portfolio and pipeline, since Albireo’s pipeline includes two disclosed potential new indications for Bylvay—Alagille syndrome (completed Phase III ASSERT trial, NCT04674761) and biliary atresia or BA (ongoing Phase III BOLD trial, NCT04336722).
Should Bylvay win FDA approval in BA by December 31, 2027, Ipsen would pay Albireo shareholders a contingent value right (CVR) of $10/share.
Also in Albireo’s pipeline are additional candidates that include:
- A3907, an oral systemic apical sodium-dependent bile acid transporter in Phase I for adult liver diseases such as primary sclerosing cholangitis and primary biliary cholangitis.
- A2342 an oral systemic sodium-taurocholate co-transporting peptide (NTCP) inhibitor that is in IND-enabling studies viral disease and cholestatic diseases.
- A bile acid modulators program (preclinical for undisclosed indications).
Investors shared Ipsen’s enthusiasm, reasoning that the price was right. At $42 a share, the deal represented a 104% premium over Albireo’s volume-weighted average price of $20.60 in the month before the deal was announced.
A trio of Jefferies analysts offered another explanation for the bullish response from investors: Sales of Bylvay are hardly sizeable to have commanded the buyout deal being offered by Ipsen. The company has guided 2022 sales of $24 million, with which Albireo is keeping pace. As of the third quarter, Albireo racked up $18.1 million, including net revenue of $7.5 million generated during Q3.
“Given quite modest Bylvay sales to date (FY22 guidance of $24M), yet-to-materialize commercial success of two additional indications & competition, we view potential counterbids as unlikely,” according to a research note written Tuesday by Jefferies analysts Eun Yang, PhD, Nalin Tejavibulya, PhD, and Suji Jeong, PhD. The three lowered their 12-month price target on Albireo from $49 a share to the acquisition price of $42 a share.
Ipsen isn’t expecting Bylvay sales to stay modest, telling analysts in its presentation explaining the deal that it projected ~$800 million in peak-year sales for the drug. As a result, Ipsen asserted, Albireo will begin adding to its acquirer’s core operating income from 2025 onward.
The three analysts, however, cautioned that Bylvay faces some competitive headwinds. Bylvay could soon face competition in PFIC from Mirum Pharmaceuticals, which is expected to file for approval of its treatment for the disorder that causes progressive liver disease in the first quarter.
Whatever happens to Mirum, Bylvay would be the second drug to enter the market in Alagille syndrome, which has a ~2.6 times larger patient population compared to PFIC with ~1,500 patients in the U.S., according to Ipsen]. Bylvay for Alagille syndrome is under FDA review, with a decision expected in the second half of 2023.
In Alagille (ALGS), Ipsen would have to catch up with Mirum, whose Livmarli® (maralixibat) indicated for cholestatic pruritus associated with the syndrome has generated $76 million in 2022 revenues, according to a preliminary figure disclosed by Mirum at J.P. Morgan. The company had earlier projected net sales of $74 million for Livmarli, which won FDA approval in September 2021 and European approval on December 13.
“While we do not anticipate the acquisition to substantially impact competitive dynamics between Bylvay and Livmarli in the time horizon contemplated in our rating and valuation; we update our market model to reflect more conservative future new patient adds in our long-term revenue projections in ALGS and PFIC,” Mani Foroohar, MD, senior managing director, genetic medicines and a senior research analyst with SVB Securities,” wrote in a research note. SVB trimmed its 12-month price target for Albireo from $50 to $39.