Novartis has acquired DTx Pharma for up to $1 billion, the companies said, in a deal designed to strengthen the buyer’s neuroscience pipeline and expand its capabilities in RNA therapeutics.
Headquartered in San Diego, DTx is a developer of oligonucleotide therapeutics designed to overcome challenges associated with delivering RNA-based therapeutics beyond the liver, using its Fatty Acid Ligand Conjugated OligoNucleotide (FALCON™) platform. FALCON is designed to enable the delivery and activity of small interfering RNA (siRNA) therapeutics to tissues beyond the liver, enhancing biodistribution and cellular uptake.
DTx’s lead pipeline candidate, DTX-1252, is a preclinical siRNA therapeutic designed to treat Charcot-Marie-Tooth Disease Type 1A (CMT1A) by targeting PMP22—specifically, suppressing the additional third copy of the PMP22 gene, whose overexpression in Schwann cells is the underlying genetic cause of the progressive, neuromuscular, autosomal-dominant disease marked by a life-long loss of muscle function and disability. CMT1A affects an estimated 150,000 patients in the United States and Europe.
DTX-1252 is designed to induce remyelination of axons to normal levels and increases muscle mass, grip strength, coordination, and agility. To date, DTX-1252 is advancing through IND-enabling studies that so far have shown reversal of CMT1A in preclinical rodent models and translation to higher species. IND-enabling studies are progressing well, according to DTx, which once anticipated moving DTX-1252 into clinical studies later this year.
With the integration of DTx’s programs in progress, Novartis says it’s too soon to know when DTX-1252 and two other DTx preclinical programs developed through the FALCON platform might be able to dose their first patients in clinical studies.
One of those other programs is intended to treat an undisclosed “rare, devastating muscle disorder” by targeting an undisclosed target for which DTx said it had “highly encouraging” preclinical data. The other is intended to treat an unspecified rare CNS disease by pursuing an undisclosed target.
“As we go through the integration phase, we’ll see if we can keep the timelines exactly where they are. If we can accelerate them, we would. If we have to slow them down, we will,” Robert H. Baloh, MD, PhD, head of neuroscience at the Novartis Institutes for BioMedical Research (NIBR), told GEN.
Baloh came to NIBR in 2021 from Cedars-Sinai Medical Center, where he built a neuromuscular division in a growing academic neurology program. At Cedars-Sinai, Baloh ran one of the largest ALS clinics on the West Coast, built out a large clinical trials unit for neuromuscular diseases—and jointly ran a Charcot-Marie-Tooth disease clinic in Los Angeles.
“I’ve been studying the disease in different forms for 20 years or so, and have been really interested in ways that we could treat it,” Baloh said. “While like many diseases, we don’t understand everything about it, we know the genetic driver in this case. And an RNA modality to decrease the expression level of PMP22 is attractive because it’s directly tied to the disease mechanism.”
“We really felt that, based on the data that we observed in CMT1A and some of their other programs, that this fatty acid conjugate format was going to be a very good fit for certain neuromuscular diseases like CMT1A. I don’t think anyone thinks there’ll be one conjugate system that solves every problem of tissue delivery or cell type,” Baloh added. “Also, we have to figure out how early we can do that in patients. In genetic diseases in general, we want to go earlier if we can, to mitigate the damage that occurs having had such an injury or a genetic lesion over the course of someone’s life.”
Baloh said Novartis would love to expand the use of FALCON to discovering and developing treatments for neuro diseases with larger patient populations than CMT1A, such as amyotrophic lateral sclerosis (ALS), Alzheimer’s disease, and Parkinson’s disease.
He noted that siRNA has already been applied in a drug Novartis developed, manufactures, and commercializes using global rights from Alnylam Pharmaceuticals. Leqvio® (inclisiran) is a siRNA directed to proprotein convertase subtilisin kexin type 9 (PCSK9) mRNA indicated, and indicated as an adjunct to diet and statin therapy for treating adults with primary hyperlipidemia, including heterozygous familial hypercholesterolemia (HeFH), to reduce low-density lipoprotein cholesterol (LDL-C).
Novartis’ pipeline of 10 neuroscience candidates includes three treatments in development for those diseases: BLZ915 (sotuletinib) for ALS, a CSF-1R inhibitor in Phase II; DLX313 (UCB0599), an alpha-synuclein inhibitor for Parkinson’s also in Phase II; and NIO752, a tau antagonist for Alzheimer’s that is in Phase I. Also, the company markets Zolgensma® (onasemnogene abeparvovec-xioi), a gene therapy for spinal muscular atrophy (SMA) in children under age two with bi-allelic mutations in the survival motor neuron 1 (SMN1) gene. Zolgensma was initially developed by AveXis, which Novartis acquired in 2018 for $8.7 billion.
“I would say this is an expansion into an area that is directly adjacent to areas such as SMA where we’ve been successful operating in the past,” Baloh said.
Novartis was among several biopharma giants with which DTx shared progress on its development of DTX-1252 and other preclinical programs over the years. An outreach meeting by DTx’s business development team succeeded when Novartis began carrying out due diligence toward an acquisition, leading to four to five months of formal talks.
Baloh’s presence at Novartis gave DTx confidence that the pharma giant could advance its preclinical programs into human trials, Artie Suckow, PhD, DTx’s co-founder and CEO, told GEN.
“As a founder of DTx, I felt confident that we could pass the baton to him, and the Novartis organization to put the program on steroids and move it through clinical development. So I think that was a key differentiator,” Suckow said.
Novartis agreed to pay $500 million upfront for DTx, plus pay an additional up to $500 million tied to achieving unspecified development milestones.
Investors hardly reacted to the DTx acquisition, as Novartis shares on the SIX Swiss Exchange barely budged Monday, closing down 0.05% from CHF 84.96 ($98.74) to CHF 84.92 ($98.70). Later in the day on the New York Stock Exchange, Novartis shares inched up 0.11%, from $98.83 to $98.94.
DTx is the second rare disease drug developer acquired by Novartis in as many months. In June, Novartis agreed to acquire Chinook Therapeutics for up to $3.5 billion, consisting of $3.2 billion cash plus up to $300 million in contingent value rights payments tied to achieving regulatory milestones. Chinook’s pipeline includes two Phase III candidates designed to treat the rare kidney disease Immunoglobulin A Nephropathy (IgAN).
Before the Novartis acquisition, privately-held DTx had raised about $113.6 million in investor capital and research grant funding. Most of that total—$100 million—consisted of a $100 million Series B financing completed in 2021.
DTx’s workforce of more than 50 employees is within what was the company’s home base of San Diego—where NIBR has built a presence in recent years, in part through the acquisition of AveXis (later renamed Novartis Gene Therapies).
“We have a group of scientists focused on siRNA modalities in San Diego already. This group can really directly interact with them (DTx researchers),” Baloh said. “They’re 10 minutes away, so they’re very close by. It’s actually a good geographic fit if you will, and that’s not to say that they won’t also be collaborating with teams in Basel [where Novartis is headquartered] as well as in Cambridge [MA].”