Bayer’s acquisition of KaNDy Therapeutics could cost a potential $1 billion or so in upfront and milestone payments—a price the pharma giant said today it could recoup in a year, and would be worth expanding its presence in women’s healthcare.

The deal would add to Bayer’s pipeline KaNDy’s lead compound NT-814, a potential first-in-class, oral once-daily, dual mechanism neurokinin-1,3 receptor antagonist that is expected to launch a Phase III trial next year.

In January, KaNDy reported positive data from the Phase IIb SWITCH-1 trial (NCT03596762) showing that NT-814 generated rapid and statistically significant reductions compared with placebo in hot flashes and night sweats associated with menopause. The hot flash reductions started during the first week of treatment and continued throughout the 12-week treatment period, KaNDy said.

“Bayer has been our preferred partner due to its leading position in the area of women’s healthcare,” Mary Kerr, PhD, co-founder and CEO of KaNDy Therapeutics, said in a statement.

Women’s healthcare is among Bayer’s prescription drug specialties, along with cardiovascular treatments, though the company also focuses on specialty therapeutics in oncology, hematology, and ophthalmology.

“We believe that under the ownership of Bayer, this potential first-in-class medicine can be optimally developed to become an important non-hormonal treatment option for women suffering vasomotor symptoms due to menopause.”

Upon approval, Bayer estimated that NT-814 could generate more than €1 billion (about $1.2 billion) in peak sales globally.

That would put NT-814 just below the €1.223 billion ($1.435 billion) in 2019 sales generated by its best-selling prescription women’s health products, the levonorgestrel-releasing intrauterine devices marketed as Mirena® (52 mg), Kyleena® (19.5 mg), and Jaydess® (13.5 mg). The trio’s sales last year were 7% above the €1.143 billion ($1.342 billion) reported in 2018.

Bayer’s next-best selling women’s health products are the drospirenone and ethinyl estradiol oral contraceptives marketed as Yaz™, Yasmin™, and Yasminelle™. Last year the trio generated €681 million (about $800 million) in sales, up 6.6% from €639 million (about $750 million) the previous year.

However, Astellas Pharma is also developing a neurokinin-3 receptor antagonist, fezolinetant, an oral, non-hormonal compound being studied for the treatment of moderate-to-severe vasomotor symptoms (VMS) such as hot flashes and night sweats associated with menopause.

Astellas acquired fezolinetant when it bought Belgian-based Ogeda in 2017 for up to €800 million ($938.5 million), and last year launched a Phase III clinical program for fezolinetant consisting of three trials whose primary completion dates stretch from December 2020 to December 2021.

Other challenges for Bayer include lawsuits filed against it over its permanently implanted birth control device Essure®, discontinued in 2018; and the end of exclusivity in coming years for top-selling drugs Xarelto® (rivaroxaban), co-marketed with Johnson & Johnson’s Janssen Pharmaceuticals; and Eylea® (aflibercept), co-marketed with Regeneron Pharmaceuticals.

“Triple-digit million”

Bayer disclosed plans to acquire KaNDy for $425 million upfront, up to $450 million in payments tied to achieving milestones until the launch of NT-814—and “triple-digit million” sales milestone payments to KaNDy’s investors, which include Forbion Capital Partners and OrbiMed.

The deal is set to be completed next month, subject to antitrust approval and other customary closing conditions, Bayer said.

“This acquisition is another testament to our commitment to the health of women, which not only broadens our pipeline, but has the potential, if approved, to deliver a new treatment option that could have a meaningful impact on women’s lives,” stated Sebastian Guth, Dr.rer.oec (equivalent to a PhD), Bayer’s president of pharmaceuticals, Americas region.

Based at the Stevenage (U.K.) Bioscience Catalyst, privately-held KaNDy was founded in 2017 as a spinoff from NeRRe Therapeutics, and backed by investors that include Advent Life Sciences, Fountain Healthcare Partners, Forbion Capital Partners, OrbiMed, and Longitude Capital.

Completion of the deal would be Bayer’s latest move this year toward expanding in women’s health products.

Earlier this year, Bayer announced it was expanding its partnership with Evotec with a new five-year, multi-target collaboration to develop multiple clinical candidates for the treatment of polycystic ovary syndrome (PCOS), the most frequent endocrine disorder in pre-menopausal women. Bayer agreed to pay Evotec €6.5 million ($7.6 million) upfront, and €10 million ($11.7 million) in research payments over five years. Bayer also agreed to pay Evotec over €330 million ($387 million) in payments tied to achieving preclinical, clinical, and sales milestones; as well as royalties up to low double-digit percentage of net sales.

In January, Bayer signed an exclusive license agreement with Daré Bioscience for the U.S. market, focused on its investigational, hormone-free, monthly vaginal contraceptive currently in clinical development for the prevention of pregnancy.

Bayer obtained exclusive rights to commercialize Daré‘s Ovaprene, an investigational hormone-free monthly vaginal contraceptive, in the United States following completion of a pivotal clinical trial being undertaken by Daré—effective upon paying Daré $20 million. Bayer also agreed to pay Daré up to $310 million in payments tied to achieving commercial milestones, plus double-digit tiered royalties on net sales.

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