Vertex Grows Gene Editing Presence, Acquiring Exonics and Expanding CRISPR Therapeutics Collaboration

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Eric N. Olson, PhD, of the the University of Texas Southwestern Medical Center, co-founder and chief science advisor of Exonics Therapeutics. The company is being acquired by Vertex Pharmaceuticals for approximately $1 billion. [University of Texas Southwestern Medical Center]

Vertex Pharmaceuticals will carry out a potentially $2 billion expansion of its presence in gene editing through a pair of deals intended to enable the company to develop novel treatments for Duchenne Muscular Dystrophy (DMD) and Myotonic Dystrophy Type 1 (DM1).

Vertex announced plans to acquire Exonics Therapeutics for approximately $1 billion, as well as spend an additional up-to $1.175 billion to expand a 3½-year-old, potentially $2.5 billion-plus collaboration with CRISPR Therapeutics that has resulted in the first clinical trial of a gene-editing therapy candidate sponsored by U.S. companies.

“These transactions are highly aligned with our strategy of investing in scientific innovation to create transformative medicines for people with serious diseases,” Vertex chairman, president and CEO Jeffrey Leiden, MD, PhD, said in a statement.

Based in Watertown, MA, Exonics uses its SingleCut CRISPR gene editing technology to develop treatments by repairing mutations that cause DMD and other genetic neuromuscular diseases with significant unmet need.

Privately-held Exonics was launched in February 2017 to advance the research of its co-founder and chief science advisor Eric N. Olson, PhD, and his laboratory at the University of Texas Southwestern Medical Center (UTSW), from which the company licenses the technology.

Olson—who is also a professor and chair of the department of molecular biology at UTSW—published a study in Science in October 2018 showing a 50% increase of dystrophin in skeletal muscle and 90% increase in the hearts of the canine model. In multiple small and large animal DMD preclinical models, Exonics has used SingleCut CRISPR to genetically repair and restore dystrophin in children with DMD.

Olson will continue as Exonics’ chief science advisor and provide oversight and guidance on the research and development of transformative gene editing therapies, Vertex said.

“Proven track record”

“Vertex has a proven track record of developing important therapies for serious diseases and we are excited to combine our efforts to potentially develop a safe and efficacious one-time treatment for severe neuromuscular diseases,” Olson stated.

Olson was alluding to Vertex’s marketed treatments for cystic fibrosis (CF), which include Kalydeco (ivacaftor), Orkambi (ivacaftor and lumacaftor), and Symdeko (tezacaftor/ivacaftor and ivacaftor). The three products last year generated a combined $3.038 billion in product revenues, up 40% from 2017, led by Orkambi with $1.262 billion, followed by Kalydeco with $1.008 billion.

Vertex’ successful development of CF therapies and revenue growth has fueled speculation about the company someday finding a buyer. Vertex was among 10 takeover targets highlighted in a GEN A-List published September 10, 2018.

Vertex has agreed to acquire all outstanding shares of Exonics, which will become a separate wholly-owned subsidiary of Vertex. Exonics equity holders will be eligible to receive approximately $1 billion, including $245 million upfront and potential future payments tied primarily to achieving development and regulatory milestones for the DMD and DM1 programs.

The acquisition is subject to certain conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. The companies said they anticipated the deal will close in the third quarter of this year.

Success from seed funding

“The Duchenne community needs novel approaches to treat and cure this devastating disease and Exonics’ technology has the potential to dramatically improve the lives of Duchenne patients,” stated Debra Miller, CEO and founder of CureDuchenne, a co-founder with Olson of Exonics that provided initial seed funding for the company.

CureDuchenne has leveraged over $1.5 billion from follow-on investments, completing five successful investment exits since it was founded in 2003. The nonprofit has applied a venture philanthropy business model of funding early-stage science to advance promising Duchenne research projects.

CureDuchenne has provided early funding for two other developers of DMD treatments: Sarepta Therapeutics, which won the FDA’s controversial first approval for a DMD therapy, Exondys 51® (eteplirsen) in 2016; and Bamboo Therapeutics—which was acquired that year by Pfizer for $645 million.

Vertex also said it will expand its partnership with CRISPR Therapeutics to develop gene therapy-based treatments, with the companies entering into an exclusive licensing agreement to discover and develop gene editing therapies for the treatment of DMD and DM1.

The companies launched their potentially $2.5 billion-plus collaboration in October 2015, with Vertex agreeing to use CRISPR Therapeutics’ gene-editing technology to discover and develop potential new treatments for CF and sickle cell disease.

In 2017, Vertex trumpeted the clinical success of three triple-combination regimens of its CF treatments in Phase I and Phase II trials, potentially expanding the universe of CF patients who could benefit from treatment—sparking a 25% surge in the company’s share price.

First U.S. clinical trial

Last year, the companies began recruiting patients for the first clinical trial of a gene-editing treatment candidate sponsored by U.S. companies. The Phase I trial (NCT03655678) is designed to assess the safety and efficacy of CRISPR-Cas9 modified CD34+ human hematopoietic stem and progenitor cells using CRISPR Therapeutics’ CTX001, which is in development for both β-thalassemia and sickle cell disease.

“We continue to make significant advancements in enabling in vivo approaches for gene editing and are excited about the possibility of developing potentially curative therapies for DMD and DM1 together with Vertex,” said CRISPR Therapeutics CEO Samarth Kulkarni, PhD.

Vertex agreed to pay $175 million upfront for exclusive worldwide rights to CRISPR Therapeutics’ existing and future intellectual property including foundational CRISPR/Cas9 technology, novel endonucleases, single and double cut guide RNAs, and AAV vectors for DMD and DM1 gene editing products.

For the DMD program, Vertex agreed to oversee all research, development, manufacturing, and commercialization activities and all related costs. For the DM1 program, Vertex and CRISPR agreed to share research costs for specified guide RNA research to be conducted by CRISPR, with Vertex responsible for all other research, development, manufacturing, and commercialization costs.

Vertex has also agreed to pay CRISPR Therapeutics a total $1 billion, including the upfront payment and payments tied to achieving research, development, regulatory, and commercial milestones for the DMD and DM1 programs. CRISPR Therapeutics is also eligible for tiered royalties from Vertex on future net sales on any products that may result from the expanded collaboration.

Upon IND filing, CRISPR has the option to forego the DM1 milestones and royalties to co-develop and co-commercialize all DM1 products globally.

The expanded collaboration is subject to conditions that include the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The companies said they anticipate the transaction will close in the third quarter of 2019.

“We are continuing to build a toolbox of small molecule and nucleic acid technologies and capabilities that will allow us to drive scientific innovation to produce transformative medicines for a broad portfolio of diseases,” Leiden added.

In addition to the Exonics acquisition and CRISPR Therapeutics collaboration expansion, Vertex also said it intends to bolster its gene editing-based drug development by:

  • Establishing a new genetic therapies research site “in the Boston area” where research programs, as well as vector development and clinical manufacturing for genetic therapies, including DMD and DM1 programs, will be conducted.
  • Appointing John T. Gray, PhD, as senior vp, genetic therapies effective June 17. He previously served as CSO and senior vp at Audentes Therapeutics where he and his team focused on rAAV gene therapy for neuromuscular and liver disorders.

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