Astellas Pharma president and CEO Naoki Okamura

Astellas Pharma has agreed to acquire Iveric Bio for approximately $5.9 billion, the companies said today, in a deal designed to expand the buyer’s pipeline of treatments for eye disorders.

Based in Parsippany, NJ, Iveric develops retinal disease drugs for what it deems significant unmet medical needs. Iveric’s lead pipeline candidate is avacincaptad pegol (ACP), a complement C5 protein inhibitor designed to treat geographic atrophy (GA) secondary to age-related macular degeneration (AMD).

By targeting C5, Iveric reasons, ACP could potentially slow the progression of GA by decreasing the activity of the complement system that causes the degeneration of retinal cells.

ACP is under FDA review, with a Prescription Drug User Fee Act (PDUFA) target decision date of August 19. The FDA accepted Iveric’s New Drug Application for ACP in February, and has granted the NDA priority review, under which the agency aims to take action within six months rather than the standard 10.

ACP—formerly called Zimura—has also been granted the FDA’s breakthrough therapy designation in GA secondary to AMD, after the complement inhibitor met its primary efficacy endpoint of delivering statistically significant reduction of the rate of GA progression across two pivotal clinical trials, GATHER1 (NCT02686658) and GATHER2 (NCT04435366).

“We are pleased to reach an agreement with Iveric Bio, a company with exceptional expertise in the R&D of innovative therapeutics in the ophthalmology field,” Astellas President and CEO Naoki Okamura said in a statement. “We believe that this acquisition will enable us to deliver greater value to patients with ocular diseases at high risk of blindness.”

Primary Focus Area

Iveric fits squarely within one of Astellas’ five “Primary Focus” areas, “Blindness & Regeneration,” through which the pharma giant has committed to developing drugs based on next-generation modalities including cell therapy and gene therapy for patients with back-of-the-eye diseases at high risk of blindness.

“This transaction is a key step in building Astellas’ product portfolio in this important area,” Astellas said of the Iveric acquisition. “The acquisition of Iveric Bio will provide a foundation of ophthalmology focused capabilities, including a multi-faceted commercial team, expansive network of experts in the ophthalmology field, established relationships with medical institutions, and the infrastructure and experience to drive our combined ophthalmology business going forward.”

Iveric competes with Apellis Pharmaceuticals, which in February received the first-ever FDA approval for a GA therapy, Syfovre™ (pegcetacoplan injection); and the duo of Lineage Cell Therapeutics and Roche, which are developing OpRegen® (RG6501), a retinal pigment epithelial cell therapy that has generated positive Phase I/IIa results in GA, most recently last week at the 2023 Association for Research in Vision and Ophthalmology Annual Meeting (ARVO 2023).

“GA is a major market that can support multiple players,” Colleen M. Kusy, CFA, a senior research analyst with Baird, wrote today in a research note. She noted that GA affects about 1 million patients in the U.S.

“The wet AMD experience is supportive of multiple commercial players in large ophthalmic indications. As such, we see meaningful market opportunity for Iveric’s Zimura,”” Kusy wrote. “While we believe ultimate market share will depend on the respective labels, we conservatively model peak US penetration for Zimura of ~15% and WW [worldwide] peak sales of ~$4.3B.”

Chris Howerton, PhD, an equity analyst with Jefferies, offered a more conservative sales forecast for ACP, projecting annual peak sales of $2.1 billion based on the deal price being ~2.8 times the drug’s peak sales, using the consensus financial estimate of Visible Alpha.

“[Deal] valuation based upon a peak sales multiple of ~3-5x makes sense — which would imply sales of ~1.2-1.7B for ACP in geographic atrophy,” Howerton wrote in a research note. He raised the firm’s 12-month price target on Iveric shares 74%, from $23 to $40 a share, but maintained its “Hold” rating.

One clinical candidate

According to Astellas’ website, only one candidate in the company’s Blindness & Regeneration pipeline is in clinical phases—ASP7317, a cell therapy consisting of human embryonic stem cell-derived retinal pigment epithelial cells. Like ACP, ASP7317 targets GA secondary to AMD, though it is also in development for Stargardt disease. ASP7317 is under study in a Phase Ib trial (NCT03178149) whose estimated primary completion date is August 31, 2014.

Last year, screening and enrollment in the Phase Ib trial for ASP7317 was put on hold “due to a manufacturing delay,” according to an accompanying presentation. Screening and enrollment were restarted last August, with dosing of patients expected to resume during Astellas’ current fiscal year, which ends March 31, 2024.

Of Astellas’ other six Blindness & Regeneration candidates in preclinical phases, three have been disclosed:

  • ASP1015, a gene therapy for glaucoma partnered with subsidiary Quethera, acquired in 2018 for up to £85 million ($5 million at the time; $106.6 million today).
  • ASP1819, a wholly-owned photoreceptor rescue cell therapy for retinitis pigmentosa.
  • ASP2020, a universal donor cell retinal pigment epithelial cell therapy in development for dry AMD and other macular degeneration, partnered with subsidiary Universal Cells, which Astellas acquired in 2018 for up to $102.5 million.

The remainder of Astellas’ Blindness & Regeneration pipeline consists of three undisclosed candidates, all wholly-owned and in discovery phase: A ganglion rescue cell therapy for glaucoma and optic neuropathy; a corneal endothelial cell therapy for corneal dystrophy; and a vascular progenitor cell for vascular disease.

Through a wholly-owned subsidiary, Astellas has agreed to acquire 100% of Iveric’s estimated 148.2 million outstanding shares of common stock at $40 a share—a 64% premium to Iveric Bio’s unaffected closing share price of $24.33 on March 31, and a premium of 75% to Iveric’s 30 trading day volume weighted average price as of March 31.

To pay for the deal, Astellas plans to use newly procured funds from bank loans and issue commercial paper totaling approximately ¥800 billion ($5.83 billion) and existing cash on hand. Astellas said it expects to repay that debt within the next five to seven years.

The companies expect to complete the acquisition deal in the second quarter of Astellas’ current fiscal year (third quarter 2023). Upon closing of the deal, Iveric will become an indirectly wholly-owned subsidiary of Astellas.

The boards of both Astellas and Iveric have unanimously approved the acquisition deal, which is subject to approval by Iveric shareholders and other customary closing conditions, including regulatory approvals.

“This transaction with Astellas, a highly respected pharmaceutical company, demonstrates the significant value that we have built for our stockholders and recognizes the tremendous work by our dedicated team,” Iveric CEO Glenn P. Sblendorio stated.

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