Achillion Keeps Focus On Complement Factor D Inhibitors As J&J Exits HCV

J&J's decision to stop HCV development and end its partnership with Achillion has a ripple effect for the smaller biotech's strategy.

Johnson & Johnson’s move away from hepatitis C drug development and termination of its collaboration with Achillion Pharmaceuticals Inc. means the biotech now will focus fully on its rare disease strategy for inhibitors of complement factor D.

Achillion left open the possibility of finding a new partner for the NS5A inhibitor that J&J is returning to the company – odalasvir – but the New Haven, Conn.-based biotech said during a Sept. 11 conference call that its primary focus continues to be the development of first-in-class small molecule inhibitors of the alternative complement pathway for rare disorders. Achillion also announced a pair of executive appointments, including a new chief of ophthalmology, which could be an important field for its complement factor D inhibitor program.

J&J's Janssen Pharmaceutical Cos. and Achillion signed a partnership around odalasvir in May 2015; the drug was to be part of J&J's three-drug combo JNJ-4178, and Phase II data indicated potential for a six-week course of therapy. [See Deal] But J&J said it based its decision to terminate HCV development on the effective offerings currently on the market.

Achillion CEO Milind Deshpande said he was disappointed by J&J's move, which Achillion learned about a couple of days before the announcement, because he felt patients could benefit from the convenient, short-duration therapy JNJ-4178 might have offered to patients.

Moving Ahead In PNH, Other Rare Diseases

Deshpande pointed out that Achillion has been focused primarily on alternative complement pathway inhibitors since partnering odalasvir with J&J. Lead candidate ACH-4471 is in Phase II for paroxysmal nocturnal hemoglobinuria (PNH) and the company plans to investigate the compound in two rare kidney diseases, C3 glomerulopathy (C3G) and immune complex membranoproliferative glomerulonephritis (IC-MPGN).

Achillion had $370m in cash on hand at the end of the second quarter, giving it ample funding to run four parallel trials of ACH-4471, two in PNH and two in the renal disorders. With positive interim data from a three-month, dose-ranging trial in patients with untreated PNH, the company now plans to initiate a second study using ‘4471 as add-on therapy for PNH patients who are getting suboptimal results from the standard of care – Actelion Pharmaceuticals Ltd.’s blockbuster Soliris (eculizumab).

“Our longer-term strategy with positive data in the study is to switch patients to ACH-4471 monotherapy,” the CEO explained. “Also, during the second half of 2017, we anticipate initiating patient dosing in two Phase II trials of ACH-4471 for patients with low C3 levels due to C3G or IC-MPGN. The first is an open-label, 14-day trial expected to enroll up to 10 patients, while the second is a placebo-controlled, double-blinded six-month trial expected to enroll 20 patients. We believe the data we have generated to date in our factor D platform are compelling and point to the potential long-term value of our portfolio.”

Deshpande said the company has had positive one-on-one meetings with investors to outline development plans since Achillion unveiled interim data in untreated PNH patients.

However, investors now may be rethinking Achillion’s direction, as the stock fell 22.1% to close at $3.83 per share on Sept. 11. Market analysts, nonetheless, maintained positive outlooks on the company and the alternative complement factor D inhibition program.

In a Sept. 11 note, Leerink Partners analyst Joseph Schwartz rated Achillion shares “outperform” and noted that his thesis is driven by the potential of the rare disease strategy. “Despite J&J’s reaffirmed commitment to the Achillion partnership on their recent analyst day, we saw limited market opportunity even if the partnership had continued,” he wrote. “We think today’s announcement turns the focus entirely onto [Achillion’s] high-risk, high-reward complement program.”

Similarly, JMP Securities analyst Liisa Bayko rated Achillion “market outperform” in a Sept. 11 note, saying the oral complement factor D inhibitor program offers “significant upside.”

What About Odalasvir?

On the Achillion investor call, Joseph Truitt, newly promoted to chief operating officer from executive vice president of commercial operations, indicated that a new deal around odalasvir is possible, but probably unlikely. “We will certainly assess all the options for the hep C portfolio,” he said. “But at this time, we're not prepared to give any guidance other than we believe that based on the Phase IIa results that it's a very competitive regimen.”

Achillion re-acquires all rights to odalasvir – there were no break-up fees tied to J&J’s decision to exit the partnership. Chief Financial Officer Mary Kay Fenton said that because J&J was incurring all development costs under that agreement, Achillion’s R&D burn rate, currently about $20m a quarter and expected to increase to about $25m per quarter during the second half of 2017, would not be affected.

The biotech also announced that Avner Ingerman has been hired as senior vice president and head of ophthalmology, a newly created position. Previously, Ingerman served as VP of ophthalmology at Regeneron Pharmaceuticals Inc., where he led development of Eylea (aflibercept) for wet age-related macular degeneration (AMD) in partnership with Bayer AG. Achillion thinks ACH-4471 might have potential in the AMD setting as well.

Deshpande noted that the addition of Ingerman and promotion of Truitt had been planned before J&J’s decision to drop HCV development.