Deal Watch: Cigna Acquisition Of Express Scripts OKed By US Justice Dept.

It remains unclear what impact the consolidation within the drug-distribution sector may have on pricing. Pfizer partners with France’s Cytoo for its new gene therapy approach to DMD, while Gilead teams with Precision BioSciences for its goal to cure HBV.

Scrip regularly covers business development and deal-making in the biopharmaceutical industry. Below is a roundup of some of the most noteworthy recent transactions. Deal Watch is supported by deal intelligence from Strategic Transactions.

Cigna Cleared To Acquire Express Scripts

The merger of insurer Cigna Corp. and the pharmacy benefit manager (PBM) Express Scripts Holding Co. was cleared by the US Department of Justice Sept. 17, putting the merger a step closer to being finalized. Cigna's acquisition still needs to be cleared by state regulators, but the companies said the deal is on track to close before the end of the year.

The acquisition of Express Scripts by Cigna could have significant implications for the drug industry as vertical consolidation sweeps the drug-distribution sector, though the exact impact on drug prices or other matters remains to be seen.  (Also see "PBM Mergers: Vertical Integration Is Cool – But Don’t Overlook Horizontal Consolidation In Part D" - Pink Sheet, 10 Apr, 2018.)

Express Scripts is the largest PBM in the US and has promoted a message of independence as a means to lowering prescription drug costs. PBMs like Express Scripts and retail pharmacies have also come under pressure with rumors that Amazon could be making a move into drug distribution, disrupting the business model altogether. (Also see "Amazon And The Case For Major Health Care Disruption " - Scrip, 29 Mar, 2018.)

Cigna announced a plan to buy Express Scripts in March for $67bn in cash and stock, including $15bn in Express Scripts debt. (Also see "Cigna/Express Scripts: The End Of The Standalone PBM Era" - Scrip, 8 Mar, 2018.)

Other health plans are moving to integrate their own pharmacy benefit services, including Aetna, which announced a $69bn merger with CVS Health Corp., parent company of the PBM Caremark, in December. (Also see "CVS/Aetna To Merge In Defensive Play To Reshape Healthcare Delivery" - Scrip, 4 Dec, 2017.) Anthem has plans to establish an internal PBM called IngenioRx when its contract with Express Scripts expires in 2020. UnitedHealth Group Co. has long operated its own internal PBM OptumRx.

Pfizer Inks DMD Deal With Cytoo

A week after shelving its Duchenne muscular dystrophy (DMD) drug domagrozumab following a failure in Phase II, Pfizer Inc. teamed up Sept. 6 with France's Cytoo SA to develop a target discovery platform focusing on the biology of the rare genetic disorder.

The deal centers around the Grenoble-headquartered firm's 'muscle-on-a-plate' platform called MyoScreen, which uses skeletal muscle cells to mimic the metabolic functions of human muscle in vivo. The partners intend to use the platform to analyze molecular disease mechanisms and adapt it to DMD using cells derived from children with the condition.

Although the genetic cause of DMD "has been known for years, little is known about the molecular functions that are affected in DMD muscles," Pfizer said, reiterating its commitment to early-stage DMD research and target identification.

The pact with Cytoo, which has a MyoScreen deal already in place with Daiichi Sankyo Co. Ltd. covering several muscular disorders, came after Pfizer announced Aug. 30 that it was discontinuing studies evaluating domagrozumab, a myostatin/growth differentiation factor 8 (GDF-8)-targeted antibody. The decision was made after the drug, an intravenous, monthly therapy, did not demonstrate a difference compared to placebo in mean change from baseline on the timed four-stair climb after one year. Now, the pharma is focusing much of its DMD efforts on gene therapy. (Also see "Pfizer’s DMD Setback With Domagrozumab Shifts Focus To Gene Therapy Approach" - Scrip, 30 Aug, 2018.)

Gilead Collaborates On Hep B Cure Aspirations With Precision BioSciences

Precision BioSciences Inc. could earn up to $445m in milestone fees under a partnership unveiled Sept. 12 with Gilead Sciences Inc. to use genomic editing to cure hepatitis B virus (HBV). Long a goal for virology specialist Gilead, the theory is that Precision’s ARCUS genome-editing platform could be used to create therapies to eliminate HBV in vivo.

The agreement specifies that Precision will handle development, formulation and preclinical evaluation of the investigational nucleases, while Gilead will take care of clinical development and commercialization of potential therapies. Gilead will fully fund R&D while paying Precision milestone payments up to $445m, as well as tiered royalties into the mid-teens for any product reaching market via the collaboration.

While current HBV therapies suppress but do not fully clear the virus, Gilead noted that preliminary studies using ARCUS nucleases to target HBV cccDNA in vitro have shown activity against cccDNA and integrated HBV DNA in human hepatocytes.

Supernus To Acquire Biscayne, Phase I Dravet Candidate

Supernus Pharmaceuticals Inc. announced plans Sept. 13 to acquire privately held Biscayne Neurotherapeutics Inc. and its novel Phase I treatment for epilepsy. Biscayne gets $15m up front, up to $73m pegged to development milestones and up to $95m based on commercial milestones, along with sales royalties if the drug reaches market.

The compound now known as SPN-817 has received orphan drug designation from the US FDA for Dravet syndrome, a severe, pediatric form of epilepsy. Supernus also gets rights to the candidate’s underlying and related intellectual property, whose originators could share in sales royalties, which will be capped at approximately 12% overall, Supernus said.

SPN-817 utilizes a novel synthetic form of huperzine A to inhibit acetyl cholinesterase, a novel mechanism of action for an anticonvulsant. Development will initially focus on the drug’s anticonvulsant activity demonstrated in preclinical models of partial seizure and Dravet syndrome. The drug is thought to increase cortical acetylcholine and permeate the blood-brain barrier, resulting in increased gamma-aminobutyric acid (GABA) in the cortical region of the brain.

Supernus’ development effort will focus on optimizing an extended oral-release formulation of the compound, which it says is crucial, because SPN-817 demonstrate 57 times greater potency than existing epilepsy drug levetiracetam in a preclinical study. Immediate-release formulations of the drug showed potential for dose-limiting side effects, the Maryland biotech said.

Xenon Buys Out Bausch Health’s Earnouts For Epilepsy Drug

Xenon Pharmaceuticals Inc. announced Sept. 11 that it is buying out all past, present and future milestone and royalty payments owed to Bausch Health Companies Inc. related to XEN1101, a Kv7 potassium channel agonist for epilepsy.

XEN1101 originated as VRX621698 from Bausch (then known as Valeant Canada LP), which discontinued the compound and licensed it to 1st Order Pharmaceuticals Inc. in 2015. 1st Order developed the compound as 1OP2198 for epilepsy and then in April 2017 licensed Xenon exclusive worldwide rights to 1OP2198, which the latter renamed XEN1101. [See Deal]

In the 2017 agreement, Xenon paid $400k up front and a $700k near-term development milestone fee, and was responsible for paying both Bausch and 1st Order up to $15.6m more for pre-commercialization milestones; up to $32.1m in sales-based milestone fees; and mid-to-high single-digit royalties on commercial sales (a breakdown of payments for each wasn’t disclosed).

Under the current transaction, Xenon provides Bausch with a one-time payment of $6m, thus terminating all of Xenon’s future financial obligations to Bausch, including up to $39.6m for clinical development, regulatory and sales-based milestones, plus the mid-to-high single-digit percentage royalty. However, Xenon still is required to pay 1st Order up to $8m [$500k for clinical development milestones, $6m for regulatory milestones (covering multiple indications), and $1.5m for other milestones).

Samabriva, Affilogic Partner On Lysosomal Storage Disorders

Samabriva and Affilogic have entered into an option and license agreement to develop Nanofitin-conjugated biotherapeutics to treat lysosomal storage disorders. Under the deal announced Sept. 10, Samabriva will use Affilogic’s proprietary Nanofitins technology to develop new therapies to address unmet needs, such as associated neurological damages.

Samabriva will pursue the evaluation of Nanofitin candidates selected by Affilogic from its proprietary libraries, in combination with lysosomal enzymes. Samabriva will have sole responsibility for evaluation, preclinical and clinical developments. The Amiens, France-headquartered company will be entitled to commercialize worldwide products incorporating Affilogic Nanofitins resulting from the collaboration.

Affilogic will receive an undisclosed upfront payment under the agreement and could earn further research funding, milestones payments and royalties by Samabriva.

Carlyle Group Invests In CDMO Ambio

The Carlyle Group has acquired a minority stake in Ambio Holdings Inc., a global peptide active pharmaceutical ingredient (API) contract development and manufacturing organization (CDMO), from MVM Partners, a specialist health care fund. Equity for the investment came from Carlyle Asia Partners V, Carlyle’s flagship $6.55bn Asia fund focused on acquisitions and strategic investments across a range of sectors in Asia Pacific. MVM retains a significant interest in Ambio.

Founded in 2007 by scientist and entrepreneur Chris Bai, Ambio is a peptide biologics company that provides API CDMO services for drugs approved in the US, EU and China. It has a robust pipeline of preclinical and clinical programs. The firm also partners with major global pharmaceutical firms to develop generic peptides. It has two manufacturing sites in China and the US, employing more than 400 people.

“Carlyle sees strong growth potential in the peptide API CDMO business, as well as great opportunities in the generic peptide business,” said Ling Yang, a managing director of the Carlyle Asia Partners advisory team. “Ambio is well positioned to capture these significant growth opportunities by capitalizing on its demonstrated strong technical capabilities and high quality. Its business model offers customer nimbleness and cost advantage.”

The Carlyle Group has invested more than $11.5bn of equity in more than 65 transactions in the global health care industry as of June 30. In Asia, Carlyle has invested approximately $1.5bn in 10 health care companies, along with more than $8bn in nearly 100 private equity transactions across China through its US dollar and RMB investment vehicles.

VistaGen Licenses Pherin's Anxiety Compound, Options MDD Candidate

VistaGen Therapeutics Inc. licensed exclusive worldwide development and commercialization rights Sept. 13 to Pherin Pharmaceuticals Inc.'s PH94B (aloradine) nasal spray in Phase III for social anxiety disorder (SAD). In addition, VistaGen got an option to acquire an exclusive worldwide license to develop and sell PH10, Pherin's Phase II nasal spray candidate for major depressive disorder (MDD).

In exchange for the PH94B license, VistaGen issued Pherin a one-time, upfront payment of $2m in VistaGen common stock (a total of 1.4m shares) and will also pay nominal monthly development support payments for a term of 18 months; development and regulatory milestone fees (including payments upon approval by both the FDA and EMA); sales milestone fees and future royalties. Under the concurrent 24-month option agreement for PH10, VistaGen issued $250k in stock (181k shares) up front.

Pherin's intranasal synthetic neuroactive steroid candidates are derived from compounds known as pherines, which locally bind to and engage peripheral nasal chemosensory receptors connected to the hypothalamus and limbic system. This route of administration renders a drug rapidly effective in ultra-low quantities, avoids systemic circulation (via the blood-brain barrier), and offers a rapid onset of efficacy, excellent safety and tolerability profiles and greater patient convenience, Pherin claims.

The addition of Pherin's compounds both expands and complements VistaGen's own central nervous system pipeline, which is led by AV101, an oral, non-opioid, non-sedating NMDA receptor glycine B (NMDAR GlyB) antagonist in Phase II for MDD (Phase II) and Phase I for neuropathic pain, epilepsy, Parkinson's disease levodopa-induced dyskinesia and suicidal ideation.

OS Therapies Gets Rights To Advaxis’ Listeria-Based Vaccine

Advaxis Inc. granted OS Therapies LLC rights Sept. 4 to develop and sell its ADXS31164 (ADXSHER2) Listeria-based vaccine as a treatment for the underserved pediatric cancer osteosarcoma. OS Therapies pays undisclosed money up front; milestone fees for development, regulatory and sales achievements; royalties; and reimbursement for product supply.

OS Therapies will fund all of its studies and plans to evaluate ADXSHER2 in conjunction with The Children’s Oncology Group (part of the NCI National Clinical Trials Network) for osteosarcoma, a rare cancer that forms in the bones. Advaxis previously gained approval for the therapy as a canine treatment, but it has not been developed or approved for human patients. Osteosarcoma is OS Therapies’ sole focus; the company notes that there have been no new treatment options in 30 years.

You can read more about deals that have been covered in depth by Scrip in recent days below:

(Also see "Almirall Taps Evotec For Novel Dermatology Mechanism" - Scrip, 17 Sep, 2018.)	Almirall SA has agreed a research collaboration that could yield novel therapies for diseases such as psoriasis and atopic dermatitis.
(Also see "Allergan Buys Bonti, Releases New Data In Defense Of 'Iconic' Botox Brand" - Scrip, 14 Sep, 2018.)	Allergan PLC declared that no other brand is more 'iconic' than Botox, during its medical aesthetics investor event, but the company also revealed several defensive moves to protect the neurotoxin's status, including the acquisition of fast-acting, short-duration toxin maker Bonti Inc.
(Also see "Boehringer Ingelheim Expands Oncolytic Virus Efforts With ViraTherapeutics Buy" - Scrip, 13 Sep, 2018.)	Paying €210m for a company that only has preclinical programs may seem steep but Boehringer Ingelheim GMBH is clearly impressed with the progress being made by its Austrian partner's lead candidate.
(Also see "Big Statement By Aurobindo As It Seals $1bn Sandoz US Deal " - Scrip, 6 Sep, 2018.)	Aurobindo Pharma Ltd. is betting big, buying certain portions of Sandoz International GMBH’s US portfolio in a deal potentially worth $1bn. The acquisition positions the Indian firm in the top league in the overall US generics space by Rx and also segments like dermatology, but much could depend on how effectively Aurobindo delivers on value creation potential amid ongoing price pressures.