Biogen By Buying Nightstar Targets Ophthalmology As Emerging Growth Area
Executive Summary
Biogen is paying around $800m cash to buy UK-based Nightstar Therapeutics, which focuses on gene therapy for retinal diseases.
Biogen Inc. will move beyond neurological, rare and autoimmune diseases and into ophthalmology with its planned acquisition of UK-based Nightstar Therapeutics PLC, thereby getting two potentially first-in-class mid- to late-stage clinical assets as well as preclinical programs.
Cash Offer
Biogen on March 4 said it was buying the gene therapy biotech for about $877m in cash, and that the offer price of $25.50 per share represented a premium of 68% to Nightstar’s previous closing price of $15.16. Biogen put the transaction's total value at around $800m on a fully diluted basis, after taking into account expected transaction expenses and anticipated cash at closing.
Ophthalmology is viewed as a key pipeline area by Biogen, as retinal diseases are part of the central nervous system and retinal degenerative diseases have similar characteristics to degenerative CNS diseases.
"Nightstar would accelerate our entry into ophthalmology by contributing two mid- to late-stage gene therapy assets, with the potential to create long-term shareholder value,” Biogen’s CEO Michel Vounatsos told an analyst call when outlining the planned acquisition.
"Compared to Spark’s $4.8bn sticker price paid by Roche, we think Biogen’s acquisition of Nightstar represents a much more sensible valuation." - BTIG
The tie-up is the latest gene-therapy driven in the field of ophthalmology.
Roche last month said it was buying gene therapy specialist Spark Therapeutics Inc. for $4.8bn to obtain the target's Luxturna therapy for inherited blindness, and a pipeline containing potential hemophilia A treatments.
'Sensible', Analysts Say
Analysts said the price Biogen was paying for Nightstar was more reasonable than that Roche has agreed to pay for Spark.
"Compared to Spark’s $4.8bn sticker price paid by Roche, we think Biogen’s acquisition of Nightstar represents a much more sensible valuation," analysts at BTIG said in a reaction note.
BMO Capital Markets agreed: “Biogen is getting Nightstar at a good price considering the stock was trading at the acquisition price at the end of September.”
For Nightstar Pipeline
Nightstar’s lead asset NSR-REP1 is in Phase III development for choroideremia (CHM), a rare degenerative disorder that leads to blindness and has no approved treatment options.
A second asset is NSR-RPGR for the rare eye disorder known as X-linked retinitis pigmentosa (XLRP). Both REP1 and RPGR have shown positive proof-of-concept in their respective indications and Phase III REP1 data in choroideremia are expected in the second half of 2020.
Nightstar also has an early preclinical stage pipeline of other programs including Stargardt's disease and Best disease.
The indications chosen by Biogen in targeting Nightstar are not surprising given its prior, ill-fated collaboration with gene therapy-focused Applied Genetic Technologies Corp. (AGTC) which was for similar indications but which was ended in late December last year by Biogen after interim data on one of AGTC's investigational therapies showed it was ineffective at treating a rare eye disorder known as X-linked retinoschisis (XLRS). (Also see "Deal Watch: Millendo Completes Merger With OvaScience, With $85m In Bank For Two Mid-Stage Programs" - Scrip, 13 Dec, 2018.)
Nightstar's NSR-REP1 is comprised of an AAV2 vector containing recombinant human complementary DNA, or cDNA, which is designed to produce REP1 inside the eye. NSR-REP1 is administered surgically by injection into the sub-retinal space, which is between the outer layers of the retina.
NSR-RPGR is being evaluated in a dose-ranging Phase I/II clinical trial for the treatment of XLRP in patients with the RPGR mutation, known as the XIRIUS trial. Biogen and Nightstar believe NSR-RPGR has the ability to slow or stop retinal degeneration of photoreceptors and to restore or maintain vision in patients affected by these mutations.