Zogenix To Pay $250m Upfront To Buy Modis For Ultra-Orphan Drug
Executive Summary
The takeover will diversify Zogenix’s pipeline through the addition of MT1621, a drug that improved the probability of survival in patients with an inherited mitochondrial DNA depletion disorder.
Zogenix Inc. has struck a deal to buy Modis Therapeutics Inc. for $250m upfront, giving it control of another late-phase rare disease drug to complement its lead product, Fintepla.
The planned takeover centers on MT1621, a deoxynucleoside substrate enhancement therapy that Modis is developing as a treatment for an inherited mitochondrial DNA depletion disorder. Zogenix sees MT1621 as a good fit for its efforts to expand beyond its existing rare disease asset, Fintepla (ZX008, low-dose fenfluramine hydrochloride), which in April was slapped with a refusal to file letter by the US Food and Drug Administration.
“Our business strategy beyond Fintepla is to seek out and acquire similarly potentially transformative rare disease therapeutic opportunities to complement our lead program. We believe we have found such an opportunity in the acquisition of Modis Therapeutics,” Zogenix CEO Stephen Farr said on a conference call with investors to discuss the deal on 27 August.
Zogenix has been on the hunt for some time for a development-stage drug with breakthrough therapeutic potential in a serious rare disease that has limited or ineffective treatment options. The belief that MT1621 fits the bill rests on the data generated to date and the nature of the disease it targets, thymidine kinase 2 deficiency (TK2d).
TK2d presents, sometimes as early as the first year of life, as a progressive, severe muscle weakness that impairs movement, breathing and eating. Most cases develop during infancy or childhood and end in death from respiratory failure. There are no treatments beyond supportive care. Zogenix thinks TK2d affects 650 to 2,500 people in the US, although, as the disease is often misdiagnosed as spinal muscular atrophy, it is possible that more patients will become available.
Modis assessed the efficacy of MT1621 in TK2d by treating 38 subjects with the drug and comparing their outcomes with a matched natural history cohort of 68 patients. The comparison linked MT1621 to a significant improvement in the probability of survival, plus improvements in functional abilities.
Zogenix plans to meet with regulators in the US and Europe to discuss the path to approval in the first quarter of next year. As it stands, Zogenix expects to need to generate additional safety data and plans to start doing so by treating people in the natural history cohort with MT1621.
The discussions and work related to MT1621 add to an already busy schedule at Zogenix, which is still recovering from the refuse-to-file notice issued by the FDA in response to a request for approval of Fintepla in the treatment of seizures associated with Dravet syndrome. Zogenix expects to refile for approval in the third quarter and deliver top-line Phase III data on Fintepla in a second indication, Lennox-Gastaut syndrome, in the first quarter of next year.
Farr downplayed concerns that the takeover would distract Zogenix from these activities, noting that the 15-person team at Modis will shoulder much of the near-term burden of advancing MT1621.
“We’re acquiring a company here that has people who have done a really great job in advancing the program. We really hope and expect that that same team will continue with this program moving forward,” Farr said.
In the longer term, Farr foresees leveraging some of the same resources for MT1621 and Fintepla. However, by acquiring a candidate that is outside of its existing focus on the central nervous system, Zogenix has limited its ability to use exactly the same infrastructure for both therapies.
“There are definitely synergies we can leverage on the commercial side, particularly around market access, pricing [and] reimbursement discussions, our medical science liaison team that helps support product in the field. The field sales force is likely to be different but that’s ok because these will be relatively small and efficient teams,” Farr said. Farr expects the sales team to have 10 to 20 people.
For Modis and its investors, the deal represents a big, quick return. Modis raised a $30m series A financing round led by F-Prime Capital Partners and OrbiMed in October. Ten months later, Zogenix is set to pay $250m upfront and commit to $150m in regulatory approval milestones to buy the company.
Zogenix has reduced the cash outlay by paying $75m of the upfront fee in stock. The remaining $175m will come out of the $460m Zogenix had in cash and marketable securities as of the end of June. Despite eating into its savings, Zogenix thinks it has enough money to support the anticipated launches of Fintepla in the US and Europe.
The deal is due to close in September.