Deal Watch: Chinook To Go Public Via Reverse Merger With Troubled Aduro

Focused on precision medicine for renal disease, Chinook gets Aduro’s Nasdaq listing and starting capital of $200m. During a wave of modest-sized M&A deals, Tetra finds buyer, Tetraphase gets competing bids.

Scrip regularly covers business development and deal-making in the biopharmaceutical industry. Deal Watch is supported by deal intelligence from Biomedtracker.

Chinook Well Capitalized To Advances Its Two Clinical-Stage Kidney Therapies

Aduro Biotech Inc. finally accepted a new direction on 2 June, agreeing to a reverse merger with Chinook Therapeutics Inc. that will take the latter firm public with a focus on precision medicine for kidney disease. Structured as a stock swap, the deal will exchange all outstanding shares of privately held Chinook for shares representing roughly 50% of Aduro’s common stock at the time of the deal, expected to close during the second half of 2020.

To operate and trade under the Chinook name, the combined company will begin with roughly $200m in capital, comprising Aduro’s cash on hand as well as $25m in equity investment from Chinook’s existing backers. Each company’s shareholders will own approximately 50% of the new entity.

Up until a couple of years ago, Aduro was a sought-after partner for big pharma on the strength of its drug candidates targeting the stimulator of interferon genes (STING) and a proliferation-inducing ligand (APRIL) pathways. Now, drug candidates once partnered with the likes of Novartis AG, Merck & Co. Inc. and Eli Lilly & Co. will be auctioned off as the new firm centers on atrasentan and BION-1301, both candidates for IgA nephropathy. Aduro shareholders will hold 10-year contingent value rights attached to the prospects of its pipeline assets going to auction.

Chinook’s pipeline also includes preclinical CHK-336, which is expected to move into Phase I within the next 12 to 18 months for an ultra-rare kidney disorder. Further, it has a discovery program focused on rare, severe chronic kidney diseases.

In January 2019, Aduro announced a 37% staff cut due to the loss of multiple R&D setbacks, with a narrowed clinical development focus on its big pharma partnerships. (Also see "Hitting Refresh: Aduro CEO On Company Cuts, Pipeline Programs And Alliances" - In Vivo, 18 Feb, 2019.) As part of that strategic reset, it dropped early-stage development efforts on anti-CTLA-4 and neoantigen therapies for cancer. In 2018, a four-year partnership with Janssen Pharmaceutical Cos. in prostate and lung cancer was terminated due to disappointing results. (Also see "Aduro Says End Of Janssen Collaborations “Not A Lethal Blow”" - Scrip, 3 Oct, 2018.)

AbbVie Partners On SHP2 Inhibitors With China’s Jacobio

AbbVie Inc. and Jacobio Pharmaceuticals Co. Ltd. unveiled a partnership on 1 June to develop and commercialize the Chinese firm’s SHP2 inhibitors for cancer indications. No financial terms were disclosed but AbbVie obtains a license to the full SHP2 portfolio of Jacobio, a spinout of Betta Pharmaceuticals Co. Ltd., including early-stage clinical candidates JAB3068 and JAB3312. (Also see " Breaking Away From Betta, Jacobio Raises China Oncology Development Bar " - Scrip, 26 Aug, 2019.)

Jacobio will continue early development of those two candidates, which target an important protein mediator of cellular signaling through RAS/MAP kinase pathway. Genetic mutations that drive cancer cell growth depend on SHP2 activity, the companies said. In addition, SHP2 is thought to modulate immune cell response by controlling cytokine expression, they added.

AbbVie will fund Jacobio’s early development work and then assume global development and commercialization responsibilities once those early trials are completed. Jacobio holds an option to develop and commercialize the assets in China, Hong Kong and Macau, which must be exercised before AbbVie initiates registrational trials.

Bristol Partners With Repare On CRISPR-Derived Cancer Program

Bristol-Myers Squibb Co. said on 26 May that it is teaming up with privately held Repare Therapeutics Inc. on a CRISPR-enabled discovery project to come up with novel cancer medications that target specific vulnerabilities in genetically defined patient populations. Repare, which raised a $68m series A financing in 2017, uses its SNIPRx technology platform for genome-wide synthetic lethality target discovery. (Also see "Versant & MPM Back Synthetic Lethality Newco With $68M" - Scrip, 22 Jun, 2017.)

The firms will use the platform to jointly identify multiple precision oncology targets, with Bristol getting exclusive worldwide rights to develop and commercialize resulting drug candidates. Bristol is paying $50m up front in cash under the agreement as well as making a $15m equity investment in Repare, which also could earn up to $3bn in earnouts under the deal. These may include license fees; payments pegged to discovery, development, regulatory achievements and sales milestones; and sales royalties.

Shionogi To Add CNS Critical Mass With Tetra Buyout

In a transaction anticipated since the Japanese pharma increased its ownership stake to 50% in March, Shionogi & Co. Ltd. will acquire Michigan biotech Tetra Therapeutics in a deal valued at roughly $500m. The two firms have partnered since December 2018 on development of negative allosteric modulator targeting phosphodiesterase 4D (PDE4D) candidate BPN14770. (Also see "Shionogi Set To Acquire R&D Partner Tetra After Raising Stake" - Scrip, 8 Mar, 2020.)

Shionogi obtained the right to fully acquire Tetra when it increased its equity in the US firm in March. The original deal was intended to accelerate development of BPN14770 in Asian markets such as Japan, South Korea and Taiwan, but now Shionogi will fully own the drug and the rest of Tetra’s pipeline. It has completed a Phase II US study in Alzheimer’s disease and Tetra recently initiated a Phase II study with the compound in Fragile X syndrome.

The companies didn’t offer specific financials for the deal, but Tetra becomes a fully owned subsidiary of Shionogi and its shareholders can realize regulatory and commercial milestone payments of up to $500m.

AcelRx Still Wants Tetraphase But At Higher Price

In March, AcelRx Pharmaceuticals Inc. revealed it would acquire antibiotics firm Tetraphase Pharmaceuticals Inc. for approximately $14.4m in a deal that would double its acute care products portfolio. (Also see "AcelRx Obtains Troubled Antibiotic Firm Tetraphase In Stock Swap" - Scrip, 16 Mar, 2020.) However, that plan has devolved into a bidding war with competing interest from Melinta Therapeutics Inc. – each potential acquirer of Tetraphase increased its bid in recent days.

AcelRx said on 29 May that it will compensate Tetraphase shareholders at $1.70 per share in cash and stock. Tetraphase’s stock ended the trading day on 28 May at $1.50 per share. Then, Melinta amended its offer on 1 June to a total price tag of $39m.

For each full share in Tetraphase, stockholders would get $0.59 in cash and 0.74 shares in AcelRx, along with a contingent value right of up to $16m in cash based on sales of the novel antibiotic Xerava (eravacycline) beginning in 2021. The transaction would enable AcelRx to combine Xerava with its hospital-based, pain-management drug Dsuvia (sufentanil), while adding Tetraphase’s commercial team.

Melinta’s offer also includes a $16m CVR and would pay $1.79 per common stock share in Tetraphase. In addition, Tetraphase would get $2.47 per share for its common stock available under warrants issued in both 2019 and 2020. In a June 1 statement, Tetraphase called Melinta’s the “superior offer.”

Processa Licenses IP For Next-Generation Irinotecan From Aposense

Maryland-based Processa Pharmaceuticals Inc. licensed intellectual property and technology access on 1 June from drug delivery specialist Aposense Ltd. to develop and commercialize next-generation irinotecan candidate ATT-11T for cancer indications. The firms noted that while irinotecan has generated blockbuster sales revenue as a chemotherapy for lung, colorectal and pancreatic cancer, it has a black box warning from the US Food and Drug Administration for risk of neutropenia and severe diarrhea.

ATT-11T is a prodrug of irinotecan that Processa says can offer patients a wider therapeutic window with lesser side effects. Under the deal, Aposense gets a $2.5m equity stake in Processa and can earn up to $125m in development and sales milestone fees as well as 7% royalty on net sales if the product reaches market.

COVID-19 Deals Roundup:

• The Netherlands’ Intravacc, focused on translational research and development of viral and bacterial vaccines, said on 2 June it is using its Outer Membranes Vesicle technology platform in partnership with US biotech EpiVax Inc. to develop a T-cell-activating vaccine for COVID-19 and related coronaviruses.

• Novartis division AveXis Inc. said on 28 May that it will help manufacture an adeno-associated viral vaccine – AAVCOVID – that [Massachusetts General Hospital] and Massachusetts Eye & Ear hope to bring into clinical development before the end of 2020. (Also see "Coronavirus Update: Novartis Joins Vaccine Efforts With Gene Therapy Approach" - Scrip, 29 May, 2020.)

• Oxford BioMedica PLC inked a one-year clinical and commercial supply agreement on 28 May with AstraZeneca PLC for the latter’s COVID-19 vaccine AZD1222. (Also see "Coronavirus Update: Novartis Joins Vaccine Efforts With Gene Therapy Approach" - Scrip, 29 May, 2020.)

• Novavax Inc. announced a $167m all-cash acquisition of Czech Republic-based Praha Vaccines, bringing the Maryland biotech a facility capable of producing 1bn doses of its NVX-CoV2373 vaccine candidate beginning in 2021. About 150 employees with significant vaccine manufacturing experience are joining Novavax via the deal, the company said.

• South Korea’s Genexine Inc. will develop its prophylactic DNA vaccine GX-19 in collaboration with Indonesia’s Kalbe Pharma, the firms said on 27 May. (Also see "Coronavirus Update: Sinovac Gets $15m Towards CoronaVac Phase II, Remdesivir Early Access In UK" - Scrip, 27 May, 2020.)

• Eli Lilly licensed global, non-exclusive rights on 16 May to Chugai Pharmaceutical Co. Ltd. ’s antibody-engineering technologies to apply to its efforts to develop antibody therapies for COVID-19. (Also see "Coronavirus Update: Gilead Ready To Unveil Remdesivir Price" - Scrip, 20 May, 2020.)

GSK Links With Samsung On Manufacture/Supply Capacity

GlaxoSmithKline PLC and Samsung BioLogics have reached a partnership to provide GSK with additional capacity to manufacture and supply its innovative biopharmaceutical therapies. Under the agreement announced on 21 May, Samsung Biologics will provide GSK with additional capacity for large-scale biopharmaceutical product manufacturing. This capacity will be flexible depending on GSK’s future needs and will supplement the pharma’s existing manufacturing network.

The agreement is worth more than $231m over the next eight years. It will initially cover commercial production of Benlysta (belimumab), with technology transfer starting in 2020 and first commercial supply expected in 2022. The intention is to expand to additional specialty-care products in the future.

Stempeutics, Novumcella Join hands For Stempeucel For Buerger’s In Japan

Indian stem cell therapy firm Stempeutics Research and Japanese bioventure Novumcella Inc. announced on 22 May an agreement to co-develop and commercialize Stempeucel for the Japanese market, for the treatment of critical limb ischemia (CLI) due to Buerger’s disease, an orphan indication in Japan.

The stem cell therapy was granted conditional approval in India in 2017 for the same indication and data from Indian trials will be used to support an application for a pivotal bridging study approval in Japan. (Also see "India Clears Off-The-Shelf Buerger’s Stem Cell Therapy" - Scrip, 2 Jun, 2016.) A preliminary consultation with Japan’s regulator, the PMDA, was held in 2019.

Under the agreement, financial details of which were not disclosed, Novumcella will meet the costs of the bridging study and provide regulatory support services to Stempeutics.

Buerger's is a rare and severe disease affecting the blood vessels of the legs, characterized by inflammation and occlusion of the vessels of extremities, resulting in reduced blood flow to these areas and leading to severe pain, ulcers or necrosis. This may eventually necessitate limb amputation.

Stempeucel comprises adult allogeneic mesenchymal stromal cells derived from multiple bone marrow donors using a novel patented technology, and can be used as an “off-the-shelf” cryopreserved product. It provides an alternative method of treating CLI due to Buerger’s, especially in patients unsuitable for revascularization with poor quality of life, and the therapy enhances the body's limited capability to restore blood flow in ischemic tissue by reducing inflammation and improving neovascularization.

Bangalore-based Stempeutics has also had a successful pre-IND meeting with the US Food and Drug Administration and a Scientific Advisory meeting with the European Medicines Agency, feedback from which will support the strategy in Japan. The country has a well-developed and supportive legal and regulatory framework for regenerative medicines, which allows early conditional approvals along with comprehensive post-approval monitoring.

In Brief:

• Regeneron Pharmaceuticals Inc. and Intellia Therapeutics Inc. announced on 1 June that they are expanding their existing partnership to develop CRISPR/Cas9-based therapies to include target transgene insertion products for hemophilia A and B. (Also see "Intellia Plans IPO, Signs Gene-Editing Pact With Regeneron " - Scrip, 12 Apr, 2016.) Regeneron will pay $70m in cash and make a $30m equity investment in Intellia under the agreement.

• Japan’s Daiichi Sankyo Co. Ltd. said on 28 May that it is partnering with Syneos Health to use the latter’s insight-driven product development to optimize its antibody-drug conjugates for cancer, including its breast cancer product Enhertu (trastuzumab deruxtecan) partnered with AstraZeneca. (Also see "AZ Closer To Second Enhertu OK After Gastric Cancer Success" - Scrip, 27 Jan, 2020.)

• Mayne Pharma Group Ltd. announced a 20-year license and supply agreement on 28 May to commercialize Mithra Pharmaceuticals SA’s combined oral contraceptive product E4/DRSP in Australia. Currently under regulatory review in Australia, the product is expected to launch in the second half of 2021.

• Thermo Fisher Scientific Inc. and CSL Ltd. unveiled a partnership on 27 May in which Thermo Fisher will provide product development, biologics manufacturing and fill/finish assistance for CSL’s next-generation large molecule products, including hemophilia therapies, at a new site slated to go online in Switzerland in 2021.

• VistaGen Therapeutics Inc. said on 27 May that it is partnering with Nuformix PLC to apply the latter’s co-crystal platform technology to develop patentable new formulations of its central nervous system drug candidates, including AV-101 for indications including chronic neuropathic pain, epilepsy and depression.

• Sweden’s Enzymatica said on 25 May that it has extended its commercial partnership with Stada Arzneimittel AG for the cold spray ViruProtect (ColdZyme) to 19 additional markets, mostly in eastern Europe. Previously, Stada held rights to distribute the product in Belgium and Austria.

• Synlogic Inc. reported on 21 May that its collaboration signed in 2016 with AbbVie to develop synthetic medications to treat inflammatory bowel disease has been terminated, with rights to all compounds discovered under pact reverting to the Cambridge, MA, biotech. (Also see "Synlogic Links Up With AbbVie For IBD Microbiome Therapies" - Scrip, 10 Feb, 2016.)

Stay tuned for the next edition of Deal Watch. You can read more about other deals that have been covered in depth by Scrip and Generics Bulletin in recent days below:

(Also see "Latecomer Merck Enters Coronavirus Vaccine Field With Themis Acquisition" - Scrip, 26 May, 2020.)	While Moderna Inc. and other frontrunners aim for a 2020 emergency use approval, Merck believes a more deliberate approach will pay off in the long term.
(Also see "China Bioventures' Role In Virus Fight Helps Secure $721m In New Funding, Deals" - Scrip, 22 May, 2020.)	Developing some of the first coronavirus vaccines and antibody testing kits, venture-backed firms in China have responded fast and partnered actively in the fight against the pandemic, helping them to raise new funds and reach deals. But there have been cautionary tales in other sectors and some investors remain wary.