Allergan 'Unusual Suspect' But Pipeline 'Hunger' A Perfect Match For Heptares
This article was originally published in Scrip
With Scrip still reeling from the news earlier this week that Pfizer and Allergan have called off their $160bn mega-merger, news broke that former darling of the UK biotech scene Heptares, now a wholly-owned subsidiary and the 'R&D engine' of Japanese company Sosei Group Corp., has secured a notable licensing deal with Allergan. Scrip caught up with Heptares CEO Malcolm Weir to get his take on the fall of PfizerGan (PfAllergan?), and of course the small matter of securing a partnership deal worth up to $3.34bn plus potential royalties.
Under the agreement announced on April 6, Allergan has licensed exclusive global rights from Heptares to a broad portfolio of novel subtype-selective muscarinic receptor agonists to treat major neurological disorders, including Alzheimer's disease.
Allergan agreed to pay $125m up front, up to $665m in development and product launch milestone fees, and as much as $2.5bn in sales milestones, plus royalties. Allergan also will provide up to $50m for a joint R&D program to push multiple drug candidates through Phase II trials. Allergan will take over development starting with Phase IIb trials and handle all manufacturing and commercialization for future products.
Scrip: Congratulations on a securing a great deal with Allergan, but I have to start by asking what your thoughts are about the Pfizer-Allergan deal falling apart…
Malcolm Weir: In truth, we've been working with Allergan on this deal all along. We didn't stop working on it because they had some discussions ongoing with Pfizer. Allergan remained committed to us throughout that process so we've been a bit blinkered. Pfizer is a partner of ours and they're both great companies. Would it have worked if they had come together? Very possibly, but diversity is always a good thing.
Malcolm Weir, Heptares
Scrip: Was securing this deal with Allergan a competitive process?
MW: Yes and no. There wasn't really a process. We have been talking to a number of pharmaceutical companies over the years and keeping them apprised of progress. [The muscarinic program] is a leading program for us and it attracted a lot of interest. But we haven't been aggressively pushing to partner it. It was just a meeting of minds really.
Scrip: What do you say to suggestions that Allergan is not the most obvious partner for you to match up with?
MW: That's an interesting point, because we did talk to the usual suspects. Some people might say that Allergan is a slightly unusual suspect. But when you look at Allergan and see how Brent [Saunders] is leading the company, then we sit perfectly within his open science agenda.
Allergan is looking to build pipeline – early, mid and late stage – not just products ready to go [to market]. They don't have big in-house discovery activities, but they have a tremendous development machine so Allergan is a very good partner for us. They are very knowledgeable in Alzheimer's, they have memantine on the market and have developed drugs for Alzheimer's before. They know the space, and they're hungry for pipeline.
That's an advantage in many ways compared to a situation where the partner company has large internal capability in a similar area. Sometimes those things get a bit difficult. Some might say it's an unusual partner but this is the way that a lot of the industry is going to move. That's good for both biotech and pharma.
Scrip: Heptares was acquired by Sosei in early 2015 as its 'R&D engine.' How does a broad-based deal such as this fit in with your positioning at Sosei?
MW: It fits very well. This is a program that we always expected to partner at some point, because we can't take drugs to market in Alzheimer's ourselves as the investment is absolutely enormous. We have partnered much of our pipeline that was historic Heptares pipeline.
What we're doing now is building a new pipeline of targets, many of which are not listed yet on our website, in a limited but well-chosen range of therapeutic areas, including neurology. Some of those targets will be partnered, just as we've done here, and there will be huge deals to come from them. But some we will look to take to market ourselves. That way we can see us – Sosei – able to sustainably move forward and build value, and build the company into a genuine pharmaceutical player.
Scrip: What stage are the lead candidates that Allergan has licensed?
MW: We've got two molecules in Phase I right now, and they're both of interest in terms of taking them forward. Within a program like this you are going to have to make prioritization decisions, ultimately, but at the moment we have those two. These are against M1, so they're for cognition.
In Phase I, they look very promising at doses which suggested they will be efficacious. At those doses we are not seeing the side effect problems that people have seen in the past with muscarinic drugs, and that's because they are selective: we've got rid of the bad side effects of M2 and M3 and kept the efficacy. So they are promising to take into Phase II studies for proof of concept in Alzheimer's.
Then we've also got M4 agents which should be in the clinic early next year, and dual M1/M4s as well. M4 is directed towards psychosis in Alzheimer's, which is the behavioral disturbances and delusions and agitation that you see in people with Alzheimer's. We plan to move the M1 products into Phase II towards the end of this year.
Scrip: Will that be the first milestone under the Allergan/Heptares deal?
MW: You're looking at milestones associated with moving multiple agents forward into Phase I, II and III. So it depends which program hits which milestone first, really.
Scrip: Sosei has just appointed Peter Bains to take over from Shinichi Tamura as CEO in June this year. Will having a new CEO at Sosei result in any changes on the ground for Heptares?
MW: I think it's a terrific move, actually. Peter's been a non-exec of the Sosei board for some years, and he's a very seasoned industry executive. He has well-developed CEO experience at running public companies such as Syngene [International Ltd.], which he IPO'd recently. He's got all the qualities that we need to take the company forward. He was one of the prime movers within the [Sosei] operation to do the deal with Heptares in the first place.
Shinichi is moving towards a chairmanship position and built the company to this stage, so there will be a transitional period over the next couple of years, and it's all very positive.