Deal Watch: Genentech Expands Upon Arvinas PROTAC Collaboration

The Roche affiliate doubles the potential monetary value of partnership focused on PROTAC technology in a range of therapeutic areas. Cardinal sells off Chinese business for $1.2bn, while Novartis licenses Homology’s gene-editing technology.

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.

Expansion Of Genentech/Arvinas PROTAC Deal Increases Potential Value To $650m

Apparently impressed with what it has seen in the first two years of its collaboration with Arvinas Inc., Genentech Inc. agreed Nov. 15 to expand a collaboration around the biotech’s PROTAC (proteolysis targeting chimera) technology platform, adding additional therapeutic targets and more than doubling the deal’s potential aggregate value to $650m.

The protein-degradation platform enables the creation of small molecule therapies in a broad range of therapeutic categories. The Connecticut biotech says the technology offers potential improvements over traditional oral therapies by using a cell’s ubiquitin and proteasome systems to degrade disease-causing proteins. The theory is that by removing target proteins directly rather than inhibiting them, PROTACs offer multiple advantages over small molecule inhibitor drugs, which can produce toxic side effects and eventual drug resistance due to their need for high systemic exposure to achieve efficacy.

No specific financial terms were disclosed, other than that Arvinas can realize development and commercial milestones exceeding $650m under the revised deal, along with tiered royalties on any products reaching market resulting from the collaboration. The original agreement, signed in October 2015, provided Arvinas with undisclosed upfront cash and the potential to earn up to $300m in milestones as well as sales royalties. [See Deal]

PROTACs, which derive from Yale University research, are bifunctional small molecules that work by tagging a protein with an E3 ubiquitin ligase, marking them for degradation via the ubiquitin/proteasome mechanism. Earlier in 2015, Arvinas teamed up with Merck & Co. Inc. in a similar multi-year deal involving several undisclosed therapeutic areas. [See Deal]

In addition to its two pharma collaborations, Arvinas also is advancing two proprietary drug candidates of its own – a preclinical androgen receptor-targeted therapy for castration-resistant prostate cancer and an estrogen receptor-targeted compound for breast cancer. Both programs are in the lead-optimization stage.

Cardinal Sells Chinese Business To Shanghai Pharma For $1.2bn

Cardinal Health Inc. and Shanghai Pharmaceuticals Holding Co. Ltd. entered a definitive agreement on Nov. 14 for the Shanghai-listed pharma group to acquire Cardinal's pharmaceutical and medical device distribution business for an enterprise value of $1.2bn.

The deal excluded Cardinal’s remaining businesses in China, such as Cordis Corp., its recently acquired Patient Recovery business, medical sourcing team or other functions. And as part of the sale, Eric Zwisler, chairman of Cardinal Health China, will retire effective immediately.

The enterprise value of the acquisition, including shareholder loans, is equivalent to around 15 times its earnings before interest, taxes, depreciation and amortization (EBITDA) for the year ended June. Shanghai Pharma expects to pay the actual price of $557m in cash to complete the acquisition.

Shanghai Pharma said in a statement that the acquisition will help expand its nationwide distribution network into untapped provinces, such as Tianjin, Chongqing and Guizhou, adding up to 28 provinces to its current presence in 24 provinces. Through the acquisition the company will also become a leading importer of foreign drugs and gain new business content, such as distribution and retail pharmacy units.

Starting from the deal closing, Cardinal and Shanghai Pharma will further work together to explore opportunities for medical device and innovative medical services in global markets. Cardinal will also become Shanghai Pharma’s strategic partner to develop business in the US.

Speculations about the bidders and bidding price had been mounting for some time; the deal was expected to reach a value of more than $1bn. (Also see "Cardinal China Sell-Off Deal Advances" - Scrip, 3 Nov, 2017.)

Novartis Licenses Global Rights To Homology's Gene-Editing Platform

Novartis AG licensed exclusive worldwide rights Nov. 13 to Homology Medicines Inc.'s AMEnDR (AAV-Mediated Editing by Direct Homologous Recombination) gene editing technology platform to develop therapeutics for a blood disease and select ophthalmic targets.

Novartis, which participated in Homology's August 2017 $83.5m Series B round, will pay an upfront payment and make another equity investment in the company. [See Deal] Homology will also receive research funding to advance development programs, milestone payments and sales royalties. Homology retains US commercialization rights and shares US profits with Novartis for in vivo applications within hemoglobinopathy. The 2015 start-up is also pursuing a pipeline of gene therapies in metabolic, central nervous system and lysosomal storage disorders, as well as other rare genetic diseases. (Also see "Homology Medicines Inc." - Scrip, 17 Jun, 2016.)

The AMEnDR platform corrects gene defects using a natural DNA-repair mechanism in which homology sequences are designed and engineered to precisely target a specific region of the genome and then delivered using adeno-associated virus (AAV) vectors. The company has demonstrated in preclinical studies the ability of its AAV vectors to cross the blood-brain barrier and provide biodistribution to multiple tissue types, including liver, muscle (skeletal and cardiac), ocular and CNS.

The technology can be used in gene correction, insertion or knockout, and eliminates the off-target effects potentially seen in nuclease-based gene editing approaches. CRISPR, one such technique the Novartis Institutes for BioMedical Research Inc. is also exploring, can easily disrupt a gene sequence by insertion or deletion, but proves more challenging in fixing a gene error. [See Deal][See Deal]

Novartis will exploit Homology's technology to pursue a single AAV candidate for direct injection into the bloodstream to fix a defective gene causing a blood disease; therapies delivered locally to the eye in ophthalmic diseases; and NIBR-nominated research projects potentially in other therapeutic areas.

Heptares Takes Japan Lead On Dementia Product Licensed To Allergan

Sosei Group Corp. and Allergan PLC have amended their 2016 global R&D and commercialization partnership in which Allergan gained exclusive rights to Sosei subsidiary Heptares Therapeutics Ltd.‘s portfolio of novel subtype-selective muscarinic receptor agonists in development for the treatment of major neurological disorders, including Alzheimer’s disease. [See Deal]

Under the agreement announced on April 6, 2016, 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. (Also see "Allergan 'Unusual Suspect' But Pipeline 'Hunger' A Perfect Match For Heptares" - Scrip, 8 Apr, 2016.)

The change means Sosei gets a license to develop and commercialize HTL0018318, a novel muscarinic M1 receptor agonist, in Japan for patients with dementia with Lewy bodies (DLB). It will first undertake a Phase II proof-of-concept monotherapy study, due to begin in Japan in 2018. Allergan has retained the right to develop HTL0018318 in DLB globally.

Sosei CEO Peter Bains said the deal provided "a major go-to-market opportunity for our lead program, which is consistent with our growth strategy." He added that the company had developed an extensive understanding of the DLB opportunity in Japan, which he was confident the company would be able to exploit.

DLB affects between 20%-30% of all dementia patients, which translates into about 920,000 individuals in Japan and around 1.4 million in the US. There are no approved therapies for DLB in the US or Europe, but Eisai Co. Ltd.'s Aricept (donepezil) is conditionally approved in Japan.

Merck KGAA To Market Orexigen's Contrave In Latin America

Orexigen Therapeutics Inc. penned a deal Nov. 13 with Merck KGAA for marketing and distribution of Orexigen's obesity drug Contrave (bupropion/naltrexone) in Latin America (including Brazil, Mexico, Argentina, Chile, Bolivia, Paraguay, Uruguay, Colombia, Ecuador, Peru, Venezuela, Honduras, Guatemala, Dominican Republic, Nicaragua, Panama, Costa Rica, Belize and El Salvador).

Orexigen chose German Merck because of its strong presence in Latin America and its experience in the field of obesity and related complications. Merck will make an upfront payment plus regulatory and sales milestones, and is responsible for all regulatory and commercialization activities. Orexigen will supply Contrave to Merck.

The drug is marketed in 67 countries globally (also under the name Mysimba) through partners including Valeant Pharmaceuticals International Inc., Laboratorios Farmaceuticos ROVI SA, Biologix FZCo., Bruno Farmaceutici SPA, Navamedic ASA and Cheplapharm Arzneimittel GMBH. Orexigen is currently in discussions with additional companies for marketing of the therapy in the EU and other ex-US countries.

Neurimmune, Ono Partner To Develop Neurodegenerative Antibody Therapies

Swiss biotech Neurimmune Holdings AG is teaming up with Japan’s Ono Pharmaceutical Co. Ltd. to develop human-derived monoclonal antibodies to treat neurodegenerative diseases. In exchange for exclusive worldwide development and marketing rights to resulting product candidates, Ono agreed Nov. 9 to make an upfront payment and be responsible for research fees, R&D success milestones and sales royalties.

Using its Reverse Translational Medicine (RTM) platform, Neurimmune plans to discover, generate and validate mAbs against a target for neurodegenerative diseases, which Ono will develop and market. The RTM molecular engineering technology, using high-throughput analyses of human immune responses to disease-related proteins in selected populations, identifies antibodies with superior biophysical, pharmacological and safety properties, preserving those favorable qualities to create highly optimized drugs.

Neurimmune's development efforts are already heavily concentrated in CNS, including lead Alzheimer's disease candidate aducanumab, which was discovered using RTM under a 2007 collaboration [See Deal] with Biogen Inc. and is now in Phase III. Biogen later went on to acquire three of Neurimmune's RTM-derived neurology programs in Parkinson's disease, Alzheimer’s and dementia in 2010). [See Deal]

For Ono, with its mostly cancer-focused pipeline, the current neurodegenerative disease deal is an opportunity to further expand into this therapeutic area. It has a 2013 partnership with Bial-Portela & CA SA for Japanese rights to ONO2370 (opicapone), a COMT inhibitor now in Phase II in Japan for Parkinson’s (and approved in the EU as Ogentys) – as well as a 2005 partnership with Novartis for Japanese rights to the Exelon (rivastigmine) transdermal patch for Alzheimer’s, which was approved in Japan in 2011. (Also see "Ono eyes dosing benefits in Bial opicapone deal" - Scrip, 25 Apr, 2013.) Ono was also developing internally the carbidopa/levodopa prodrug ONO2160 for PD, but discontinued it earlier this year after Phase I trials failed to show efficacy.

Takeda To Try Portal's Needle-Free Delivery Device For Entyvio

Portal Instruments Inc. granted Takeda Pharmaceutical Co. Ltd. rights Nov. 7 to use its needle-free drug delivery device with the Japanese pharma’s gastrointestinal therapy mAbEnyvio (vedolizumab). Portal gets undisclosed money up front and is eligible to receive up to $100m in development, regulatory and commercialization milestones, plus royalties.

Portal’s device, licensed exclusively from Massachusetts Institute of Technology, delivers biologic therapies through a pressurized liquid instead a needle. The system reduces pain and anxiety commonly associated with needle-based drug delivery, and allows patients to self-administer at home.

Takeda has been looking for a new way to administer Entyvio, which is currently delivered via intravenous infusion. The I.V. formulation of the drug is marketed for ulcerative colitis and Crohn’s disease; a Phase III trial is currently underway testing a subcutaneous form.

OncoResponse Acquires Paganini Biopharma

Two-year old OncoResponse Inc. acquired fellow privately owned cancer biotech Paganini Biopharma Inc. on Nov. 7 for an undisclosed sum. Paganini was formed based on technology licensed from University of California, Los Angeles. The company brings to OncoResponse an anti-epithelial membrane protein 2 (EMP2) fully human monoclonal antibody, which OncoResponse has coded ONCR201.

EMP2 is over-expressed in endometrial and ovarian cancers, as well as triple-negative breast cancer. The candidate is slated to begin clinical trials in 2019, with potential as both a monotherapy and in combination with immunotherapies.

OncoResponse adds ONCR201 to a pipeline that already includes projects for non-small cell lung cancer, prostate and gastric cancers, melanoma and chronic myeloid leukemia. The company was spun out of MD Anderson Cancer Center and Theraclone Sciences Inc. in 2015 and raised $22.5m through a Series A round that closed last year. [See Deal] Paganini reportedly approached one of OncoResponse’s investors for funding, and the investor suggested the possibility of an acquisition.

NanoCarrier Gets Japanese Rights To VBL Cancer Gene Therapy

Vascular Biogenics Ltd. licensed NanoCarrier Co. Ltd. exclusive rights on Nov. 6 to develop and commercialize its lead cancer compound VB111 (ofranergene obadenovec) in Japan for all indications. For the license, NanoCarrier will pay $15m up front, more than $100m in potential development and sales milestones, and tiered royalties in the high teens. NanoCarrier will handle all development, regulatory activities and commercialization of VB111 in Japan, while VBL will supply the product.

VB111 is a gene therapy in various stages of development for a number of oncology indications: Phase III for recurrent glioblastoma; Phase II for sarcoma and thyroid, ovarian, peritoneal, fallopian tube and endometrial cancers; Phase I for non-small cell lung, neuroendocrine and renal cancers; and preclinical studies for melanoma. The companies plan to explore future oncology partnerships with each other.

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

(Also see "Loxo’s Tissue-Agnostic Approach Brings $400m Upfront From Bayer" - Scrip, 14 Nov, 2017.)	Bayer AG signs collaboration to develop and commercialize larotrectinib and a follow-on, under a structure that enables Loxo Oncology Inc. to co-promote in the US and build commercial infrastructure.
(Also see "J&J Deal Helps Zymeworks Continue Transformational Year" - Scrip, 13 Nov, 2017.)	Zymeworks Inc. says $50m up front from Janssen Biotech Inc. reflects clinical validation of its antibody technology platforms. Firm also moved first proprietary candidate into clinic and netted $59m from an IPO in 2017.
(Also see "Sanofi Expands MS Portfolio With BTK Inhibitor From Principia" - Scrip, 9 Nov, 2017.)	Sanofiadds the Phase I candidate to its Lemtrada follow-on for multiple sclerosis development, while Principia BioPharma Inc. will use $40m in upfront cash to advance its orphan disease strategy.