Deal Watch: Oncternal Goes Public Via Reverse Merger With GTx

All-stock transaction combines privately held Oncternal with GTx, which had been considering its strategic alternatives. Biogen acquires gene therapy biotech Nightstar, MaxCyte and Kite expand their CAR-T partnership.

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

Oncternal Says Combined Company’s Runway Will Last Into 2020

Struggling GTx Inc. may have found new life for its Selective Androgen Receptor Degrader (SARD) technology, and its shareholders will get roughly a one-quarter stake and contingent value rights (CVR) pegged to SARD development, under an all-stock transaction announced March 7 that will provide a public shell for oncology biotech Oncternal Therapeutics Inc. Oncternal will be the combined company’s new name, will assume GTx’s Nasdaq listing and will hold about $26m in cash, sufficient runway for operations until second-quarter 2020.

A GTx selective androgen receptor modulator (SARM) candidate known as enobosarm or ostarine failed to meet the co-primary endpoints in a pair of Phase III trials in muscle-wasting in 2013, resulting in GTx’s stock crashing by roughly 65%. (Also see "GTx Muscle Wasting Drug Fails, But Data Offer Possible New Path" - Pink Sheet, 25 Sep, 2013.) In 2014, a pair of trial investigators on prostate cancer candidate GTx-758 were charged with insider trading of information by the Securities and Exchange Commission after the compound was placed on clinical hold by the FDA. (Also see "Trial investigators busted for insider trading on 'halted' GTx studies " - Scrip, 20 May, 2014.)

San Diego-based Oncternal said the merger will result in a company focused on novel cancer therapies using largely untapped biological pathways. Its lead candidate is a first-in-class ROR1-targeted antibody, cirmtuzumab, currently in a Phase I/II combination study with AbbVie Inc./Johnson & Johnson’s Imbruvica (ibrutinib) in chronic lymphocytic leukemia and mantle cell lymphoma. The company said data from that study and a Phase I study of ETS transcription factor oncoprotein inhibitor TK216 in Ewing sarcoma should report out data later this year and during the first half of 2020, respectively.

Oncternal also plans to move a preclinical SARD candidate for castration-resistant prostate cancer toward the US filing of an investigation new drug (IND) application, while advancing another preclinical program of its own toward the clinic as well.

The deal is expected to close by the end of the second quarter, and Oncternal shareholders will own approximately 75% of the new company. GTx shareholders will own about 25% and stockholders of record immediately prior to the effective date of the merger also will hold the CVR rights to 50% of proceeds for any grant, sale or transfer of SARD technology during a specified term. The CVR also includes potential for royalties against any products reaching market from that platform during a specified period.

Oncternal CEO James Breitmeyer and Chairman David Hale will continue their roles in the new company. No GTx employees are expected to be retained after the merger goes through, although Oncternal’s nine-member board of directors will include two members of the current GTx board.

Biogen Acquires Nightstar For $877m

Biogen Inc. is paying $877m in cash ($25.50 per share, a 70% premium) to acquire ophthalmic-focused Nightstar Therapeutics PLC; Biogen is valuing the deal at around $800m on a fully diluted basis, after factoring in anticipated transaction expenses and cash at closing.

The March 4 acquisition accelerates Biogen’s entry into the ophthalmology space, moving the big biotech beyond its key areas of neurological, rare and autoimmune diseases. Nightstar is developing adeno-associated virus (AAV) treatments for inherited retinal disorders. Its lead program is Phase III gene therapy NSR-REP1 for choroideremia and designed to produce the REP1 protein inside the eye. Data from the trial is expected in the second half of 2020.

Biogen also gains Phase I/II NSR-RPGR for X-linked retinitis pigmentosa. This candidate potentially can slow down or even halt retinal degeneration of photoreceptors and restore vision. NSR-REP1 and NSR-RPGR are both comprised of an AAV vector administered by subretinal injection.

Nightstar’s pipeline also includes preclinical assets for Stargardt's disease, Best disease and retinitis pigmentosa. The acquisition comes just three months after Biogen pulled the plug on a mid-2015 deal with Applied Genetic Technologies Corp. following a failed Phase I/II trial of AGT’s X-linked retinoschisis (XLRS) gene therapy program. [See Deal]

MaxCyte, Kite Expand CAR-T Research Pact

MaxCyte Inc. has expanded its relationship with Gilead Sciences Inc.’s CAR-T subsidiary Kite Pharma Inc. by inking a multi-drug clinical and commercial agreement. Under the deal terms, Kite will use MaxCyte’s Flow Electroporation Technology to enable non-viral cell engineering for development of multiple CAR-T drug candidates for up to 10 targets.

“We’re excited to take our relationship with Kite further into product development, providing the company the ability to leverage MaxCyte’s versatile cell engineering platform to enable the power of gene-editing for clinical and commercial development of critical new CAR-T therapeutics,” Doug Doerfler, MaxCyte CEO, said when the deal was announced March 1.

The expansion of the Kite-MaxCyte relationship builds on an existing research agreement announced in November 2018. (Also see "Deal Watch: Boehringer, Epizyme Team Up To Develop Epigenetic Cancer Therapies" - Scrip, 21 Nov, 2018.) Under the terms of the new agreement, Kite obtains non-exclusive clinical and commercial-use rights to the Gaithersburg, Md.-based firm’s cell-engineering platform to develop CAR-T therapies, and MaxCyte will receive development and approval milestones and sales-based payments in addition to other licensing fees.

MolMed, Genenta Extend Gene Therapy Deal

After three years of developing and validating the analytical manufacturing methods for Genenta’s gene therapy candidate Temferon, MolMed SPA and Genenta announced March 7 that they have renewed and expanded their collaboration.

MolMed will now be the exclusive supplier of Temferon for clinical trials. Temferon consists of autologous CD34+-TEM (Tie2 expressing monocytes) enriched hematopoietic stem and progenitor cells (HSPCs) transduced with a lentiviral vector encoding the human interferon-alfa2 gene. Genenta plans to begin Phase I/II trials in early relapsed multiple myeloma and glioblastoma multiforme imminently.

While MolMed conducts GMP (good manufacturing practice) development and manufacturing activities for third parties, it is also developing its own anticancer therapies using cell/gene engineering and peptide-targeted technology. The European Medicines Agency granted one of its cell therapy products, Zalmoxis, conditional marketing authorization in 2016, and it obtained reimbursement agreements in Italy and Germany in late 2017 and early 2018, respectively. (Also see "Pharma Showing More Interest In Conditional Approvals; Back On EU Expert Group Agenda" - Pink Sheet, 14 Mar, 2017.) Zalmoxis genetically engineers partially matched donor T-cells to enable bone marrow transplants with high-risk hematological cancers without post-transplant immunosuppression prophylaxis.

Both MolMed and Genenta are based in Milan, Italy.

Start-Up Anthos Licenses Novartis’ Antithrombotic Candidate

Recently launched Anthos Therapeutics Inc. in-licensed on Feb. 26 Novartis AG's MAA868, an antibody directed at clotting protein Factors XI and XIa.

In Phase II, MAA868 has shown promise as a once-monthly subcutaneous antithrombotic, inhibiting Factor XI and demonstrating long-lasting anticoagulant activity with minimal or no bleeding risk. Novartis originally developed the compound (which it later shelved for unknown reasons) under 2004 and 2007 partnerships with MorphoSys AG (using that company's HuCAL human antibody technology). [See Deal]

Although specific financial details of the present transaction weren't disclosed, Novartis gets a minority equity interest in Anthos, which concurrently raised $250m through a Series A round from Blackstone Life Sciences and will likely put the proceeds of the financing toward further development of MAA868. [See Deal] Anthos plans to focus on conditions manifested by thrombosis, potentially including ischemic heart disease and stroke, atrial fibrillation, peripheral artery disease, venous and systemic arterial thromboembolism and other orphan diseases.

Danaher Acquires GE Life Sciences’ Biopharma Unit For $21.4bn

Danaher Corp. agreed to acquire the biopharma business (instruments, consumables and software supporting research, discovery, process development and manufacturing workflows of biopharmaceutical drugs, vaccines and cell therapies) of GE Healthcare's GE Healthcare Life Sciences division for $21.4bn ($21bn in cash and $400m for the assumption of pension liabilities), or about 17 times the biopharma unit's expected 2019 earnings before interest, tax, depreciation and amortization (EBITDA).

The transaction is projected to close during the fourth quarter of 2019 and Danaher expects to realize a cost savings of $100m-plus by year three. The divested biopharma business line – which posted 2018 revenues of $3bn, around 15% of GE Healthcare's total revenue, and is expected to generate $3.2bn in revenue this year – mostly includes process chromatography hardware and consumables, cell culture media, single-use technologies, development instrumentation and consumables and services. The second business line of the Life Sciences segment, the pharmaceutical diagnostics business, consisting of contrast media, molecular imaging agents and related consumables, is excluded from the deal and will remain under the GE Healthcare umbrella.

Danaher will fund the purchase through a combination of concurrent public offerings of an totaling $2.7bn ($1.35bn in common stock and $1.35bn in Series A mandatory convertible preferred stock), as well as cash (as of Dec. 31, 2018, it had $788m in cash on hand), and the issuance of new debt and/or credit facilities.

Sunstar Suisse Buys GelX Brand From BMG Pharma

Sunstar Suisse SA purchased the GelX supportive cancer care product on Feb. 25 from BMG Pharma SPA. GelX is a zinc gluconate and taurine gel, designed based on BMG’s proprietary delivery technology which uses a mineral salt- and sulfonic acid-based polymer to coat the oral mucosa and soothe and protect against the effects of oral mucositis.

Sunstar will commercialize the product globally, enhancing the company’s offerings in the dental and oral health market. BMG will use the proceeds from the sale to support continued development of new topical, subcutaneous dermatology, osteoarthritis and oral care products.

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

(Also see "Mehta Analysis: BMS/Celgene Merger Shows Big Pharma Is Stuck In Wrong Groove " - Scrip, 8 Mar, 2019.)	Bristol-Myers Squibb Co. executives are justifying the acquisition of Celgene Corp. in terms that have been well-rehearsed through the history of big pharma mergers. But they are failing to consider radical changes to the environment in which pharma operates, argues Viren Mehta of Mehta Partners LLC.
(Also see "Shionogi Builds Digital Therapeutics Presence Through Akili Alliance " - Scrip, 7 Mar, 2019.)	Shionogi & Co. Ltd. has become the latest Japanese company to build its presence in the digital health realm, this time through an alliance with Akili Interactive Labs Inc. for two novel digital therapeutics.
(Also see "Pro Vs. Con: A Side-By-Side Look At Investor Concerns, Bristol's Defenses Of Celgene Deal" - Scrip, 6 Mar, 2019.)	Activist investors continue to question the value of Bristol-Myers Squibb’s acquisition of Celgene ahead of an April 12 shareholder vote on the deal, but Bristol released a new overview of the transaction to rebut arguments against it.
(Also see "Numab's Pipeline To Benefit From Intarcia Licensing Its ND016 " - Scrip, 6 Mar, 2019.)	Privately held Swiss immunology and immuno-oncology specialist Numab AG has licensed its tri-specific antibody ND016 to Boston-based Intarcia Therapeutics Inc., and will use the proceeds to advance its own drug pipeline, its co-founder tells Scrip.
(Also see "Celgene/Bristol: Happy Union Or Runaway Bride?" - Scrip, 28 Feb, 2019.)	Wellington, the largest institutional shareholder in Bristol, and activist firm Starboard both have publicly opposed the Bristol/Celgene merger but the strong crossover of investors in both biopharmas suggests the deal will still obtain approval.