M&A

Allergan’s executive team orchestrates a $200M buyout to beef up gastroenterology pipeline

 

saundersfixed

Allergan CEO Brent Saunders has bagged the latest in a long string of new biotech buyouts. The target this time: a diabetic gastroparesis drug called relamorelin (RM-131), which just cleared a Phase IIb study and will now head straight into a pivotal trial. And they’re jumping into a field that hasn’t seen a new drug approved in more than 30 years.

Allergan $AGN is paying $200 million to complete the deal, acquiring a subsidiary of Rhythm Holding called Motus, which owns the rights to the ghrelin agonist. That comes on top of the $47 million that Allergan handed over for the option on the drug and trial support. There’s also an added bonus payment due if and when the drug achieves its first commercial sales.

Allergan's Bill Meury

Allergan’s Bill Meury

The deal falls right into Allergan’s sweet spot. It’s a late-stage drug with a clear set of advanced data that can be added to the late stage pipeline and hustled through a Phase III over the next 1.5 to 2 years. And the company team has high hopes that this can be a blockbuster addition to the company — though some analysts were put off by a spike in the placebo response.

“This is going to be a flagship for us in gastroenterology,” Allergan commercial chief Bill Meury tells me, “in what could be a multibillion dollar drug market.”

Allergan has been the busiest buyer in biotech from the day that its planned merger with Pfizer formally fell through earlier this year. And there are plenty of more acquisitions coming.

“I think it’s a way of business for us,” Saunders says.

Saunders still feels that despite a whirlwind of new deals Allergan’s R&D strategy is still often misunderstood. Maybe relamorelin will help clarify things.

Saunders says he isn’t looking for any other me-too drugs in the clinic. His BD team is focused on offering big improvements to health for patients who aren’t well served by the drugs already available for their diseases. That’s what drives the company in NASH — where it paid a big premium for Tobira — and it’s the motive behind the new buyout today. The company does look to make incremental gains with its existing portfolio of approved therapies. And they are always on the lookout for marketed drugs that can fit into the portfolio as “growth assets.”

And as Saunders said to great effect in a recent price manifesto, Allergan isn’t expecting to achieve that growth through big price increases every year.

David Nicholson, Allergan

David Nicholson, Allergan

In this case, says R&D chief David Nicholson, there hasn’t been a significant new drug approved for gastroparesis since 1983.

The Phase IIb study for relamorelin demonstrated its ability to reduce vomiting by 70% to 75% for all three doses tested in the targeted population of diabetics. And that data backs up what investigators reported in the Phase IIa, adding to their confidence that the Phase III can back up that primary endpoint. There was, though, “a big placebo effect, and we’re looking at that.”

That placebo effect gave several analysts pause on Thursday morning.

“My read is that primary endpoint (vomiting episodes) isn’t stat sig over placebo (which is surprising considering press release notes 75% reduction in vomiting frequency in active arm),” writes Umer Raffat. “It does, however, appear that Allergan may have seen activity on a secondary endpoint of composite gastroparesis symptoms.”

The full data set will be reviewed at a scientific conference sometime in 2017.

 


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