Are­na bounces back. Stock soars on ozan­i­mod ri­val's PhII suc­cess

Its di­et pill was a com­mer­cial flop that al­most sent Are­na to the grave. Now — with its sec­ond pipeline drug re­port­ing pos­i­tive mid-stage da­ta — Are­na is mak­ing a come­back.

Af­ter a rocky few years that in­clud­ed mas­sive lay­offs, com­pa­ny­wide re­struc­tur­ing, and an oblit­er­at­ed stock, Are­na now has a fresh pipeline with two drugs that have pro­duced sol­id Phase II da­ta. The San Diego com­pa­ny’s stock $AR­NA, once in the gut­ter, has more than dou­bled since this time last year.

Amit Mun­shi

The stock price flew up 25% overnight fol­low­ing news late Mon­day that its ul­cer­a­tive col­i­tis drug etrasi­mod proved promis­ing in a Phase II study. The once-dai­ly oral drug is a S1P re­cep­tor mod­u­la­tor that works much like the block­buster hope­ful ozan­i­mod. That drug was the sub­ject of Cel­gene’s $7.2 bil­lion buy­out of an­oth­er San Diego com­pa­ny, Re­cep­tos, and has been tout­ed as $1 bil­lion-plus per year as­set. Its fu­ture, how­ev­er, is un­clear af­ter the FDA kicked back Cel­gene’s mar­ket­ing ap­pli­ca­tion just last month.

In a lengthy con­ver­sa­tion last year, Are­na’s CEO Amit Mun­shi told me its drug etrasi­mod was like ozano­mid… but bet­ter. “We be­lieve it’s safer and po­ten­tial­ly more ef­fi­ca­cious (than ozan­i­mod),” Mun­shi said.

In the re­cent Phase II study, Are­na re­port­ed pa­tients on the 2-mg dose of the drug had sta­tis­ti­cal­ly sig­nif­i­cant im­prove­ments over the place­bo in all pri­ma­ry, sec­ondary, and clin­i­cal re­mis­sion end­points.

Some in­vestors, how­ev­er, wor­ry the FDA’s re­cent re­ac­tion to ozan­i­mod might sig­nal safe­ty is­sues and a po­ten­tial class ef­fect that would cast a shad­ow on etrasi­mod. Biotech an­a­lysts at Leerink, though, see no rea­son to jump to that con­clu­sion.

We don’t think this is the case, or else they would have re­port­ed it by now, giv­en its ma­te­ri­al­i­ty. Man­age­ment has pre­vi­ous­ly spo­ken of S1P re­cep­tors 2 and 3 con­tribut­ing to car­diac, pul­monary, and pos­si­ble tu­mor-re­lat­ed risks. As a re­sult, ac­tiv­i­ty of S1P re­cep­tor mod­u­la­tors will man­i­fest un­want­ed car­diac AEs un­less the com­pound has se­lec­tiv­i­ty. Etrasi­mod has been de­signed to se­lec­tive­ly tar­get re­cep­tors 1, 4, and 5 for clin­i­cal ef­fi­ca­cy while avoid­ing 2 and 3. Sup­port­ing this claim, Are­na did not see any sub­stan­tial heart rate ef­fects in their Phase I study, which is re­flect­ed in the lack of dose titra­tion in the cur­rent Phase II study. Thus, al­though some in­vestors in­ter­pret the re­cent refuse-to-file let­ter for Ozan­i­mod to be due to safe­ty and a po­ten­tial class ef­fect, we con­tin­ue to think etrasi­mod could be dif­fer­en­ti­at­ed.

Pre­ston Klassen

Are­na is mov­ing the drug for­ward, not­ing that it would pur­sue new im­mune-re­lat­ed ap­pli­ca­tions for etrasi­mod, da­ta per­mit­ting. That means Are­na’s pipeline, once a one-trick pony with the com­mer­cial flop Belviq on cen­ter stage, is be­com­ing more ro­bust. In ad­di­tion to etrasi­mod, Are­na has a pul­monary ar­te­r­i­al hy­per­ten­sion drug, ra­linepag, which put up pos­i­tive Phase II da­ta last Ju­ly. The biotech plans to take that pro­gram in­to Phase III tri­als. The com­pa­ny al­so has a mid-stage cannabi­noid 2 re­cep­tor pain drug, APD3771, for pain as­so­ci­at­ed with Crohn’s dis­ease.

“We be­lieve these da­ta sup­port pro­ceed­ing to a Phase II pro­gram in ul­cer­a­tive col­i­tis and con­tin­u­ing ef­forts to un­der­stand the broad po­ten­tial util­i­ty of etrasi­mod in oth­er im­mune and in­flam­ma­to­ry dis­eases with sig­nif­i­cant un­met needs,” said Pre­ston Klassen, Are­na’s ex­ec­u­tive vice pres­i­dent of R&D and chief med­ical of­fi­cer. “Along with the pos­i­tive Phase II re­sults for ra­linepag re­port­ed last year, this im­por­tant mile­stone for the com­pa­ny fur­ther am­pli­fies our con­vic­tion in Are­na’s in­ter­nal­ly dis­cov­ered and de­vel­oped com­pounds and their po­ten­tial to be best-in-class.”

Brent Saunders [Getty Photos]

UP­DAT­ED: Ab­b­Vie seals $63B deal to buy a trou­bled Al­ler­gan — spelling out $1B in R&D cuts

Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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Two biotech uni­corns swell pro­posed IPOs, eye­ing a $600M-plus wind­fall

We’ve been wait­ing for the ar­rival of Bridge­Bio’s IPO to top off the wave of new biotech of­fer­ings sweep­ing through Nas­daq at the end of H1. And now we learn that it’s been sub­stan­tial­ly up­sized.

Ini­tial­ly pen­ciled in at a uni­corn-sized $225 mil­lion, the KKR-backed biotech has spiked that to the neigh­bor­hood of $300 mil­lion, look­ing to sell 20 mil­lion shares at $14 to $16 each. That’s an added 5 mil­lion shares, re­ports Re­nais­sance Cap­i­tal, which fig­ures the pro­posed mar­ket val­u­a­tion for Neil Ku­mar’s com­pa­ny at $1.8 bil­lion.

No­var­tis holds back the copy­cat brigade's at­tack on its top drug fran­chise — for now

A fed­er­al judge has put a gener­ic chal­lenge to No­var­tis’ block­buster mul­ti­ple scle­ro­sis drug Gilenya on hold while a patent fight plays out in court.

Judge Leonard P. Stark is­sued a tem­po­rary in­junc­tion ear­li­er this week, forc­ing My­lan, Dr. Red­dy’s Lab­o­ra­to­ries and Au­robindo Phar­ma to shelve their launch plans to al­low the patent fight to pro­ceed. He ruled that al­low­ing the gener­ics in­to the mar­ket now would per­ma­nent­ly slash the price for No­var­tis, even if it pre­vails. 

Af­ter rais­ing $158M, this up­start's founders have star back­ers and plans to break new ground in gene ther­a­py

Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

Sanofi/Re­gen­eron mus­cle ahead of a ri­val No­var­tis/Roche team, win first ap­proval in key rhi­nos­i­nusi­tis field

Re­gen­eron and their part­ners at Sanofi have beat the No­var­tis/Roche team to the punch on an­oth­er key in­di­ca­tion for their block­buster an­ti-in­flam­ma­to­ry drug Dupix­ent. The drug team scored an ac­cel­er­at­ed FDA ap­proval for chron­ic rhi­nos­i­nusi­tis with nasal polyps, mak­ing this the first such NDA for the field.

An­a­lysts have been watch­ing this race for awhile now, as Sanofi/Re­gen­eron won a snap pri­or­i­ty re­view for what is now their third dis­ease in­di­ca­tion for this treat­ment. And they’re not near­ly done, build­ing up hopes for a ma­jor fran­chise.

FDA re­jects Ac­er's rare dis­ease drug, asks for new tri­al — shares crater

Ac­er Ther­a­peu­tics’ bid to re­pur­pose celipro­lol — a be­ta-block­er on the mar­ket for hy­per­ten­sion — as a treat­ment for a rare, in­her­it­ed con­nec­tive tis­sue dis­or­der has hit a se­vere set­back. The New­ton, Mass­a­chu­setts-based com­pa­ny on Tues­day said the FDA re­ject­ed the drug and has asked for an­oth­er clin­i­cal tri­al.

The com­pa­ny’s shares $AC­ER cratered near­ly 77% to $4.47 in Tues­day morn­ing trad­ing.

Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

Ab­b­Vie's $63B buy­out spot­lights the re­turn of ma­jor M&A deals — de­spite the back­lash

Big time M&A is back. But for how long?

Over the past 18 months we’ve now seen three major buyouts announced: Takeda/Shire; Bristol-Myers/Celgene and now AbbVie/Allergan. And with this latest deal it’s increasingly clear that the sharp fall from grace suffered by high-profile players which have seen their share prices blasted has created an opening for the growth players in big pharma to up their game — in sharp contrast to the popular bolt-on deals that have been driving the growth strategy at Novartis, Merck, Roche and others.

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Top an­a­lyst finds a sil­ver lin­ing in Ab­b­Vie’s $63B Al­ler­gan buy­out — but there’s a catch

Af­ter get­ting beat up on all sides from mar­ket ob­servers who don’t much care for the lat­est mega-deal to ar­rive in bio­phar­ma, at least one promi­nent an­a­lyst now is start­ing to like what he sees in the num­bers for Ab­b­Vie/Al­ler­gan.

But it’s go­ing to take some en­cour­age­ment if Ab­b­Vie ex­ecs want it to last.

Ab­b­Vie’s mar­ket cap de­clined $20 bil­lion on Tues­day as the stock took a 17% hit dur­ing the day. And SVB Leerink’s Ge­of­frey Porges can see a dis­tinct out­line of an up­side af­ter re­view­ing the fun­da­men­tals of the deal.

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