Calliditas bets up to $102M on a biotech buyout, snagging a once-failed PBC drug
After spending years developing its oral formulation of the corticosteroid budesonide, Sweden’s Calliditas now has its sights set on the primary biliary cholangitis field.
The company will buy out France-based Genkyotex, and it’s willing to bet up to €87 million ($102 million) that Genkyotex’s failed Phase II drug, GKT831, will do better in late-stage trials.
Under the current agreement, Calliditas $CALT will initially pay €20.3 million in cash for 62.7% of Genkyotex (or €2.80 a piece for 7,236,515 shares) in early October, then circle back for the rest of Genkyotex’s shares under the same terms. If nothing changes, the whole buyout will cost Calliditas €32.3 million, plus up to €55 million in contingent rights.
“We believe this transaction represents an exciting expansion of our pipeline in orphan diseases related to inflammation and fibrosis,” Calliditas CEO Renée Aguiar-Lucander said in a prepared statement. “We believe Genkyotex’s novel NOX inhibition technology may have broad clinical utility not just in PBC, but as a platform therapy with the potential to target other fibrotic indications, including Primary Sclerosing Cholangitis (PSC), selected kidney diseases and Idiopathic Pulmonary Fibrosis (IPF), in which an investigator led Phase 2 trial is expected to start recruitment later this year.”
Last year, Genkyotex set out to measure gamma glutamyl transpeptidase reduction in a Phase II trial for PBC. Researchers noted a 19% reduction in GGT, but deemed it statistically insignificant after 24 weeks. GKT831 (setanaxib) did, however, meet secondary endpoints. The drug led to a reduction in alkaline phosphatase, and a 22% reduction in liver stiffness for a subgroup of patients who had more severe fibrosis, compared to a 4% increase in placebo.
At the time, Genkyotex CEO Elias Papatheodorou said the results were good enough to advance GSK831 into late-stage trials for PBC and other fibrotic liver diseases. Now Calliditas will seek to prove Papatheodorou right. It plans to push GSK831 into late-stage development for PBC, and also begin a Phase II trial for Idiopathic Pulmonary Fibrosis later this year.
If the drug wins certain regulatory approvals or marketing authorizations within 10 years of the buyout, block sellers and Genkyotex shareholders stand to pocket up to €55M, including:
- €30M on FDA approval for a first indication
- €15M on EC approval for a first indication
- €10M on FDA or EC approval for either IPF or type 1 diabetes (unless the milestone was already paid out for such indication by the FDA or the EC)
“We look forward to leveraging our strong late stage clinical team, CMC and regulatory expertise as well as our learnings from our Phase 3 Nefecon program to navigate and execute an efficient path forward for setanaxib. We continue to deliver on our strategy focusing on adding late stage assets with an orphan focus and encouraging data in patients to build a company focused on delivering solution for patients with diseases with high unmet needs,” Aguiar-Lucander added later.