Just a year after ex-Allergan president Doug Ingram took the helm of a low-profile biotech named Chase Pharmaceuticals and helped steer an experimental therapy for Alzheimer’s through a successful, though small, Phase II study, he’s arranged a sale of the company to Brent Saunders and the new team running Allergan.
Allergan CEO Saunders agreed to hand over $125 million in a cash upfront to acquire Irvine, CA-based Chase, and a spokesperson for the company says milestones bring the total value of the deal up to a potential $1 billion.
Allergan gets a small pipeline, but the deal is being driven by its desire for CPC-201. While a number of new drugs in the Alzheimer’s sector are trying to bend the curve on disease progression, CPC-201 has a much more modest goal in mind. The drug is designed to allow patients to heighten their dose of donepezil, which is used to help control symptoms of the memory-wasting ailment.
The deal also spotlights Allergan’s hunger for new drugs it can push into late-stage testing. It’s acquired a growing lineup of biotechs in the months since its merger with Pfizer fell through. And Saunders has made it clear to me that this kind of steady flow of acquisitions is a part of Allergan’s business model now.
The deal marks a significant success for Chase’s investors, which have backed the biotech with $24 million. The cash upfront is worth more than 5X, and there’s much, much more on the table if the Phase III works.
Ingram took over as CEO of Chase last fall, just months after Saunders stepped in to merge the company into Actavis, keeping the Allergan name in that buyout. Ingram stepped out of his role at Allergan at the time, though he agreed to help as an adviser.
In Phase II, 29 out of 33 patients were able to tolerate a 40 mg maximum dose of the drug without triggering serious side effects. If that plays out in a much larger late-stage trial, Allergan believes it will have a much-needed therapy that can be added to the very limited pharmacopeia that exists currently in Alzheimer’s.
Bernstein analysts gave the deal a quick thumbs up. They wrote:
Our view: assuming the data affirms the news, this is certainly an intriguing product and well worth the $125M spent on the acquisition. A decade ago, this could have been a multi-billion blockbuster drug. Now, it seems more dependent on how good the amyloid beta based drugs will be. Still, we expect that for patients who are candidates for Aricept, this could be an improvement. Further, given AGN existing commercial infrastructure, the return on investment could be high.
“We believe our lead candidate, CPC-201, will offer a significant improvement over existing therapy in the symptomatic treatment of Alzheimer’s disease, and will benefit all those suffering from this disease,” said Thomas Chase, co-founder and Chief Scientific Officer of Chase Pharmaceuticals.
— Brent Saunders (@brentlsaunders) November 22, 2016
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