Fresh from $94.5M crossover round, Fra­zier-groomed der­ma­tol­ogy biotech shoots for $100M IPO

Back in Oc­to­ber, when Fra­zier Health­care Part­ners took the wraps off their lat­est der­ma­tol­ogy play, few had heard of Ar­cutis Ther­a­peu­tics. But ex­ecs are quick­ly chang­ing that, fol­low­ing up a $94.5 mil­lion Se­ries C crossover round with a pitch for $100 mil­lion in IPO cash.

Frank Watan­abe

It is per­haps fit­ting for Ar­cutis to claim the sec­ond S-1 fil­ing of the decade. The biotech isn’t do­ing any­thing ground­break­ing, per se; rather, the idea is to de­liv­er top­i­cal for­mu­la­tions of known drugs — from well-es­tab­lished drug class­es — there­by plug­ging a gap be­tween in­ef­fec­tive top­i­cal treat­ments and ex­pen­sive in­jecta­bles.

By the time they ap­pear on the Nas­daq as $AR­QT, the hope is that their twin Phase III tri­als in plaque pso­ri­a­sis for the lead drug will be well un­der­way.

The four drug can­di­dates, span­ning sev­en clin­i­cal pro­grams, in Ar­cutis’ pipeline stem from two com­pounds it has in-li­censed. The ac­tive in­gre­di­ent in both ARQ-151 cream and ARQ-154 foam is rof­lu­mi­last, a PDE4 in­hibitor that As­traZeneca mar­kets for chron­ic ob­struc­tive pul­monary dis­ease in oral form. Hen­grui pro­vid­ed the JAK1 in­hibitor that Ar­cutis is turn­ing in­to ARQ-252 (cream) and ARQ-255 (sus­pen­sion).

Ar­cutis got rights to rof­lu­mi­last on the cheap, the fil­ing re­vealed: up­front of $1 mil­lion and $3 mil­lion in Se­ries B stock. Clin­i­cal, reg­u­la­to­ry and sales mile­stones add up to less than $30 mil­lion, $2 mil­lion of which has been paid. The Hen­grui JAK1 in­hibitor (orig­i­nal­ly dubbed SHR0302) cost Ar­cutis $1.9 mil­lion to­tal up­front, with over $220 mil­lion in mile­stones tagged to a deal that cov­ers the US, Cana­da, Japan and the EU.

John Smither

In ad­di­tion to tar­get­ing pso­ri­a­sis and atopic der­mati­tis with ARQ-151 and se­b­or­rhe­ic der­mati­tis and scalp pso­ri­a­sis with ARQ-154, Ar­cutis has al­so en­list­ed Hawk­eye Ther­a­peu­tics to de­vel­op more ap­pli­ca­tions of rof­lu­mi­last. As part of the deal, it pur­chased around 20% of its part­ners’ shares at the time.

Giv­en the mass-mar­ket in­di­ca­tions that they are eye­ing — which al­so in­clude hand eczema, vi­tili­go and alope­cia area­ta — Ar­cutis is keen­ly aware of block­buster, gener­ic and ex­per­i­men­tal ri­vals, from Hu­mi­ra and Ote­zla to Clobex and cor­ti­cos­teroids. But it still be­lieves it can carve out a niche, par­tic­u­lar­ly in pa­tients with mild to mod­er­ate dis­eases.

“The bi­o­log­ics ac­count for some­thing like 80% of the to­tal mar­ket size of pso­ri­a­sis but it’s on­ly some­thing like 6% of the pa­tients,” CFO John Smither pre­vi­ous­ly told End­points News. “We’re try­ing to solve a dif­fer­ent thing by ac­tu­al­ly treat­ing more pa­tients at a more cost-ef­fec­tive price” — a sweet spot where pa­tients won’t need physi­cian ap­proval to get re­im­burse­ment.

Bhaskar Chaud­huri

Smither owns 1.1% of the stock, while CEO Frank Watan­abe — an Am­gen vet in­volved in the mar­ket­ing of En­brel — holds 4.1%. Watan­abe’s com­pen­sa­tion pack­age for 2019 came in at $970,546.

But Fra­zier, led by Bhaskar Chaud­huri, re­mains the largest share­hold­er, hav­ing start­ed the com­pa­ny around three years ago, at 36.9%. Bain Cap­i­tal and Or­biMed, which were brought in dur­ing Se­ries B, claim 13.5% and 15.1%, re­spec­tive­ly.

2019 Trin­i­ty Drug In­dex Eval­u­ates Ac­tu­al Com­mer­cial Per­for­mance of Nov­el Drugs Ap­proved in 2016

Fewer Approvals, but Neurology Rivals Oncology and Sees Major Innovations

This report, the fourth in our Trinity Drug Index series, outlines key themes and emerging trends in the industry as we progress towards a new world of targeted and innovative products. It provides a comprehensive evaluation of the performance of novel drugs approved by the FDA in 2016, scoring each on its commercial performance, therapeutic value, and R&D investment (Table 1: Drug ranking – Ratings on a 1-5 scale).

UP­DAT­ED: FDA’s golodirsen CRL: Sarep­ta’s Duchenne drugs are dan­ger­ous to pa­tients, of­fer­ing on­ly a small ben­e­fit. And where's that con­fir­ma­to­ry tri­al?

Back last summer, Sarepta CEO Doug Ingram told Duchenne MD families and investors that the FDA’s shock rejection of their second Duchenne MD drug golodirsen was due to some concerns regulators raised about the risk of infection and the possibility of kidney toxicity. But when pressed to release the letter for all to see, he declined, according to a report from BioPharmaDive, saying that kind of move “might not look like we’re being as respectful as we’d like to be.”

He went on to assure everyone that he hadn’t misrepresented the CRL.

But Ingram’s public remarks didn’t include everything in the letter, which — following the FDA’s surprise about-face and unexplained approval — has now been posted on the FDA’s website and broadly circulated on Twitter early Wednesday.

The CRL raises plenty of fresh questions about why the FDA abruptly decided to reverse itself and hand out an OK for a drug a senior regulator at the FDA believed — 5 months ago, when he wrote the letter — is dangerous to patients. It also puts the spotlight back on Sarepta $SRPT, which failed to launch a confirmatory study of eteplirsen, which was only approved after a heated internal controversy at the FDA. Ellis Unger, director of CDER’s Office of Drug Evaluation I, notes that study could have clarified quite a lot about the benefit and risks associated with their drugs — which can cost as much as a million dollars per patient per year, depending on weight.

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How to cap­i­talise on a lean launch

For start-up biotechnology companies and resource stretched pharmaceutical organisations, launching a novel product can be challenging. Lean teams can make setting a launch strategy and achieving your commercial goals seem like a colossal undertaking, but can these barriers be transformed into opportunities that work to your brand’s advantage?
We spoke to Managing Consultant Frances Hendry to find out how Blue Latitude Health partnered with a fledgling subsidiary of a pharmaceutical organisation to launch an innovative product in a
complex market.
What does the launch environment look like for this product?
FH: We started working on the product at Phase II and now we’re going into Phase III trials. There is a significant unmet need in this disease area, and everyone is excited about the launch. However, the organisation is still evolving and the team is quite small – naturally this causes a little turbulence.

Wuhan virus out­break trig­gers in­evitable small-biotech ral­ly

Every few years, a public health crisis (think Ebola, Zika) spurred by a rogue pathogen triggers a small-biotech rally, as drugmakers emerge from the woodwork with ambitious plans to treat the mounting outbreak. In most cases, that enthusiasm never quite delivers.

Things are no different, as the coronavirus outbreak in Wuhan, China takes hold. There have been close to 300 confirmed human infections in China, and at least four deaths. Coronaviruses are a large family of viruses, which include MERS and SARS. On Tuesday, the CDC reported the virus was detected in a US traveler returning from Wuhan.

Brex­it fears, Wood­ford woes over­shad­owed UK biotech and cut 2019 fi­nanc­ing by al­most half

The venture tide might have subsided, the IPO window may be closing and certain listed biotechs may be having a tough time amid Neil Woodford’s well-publicized demised, but there’s still plenty to celebrate in the UK BioIndustry Association’s eyes.

Overall investment in UK biotech last year fell from the record-breaking £2.2 billion levels of 2018 to £1.3 billion — including £679 million in venture capital, a meager £64 million in IPOs plus £596 million when you add up all public financings, according to a new report from the BIA.

Blue­print Med­i­cines po­ten­tial­ly de­lays Ay­vak­it de­ci­sion; Con­trol beats treat­ment in mesothe­lioma tri­al

→ Blueprint Medicines filed an amendment to its application to get the gastrointestinal stromal tumor (GIST) drug Ayvakit approved in fourth-line GIST, the company disclosed in the prospectus for a new $325 million public offering.  Blueprint got a big accelerated OK on the drug this month in a particular mutation, but because the FDA decided to split their review in two, they didn’t hear on fourth-line GIST. They were supposed to hear before February 14, but this amendment could push that date back by 3 months. Blueprint wrote that the amendment is designed to allow the company to comply with the FDA’s request for data from the Phase III Voyage trial before they give a judgment.

Io­n­is, Akcea boost­ed by a pos­i­tive PhII for their No­var­tis castoff car­dio drug — and they plan to push ahead in­to piv­otals

Late last year Novartis abandoned a cardio drug from Ionis’ spinoff Akcea just after the pharma giant snapped up inclisiran, going the RNAi way in guarding against heart disease in the $9.7 billion Medco buyout.

Now the pharma goliath — which is headed down the PCSK9 road with a drug it believes can be used in a mass population — can get a clearer picture of just what they gave up.

Akcea $AKCA and the mother company $IONS put out a statement early Wednesday saying that their Phase II study of AKCEA-APOCIII-LR delivered solid efficacy data, with the high dose clearly outperforming placebo in significantly reducing triglycerides as a means to cutting the risk of cardiovascular disease. In addition, investigators concluded that the drug slashed apoC-III, very low-density lipoprotein and remnant cholesterol while boosting “good” HDL levels.

Hal Barron and Emma Walmsley, GSK

GSK’s ‘break­through’ BC­MA can­cer drug gets a pri­or­i­ty re­view — and a big win for the on­col­o­gy R&D team

After largely whiffing the past 2 years on the pharma R&D front, GlaxoSmithKline research chief Hal Barron has seized boasting rights to a key win that puts them back in the cancer drug development game.

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Who are the young bio­phar­ma lead­ers shap­ing the in­dus­try? Nom­i­nate them for End­points' spe­cial re­port

Update: Nominations open through end of day, Monday, January 27

Two years ago, when we did our first Endpoints 20-under-40, we profiled a set of up-and-comers who promised to help reshape the industry as we know it. Now we’re back and once again looking for the top 20 biopharma professionals under the age of 40. We’ll be profiling folks who have accomplished a lot at a young age but seem on the verge of accomplishing so much more.