Biotech M&A is back. Ipsen set to fork out up to $1.3B for rare disease specialist Clementia

Merger Monday is back in full swing. Along with Roche buying Spark Therapeutics $ONCE, Parisian biotech Ipsen (Euronext: $IPN) is beefing up its rare disease arsenal by acquiring Canada’s Clementia Pharmaceuticals, less than two years after the Montreal-based drug developer’s $120 million IPO.

Under the terms of the deal, Ipsen will pay $25 per Clementia share — a roughly 68% premium to its Friday close — for a total of $1.04 billion, in addition to another $6/share if Clementia’s lead experimental drug, palovarotene, can be used to treat a rare bone disease called multiple osteochondromas (MO), which could translate to another $263 million.

Clementia’s shares $CMTA skyrocketed 73.5% in premarket trading.

Palovarotene has been repurposed by Clementia for a pair of rare diseases, after Roche failed to show the retinoic acid receptor gamma (RARγ) selective agonist could work against emphysema, a form of chronic obstructive pulmonary disease (COPD).

The Swiss drugmaker had plans to shelve the drug, but researchers underscored the potential of the class of drugs in preventing bone formation and fibrosis (retinoic acid signaling is believed to play a role in muscle cell generation). Clementia took the drug off Roche’s shelf, for two bone disorders: fibrodysplasia ossificans progressiva (FOP) and MO.

A marketing application for the drug to treat episodic flare-ups associated with FOP is expected to be submitted to the FDA in the second half of this year — and if approved the drug is set for launch mid-2020. For the FOP indication, the FDA has laid out a red carpet for the drug, with orphan drug designation, breakthrough therapy status, fast track status and rare pediatric disease designation, so the odds are in its favor for an accelerated review, if the NDA is accepted.

In an initiation note published last month Baird analysts cheered the potential of the drug: “(With) striking efficacy and a potential accelerated NDA filing in an ultra-rare condition, we have conviction that palo can dominate the FOP therapeutic landscape.”

A Phase III study testing the treatment as a chronic dosing regimen for FOP, a Phase II trial for MO, and a Phase I trial for dry eye disease are also ongoing.

In a note on Monday, Leerink’s Joseph Schwartz said the ongoing phase III study testing palovarotene in FOP patients could further demonstrate and supplement its efficacy in the patient population, estimating peak sales of more than $400 million for the indication by 2030.

Schwartz expects interim data from ongoing MO study in pediatric patients by the end of next year, and topline data by 2021. On the basis of a “significantly higher projected prevalence of MO”, he forecast peak sales of over $1 billion by 2030.

The deal is expected to be consummated in the second quarter, and will have a limited dilutive impact on Ipsen’s core operating margin for 2019 and 2020, the company said on Monday.

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Recursion Pharmaceuticals Salt Lake City, UT
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Atlas Venture Cambridge, MA

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