Neglected on Wall Street, little Stealth Bio finds an affluent chum with $30M in cash and high hopes for their PhIII drug
Stealth BioTherapeutics never had much luck at gaining the attention of Wall Street $MITO while struggling to advance its late-stage drug for mitochondrial disease. But it turns out Alexion was watching closely.
Thursday morning the bigger rare disease biotech agreed to front $30 million —half for stock — to pick out a ringside seat as Stealth makes its way through the final stages of a Phase III with elamipretide. The drug’s been touted as a potential first-in-class therapy, but investors never bought in, watching Stealth’s shares drift steadily lower after pricing the IPO at $12.
The deal gives Alexion an option on rights to “co-develop subcutaneous elamipretide in the US for PMM (genetically defined primary mitochondrial myopathy) and Barth syndrome, as well as Leber’s hereditary optic neuropathy, which is currently in earlier stage clinical development.” Alexion would be free to take the drug global on its own.
We’re not getting a read on the rest of the terms, which are excluded in their statement as well as SEC filings. But Stealth CEO Reenie McCarthy says that the deal offers a shot at “synergies of execution that will both expedite and increase patient access following achievement of key upcoming clinical and regulatory milestones for our PMM and Barth syndrome programs.”
The drug is a small peptide that binds to cardiolipin, described in the F-1 (Stealth operates in Newton, MA but is based in the Caymans) as “an essential structural element of mitochondria.” And the mitochondria are the powerhouses of human cells, essential to good health. The binding process, they say, stabilizes the structure of mitochondria while experiencing oxidative stress.
Stealth shares jumped more than 15% on Thursday morning, reflecting some modest enthusiasm for the deal.
“Mitochondria play a critical role in normal organ function and, when dysfunctional, can have devastating consequences on multiple organ systems, leading to many serious diseases, such as primary mitochondrial myopathy,” said John Orloff, the R&D chief at Alexion. “Given our strong existing relationships with neuromuscular specialists — who play a critical role in treating PMM — we believe this is an exciting potential opportunity to further expand our rare neurology portfolio and look forward to the possibility of working with Stealth to realize the promise of elamipretide for patients.”