After a tumultuous year marked by a vicious short attack, a yanked stock offering and encouraging early data on its cystic fibrosis (CF) doublet, tiny biotech Proteostasis Therapeutics has won the endorsement of mighty Roche, which has seized the rights to potential small molecule modulators with undisclosed targets from the embattled company.
Under the deal — which does not include the controversial company’s CFTR modulators and its drugs-in-development or research programs in CF — Proteostasis is eligible to receive upfront and milestone payments of over $100 million. The Swiss drugmaker $RHBBY is now in charge of all R&D expenses for the program, and if any approved products emerge from the deal, Proteostasis will make tiered royalties on sales.
The announcement on Monday lifted the small drug developer’s $PTI shares up nearly 20% before the bell.
The modulators come from the Cambridge, MA-based company’s platform that controls and rebalances the proteostasis network (PN). The PN ensures proteins reach their final destination correctly folded with appropriate function or be degraded and cleared to prevent damage. But when the proteome is imbalanced — due to a plethora of factors such as genetic mutations and environmental influences — that culminates in poor protein quality and eventually, disease. Proteostasis’ technology helps these proteins reach final destinations in pathways while correctly folded.
The agreement validates the company’s PN potential, Cantor Fitzgerald’s Elemer Piros wrote in a note, noting that Proteostasis has already demonstrated early proof-of-concept for the technology in CF.
Given the number of indications that are caused by loss-of-function, leading to inefficient folding/excessive degradation, we believe this collaboration could open the door for future licensing agreements.
In October, the small biotech skyrocketed 448% on initial positive data on a handful of CF patients who were given a combination of its two experimental drugs — PTI-808 and PTI-801 — impressing analysts who drew comparisons with CF major Vertex’s $VRTX Orkambi and Symdeko, and shored up their expectations for a triplet cocktail. But the preceding months were not as kind. In June, the stock was hammered on lackluster data on PTI-801 as a monotherapy — a setback that came months after Proteostasis rescinded a planned offering of 9 million shares in response to a a scathing review of its CFTR amplifier PTI-428 from short seller Kerrisdale Capital.
Preliminary data on the company’s triplet combo are expected by the end of the year.
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