Tossed in a storm of con­tro­ver­sies, Pro­teosta­sis finds shel­ter in $100M cash Roche deal — shares surge

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.

Brent Saunders [Getty Photos]

UP­DAT­ED: Ab­b­Vie seals $63B deal to buy a trou­bled Al­ler­gan — spelling out $1B in R&D cuts

Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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Top an­a­lyst of­fers a rare, up­beat in­ter­pre­ta­tion of Ab­b­Vie’s $63B Al­ler­gan deal — but there’s a catch

Af­ter get­ting beat up on all sides from mar­ket ob­servers who don’t much care for the lat­est mega-deal to ar­rive in bio­phar­ma, at least one promi­nent an­a­lyst now is start­ing to like what he sees in the num­bers for Ab­b­Vie/Al­ler­gan.

But it’s go­ing to take some en­cour­age­ment if Ab­b­Vie ex­ecs want it to last.

Ab­b­Vie’s mar­ket cap de­clined $20 bil­lion on Tues­day as the stock took at 17% hit dur­ing the day. And SVB Leerink’s Ge­of­frey Porges can see a dis­tinct out­line of an up­side af­ter re­view­ing the fun­da­men­tals of the deal.

While Ako­rn works to re­vive its for­tunes, the FDA hits it with an­oth­er warn­ing let­ter

Ako­rn just can’t dig it­self out of its hole.

The spe­cial­ty gener­ic drug­mak­er has re­ceived yet an­oth­er warn­ing let­ter from the FDA this year. With­out dis­clos­ing any specifics, the Lake For­est, Illi­nois-based drug­mak­er on Wednes­day said the US reg­u­la­tor had is­sued the let­ter, cit­ing an in­spec­tion of its Som­er­set, New Jer­sey man­u­fac­tur­ing fa­cil­i­ty in Ju­ly and Au­gust of 2018. The com­pa­ny’s shares $AKRX dipped about 1.7% to $4.65 be­fore the bell.

Af­ter rais­ing $158M, this up­start's founders have star back­ers and plans to break new ground in gene ther­a­py

Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

Ab­b­Vie's $63B buy­out spot­lights the re­turn of ma­jor M&A deals — de­spite the back­lash

Big time M&A is back. But for how long?

Over the past 18 months we’ve now seen three major buyouts announced: Takeda/Shire; Bristol-Myers/Celgene and now AbbVie/Allergan. And with this latest deal it’s increasingly clear that the sharp fall from grace suffered by high-profile players which have seen their share prices blasted has created an opening for the growth players in big pharma to up their game — in sharp contrast to the popular bolt-on deals that have been driving the growth strategy at Novartis, Merck, Roche and others.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

UP­DAT­ED: In sur­prise switch, Bris­tol-My­ers is sell­ing off block­buster Ote­zla, promis­ing to com­plete Cel­gene ac­qui­si­tion — just lat­er

Apart from revealing its checkpoint inhibitor Opdivo blew a big liver cancer study on Monday, Bristol-Myers Squibb said its plans to swallow Celgene will require the sale of blockbuster psoriasis treatment Otezla to keep the Federal Trade Commission (FTC) at bay.

The announcement — which has potentially delayed the completion of the takeover to early 2020 — irked investors, triggering the New York-based drugmaker’s shares to tumble Monday morning in premarket trading.

Celgene’s Otezla, approved in 2014 for psoriasis and psoriatic arthritis, is a rising star. It generated global sales of $1.6 billion last year, up from the nearly $1.3 billion in 2017. Apart from the partial overlap of Bristol-Myers injectable Orencia, the company’s rival oral TYK2 psoriasis drug is in late-stage development, after the firm posted encouraging mid-stage data on the drug, BMS-986165, last fall. With Monday’s decision, it appears Bristol-Myers is favoring its experimental drug, and discounting Otezla’s future.

The move blindsided some analysts. Credit Suisse’s Vamil Divan noted just days ago:

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Image: Chris Varma. Frontier

UP­DAT­ED: Chris Var­ma un­veils MP­M's lat­est start­up — eye­ing 'un­drug­gable' can­cer tar­gets and pow­ered by ma­chine learn­ing, $67M

Two years af­ter MPM Cap­i­tal en­list­ed Chris Var­ma on its busy on­col­o­gy team, the for­mer en­tre­pre­neur-in-res­i­dence is un­veil­ing his first ven­ture project out of his new stomp­ing grounds in the Bay Area: Fron­tier Med­i­cines.

For Var­ma, who’s al­so co-found­ed Blue­print Med­i­cines and built com­pa­nies at Third Rock and Flag­ship, this marks an­oth­er op­por­tu­ni­ty to ap­ply some cut­ting-edge sci­ence to “sev­er­al of the most im­por­tant and dif­fi­cult tar­gets in can­cer” — tar­gets that oth­ers have tried to tack­le with more clas­si­cal meth­ods and failed. The launch round comes in at $67 mil­lion, which should go some way in scaf­fold­ing a pre­clin­i­cal pipeline and push one or more as­sets in­to the clin­ic three years from now, he tells me.

The top 15 mega-deals in bio­phar­ma: Ab­b­Vie and Bris­tol-My­ers ac­qui­si­tions stir fresh de­bate over what's too big to buy

The debate over what’s too big to buy in biotech is back. A number of top analysts went right after AbbVie’s rationale for the Allergan deal today, just as Bristol-Myers Squibb stirred immediate debate over the worth and wisdom of acquiring Celgene.

To help provide some added context to this discussion, we asked DealForma chief Chris Dokomajilar to look over the past decade of major M&A in biopharma to decipher the top 15 plays.

The new numbers, unadjusted for inflation, harken back to the days of the Pfizer-Wyeth buyout and Merck’s decision to absorb Schering-Plough — both triggered in 2009. The heat over those acquisitions made the big pharma mega-deal highly unpopular for most everyone — except Pfizer — as industry leaders swore off almost all but the handy bolt-on acquisition.

Until recently.

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