Ablynx another beneficiary of AbbVie’s pay-to-fund approach

Analysis

If today’s deal with Ablynx once again shows AbbVie to be a company willing to throw large amounts of money at early-stage biotech assets, it also confirms rheumatoid arthritis as the area at which it is proposing to direct much of this cash.

The latest RA alliance has seen Ablynx pocket an impressive $175m up front, and comes a year and a half after the big pharma firm handed over $150m for rights to an RA project in development by Ablynx’s Belgian rival Galapagos. But AbbVie is a shrewd negotiator: both biotechs have had to commit to funding large phase II trials, and most of the two up-front fees will be swallowed up in R&D costs.

Which is not to deny that both deals are impressive. Ablynx’s chief executive, Edwin Moses, told EP Vantage that even after committing over $100m in development costs for its anti-IL-6 receptor nanobody, ALX-0061, his company would be left with enough of the signing fee to develop its organisation and build up the value of other pipeline projects.

The Ablynx tie-up is not dissimilar to the deal that Abbott Laboratories – as the company was known before splitting off AbbVie – did with Galapagos in February 2012. Galapagos had to spend some $95m of the $150m signing fee on a phase II trial of its JAK1 inhibitor GLPG0634.

Franchise building

In striking these deals AbbVie is bolstering an RA franchise headed by its TNA-alpha inhibitor Humira, the world’s top-selling drug, whose patent is set to expire in 2016.

In picking up ALX-0061 and GLPG0634 the group seems to be challenging two more recent entrants to the RA space: Roche’s IL-6 MAb Actemra and Pfizer’s JAK inhibitor Xeljanz. Mr Moses said the real competitor for ALX-0061 was Actemra, given that many patients are refractory to TNF-alpha inhibitors like Humira, while an oral treatment like Xeljanz might raise compliance problems.

But he stressed that one of the attractions of having AbbVie as a partner was that it had turned Humira into the global leader even though it was the third anti-TNF agent to market, and “clearly we won’t be the first” with an IL-6-targeting agent.

Still, several years of spending await Ablynx before AbbVie commits fully to ALX-0061. For a start, the big pharma group has bought into the subcutaneous formulation, which has yet to complete phase I testing. Ablynx’s phase II study will thus begin in 2015 and yield data the following year.

Only at this point will AbbVie decide whether to exercise an option to take on full development. Ablynx has also committed to starting clinical development of ALX-0061 in lupus, providing AbbVie with another data point for opting in to full development, and additional milestone fees, in 2018.

Licensing trigger

As EP Vantage argued, licensing out ALX-0061 has been a strong possibility since Ablynx published phase II results – of the intravenous formulation – in February (EP Vantage interview – RA trial success should net Ablynx a partner, February 13, 2013).

With all the caveats against cross-study comparisons, Mr Moses said these data showed ALX-0061 to have an apparently improved efficacy versus Roche’s incumbent, Actemra, with a possible safety advantage. Other IL-6-targeting molecules are in development ahead of ALX-0061, though Mr Moses highlighted ALX-0061’s smaller size versus antibodies as a competitive advantage.

While on a sellside consensus basis there are no forecasts for ALX-0061, some consensus revenue data exist for the later-stage competitors. Edison analysts had mooted the possibility of a pure up-front fee of $30m and peak sales of $1.2bn, which after risk adjusting valued ALX-0061 at €177m ($239m).

Selected IL-6-targeting projects for rheumatoid arthritis
Project Company 2012 sales ($m) 2018e sales ($m) Status
Actemra Roche 898 2,342 Marketed
Sarilumab Sanofi/Regeneron - 205 Phase III
Sirukumab Johnson & Johnson/GlaxoSmithKline - 68 Phase III
Siltuximab Johnson & Johnson - 33 Phase II
Clazakizumab Bristol-Myers Squibb - 4 Phase II
ALX-0061 Ablynx/AbbVie - - Phase II

Mr Moses said he had drawn up a shortlist of the 35 biggest pharma players for partnering, crossing off those that were already involved in IL-6 inhibition. This left “10 or 12 prospects, and we pitched and talked to all of these”.

While there is no doubt that Ablynx has struck a significant deal with the pharma industry’s most important RA player, its shares were up by an anaemic 9% in afternoon trading today. Perhaps the market is cautious about the significant amount Ablynx has committed to R&D; in any case, Mr Moses remains upbeat.

Comparing his alliance with a typical deal where full rights are simply handed across to a big pharma partner, he said it was “more interesting than just throwing the product over the fence”.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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