If the positive reaction of NASH stocks to Allergan’s takeout of Tobira yesterday made it clear that this liver disease was hot again, the group's second move – buying the private NASH player Akarna – parked Allergan’s tanks on the lawns of Intercept and Gilead.
True, Akarna is still a preclinical player, but its founder and chief executive is a pioneer in the discovery of farnesoid X receptor agonists, the NASH mechanism that Gilead, Intercept and several smaller companies are betting on (see table below). It can be assumed that in pursuing this pharmacology Allergan will have talked to many of those other players, too.
These include the private companies Nectid and Enyo Pharma, with phase I assets targeting the farnesoid X receptor (FXR), though Enyo for now is looking at hepatitis B rather than NASH. Also in FXR agonism is the listed biotech Enanta, which closed up 4% yesterday; its EDP-305 is expected to enter clinical trials next year.
|Selected FXR agonists|
|Ocaliva||Intercept||Marketed for primary biliary cirrhosis|
|GS-9674||Gilead Sciences||Via Phenex acquisition|
|Px-102||Gilead Sciences||Via Phenex acquisition|
|INT-767||Intercept||FXR & GPBAR1 agonist|
|EYP001||Enyo Pharma/Poxel||Hepatitis B focus|
|AKN-083||Allergan||Via Akarna acquisition; phase I in NASH expected 2017|
|EDP-305||Enanta||Phase I in NASH expected 2017|
|NFX-22||Nectid||Medium-chain triglyceride & eicosapentaenoic or docosahexaenoic acid|
|XL335/WAY-362450||Exelixis/Pfizer||No recent work reported|
|?||Lilly||Evidence of early work and patent filings|
|Source: EvaluatePharma, company filings, Google Patents.|
In shelling out $50m for Akarna Allergan looks to have sent another, albeit early, signal that the likes of Intercept, Gilead and Novartis have to contend with a bigger competitor. To underline the point, Allergan’s chief executive, Brent Saunders, said in a call today that his company was “putting down a big marker in NASH”.
Akarna had until now sailed below the radar, having been founded in 2014 and raising $15m from Forbion, New Science Ventures and Third Point earlier this year. The key attraction is Akarna’s founder and chief executive, Raju Mohan, who had worked on designing FXR-targeting molecules at X-Ceptor and then Exelixis, X-Ceptor’s acquirer.
Exelixis and the Pfizer predecessor company Wyeth had been working on the FXR agonist XL335/WAY-362450, though no recent studies seem to have taken place. Interestingly, an IP search reveals some FXR patents assigned to both Exelixis and Akarna.
In addition to AKN-083, the Akarna acquisition also includes a portfolio of earlier-stage FXR compounds. On today’s call Allergan called the assets best in class, claiming that because they were not bile acid derivatives (like Intercept’s Ocaliva) they were not expected to elicit pruritus.
Novartis also touts its phase II project LJN452 as a non-bile acid FXR agonist.
As if this was not already obvious, Mr Saunders said the bidding process for Tobira, the deal Allergan closed just hours before Akarna, had been very competitive (Allergan sparks a second liver disease craze, September 20, 2016).
It is hard to envisage any other scenario in which a company with limited cash and an equivocal trial result under its belt attracts a 600% premium to the previous day's stock price. Allergan’s investors were sceptical, and the group’s market cap lost $2.6bn of value yesterday amid sellside questions about its ability to do small deals.
The market was also reminded of the fact that the up-front fee was not all. In an SEC filing Allergan revealed more about what events would trigger the deal’s contingent value rights, and at least the first, worth $296m, looks eminently achievable in the near term.
Whatever the price, thanks to Tobira and Akarna, Allergan now boasts three separate mechanisms to tackle NASH. Does this mean that it now has all the pieces it needs to become a serious contender in this liver disease? Deal bankers and bullish NASH-focused investors will hope that the answer is no.
|Breaking down the cost of Tobira|
|Event||Possible timing||Value ($m)|
|Cenicriviroc starts phase III that measures fibrosis improvement in NASH||2017||296|
|US filing for NASH product containing cenicriviroc||2019||98|
|First commercial sale of a NASH product||?||296|
|NASH product sells over $1bn in four consecutive quarters||?||391|
|Source: SEC filing.|