9 Meters must go a lot further than that

Innovate combines with RDD, but the success of the takeover relies in large part on a project for coeliac disease.

Following Glaxosmithkline’s acquisition of Sitari last month another deal is in the offing concerning a therapy for coeliac disease. This time the coeliac drug developer is the buyer, not the target: Innovate Biopharmaceuticals, whose coeliac therapy is in phase III, is acquiring RDD Pharma, a private group with a similar gastrointestinal focus.

The new company will be called 9 Meters Biopharma, presumably after the length of the human alimentary tract, and will be listed on Nasdaq. The new groups will be starting with fuel in the tank: Orbimed Advisors is leading a $25m capital raise, doubtless highly welcome given Innovate’s parlous financial state.

Innovate will pay for RDD with newly issued stock equal to 19.5% of its current issued capital, as well as shares of Innovate convertible preferred stock. The group’s investors took the news placidly, with its share price flat today. 

The combined company will be up to 58.5% owned by current Innovate stockholders.

Pipeline 

9 Meters’ lead asset will be Innovate’s INN-202, the intestinal tight junction regulator known generically as larazotide acetate. This is in a phase III trial for coeliac disease, but phase II data have been mixed so far, with no dose-response, and its pivotal study will not report until summer 2021 (Glaxo dips a lonely big pharma toe into the coeliac space, September 12, 2019).

Larazotide is also in phase I trials for nonalcoholic steatohepatitis and nonalcoholic fatty liver disease; for its use in these disorders Innovate uses the codename INN-217. INN-108, Innovate’s Cox inhibitor for ulcerative colitis, is also in phase I.

RDD’s lead is RDD-0315 or oxymetazoline, the company’s chief executive, John Temperato, said on a conference call today. This is intended to treat faecal incontinence in patients with spinal cord injury, and the group is currently concluding a dose-ranging phase I study. Further clinical trials are to start at the beginning of next year. 

According to RDD’s website RDD-0315 has also completed a phase IIa study, in which it met the primary endpoint of lowered frequency of incontinence events.

9 Meters' pipeline
Company Project

Indication 

Indication status  2024e sales ($m)
Innovate INN-202 Coeliac disease Phase III 185
  INN-329 Pancreatic function diagnostic Phase III -
  INN-108 Ulcerative colitis Phase I 97
  INN-217 NASH Preclinical -
  INN-217 NAFLD Preclinical -
RDD Pharma RDD-0315 Faecal incontinence Phase II -
  RDD-1609 Pruritus Phase II -
  RDD-2007 Radiotherapy side effects Preclinical -
Source: EvaluatePharma.

Coeliac disease is not a hotbed of activity, and Innovate claims that INN-202 is the only compound to have entered phase III trials. But ulcerative colitis and Nash are pretty well served, and 9 Meters will surely struggle to compete here. 

Consequently much of 9 Meters’ investment case must focus on INN-202. It must hope that its new cash infusion will take it to the pivotal readout – and that the trial shows a hit definitive enough to convince payers that drug therapy is worthwhile for this indication.

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