Astellas doesn’t buy Apellis

Geographic atrophy is a large and untapped market, so it is no wonder that players in this disease are attracting takeout interest. However, those hoping for an acquisition of the sector’s leader, Apellis, were disappointed on Sunday when Astellas swooped for its cheaper rival Iveric Bio, offering $5.9bn.

This is an understandable move from the Japanese group, given that the companies’ competing projects look fairly similar on a cross-trial basis. Astellas also managed to bag Iveric for a relatively small 22% premium over Friday’s closing share price, raising doubts about the fee that Apellis might be able to command.

However, this figure does not tell the whole story. Both Iveric and Apellis’s stock prices have been climbing since early April, when Bloomberg reported that the latter was drawing interest from large pharma. Indeed, Astellas pointed out that the $40 per share it was paying for Iveric was a 64% premium over that group’s closing share price on 31 March.

Perhaps more surprising than the target is the buyer. Astellas is hardly an ophthalmology giant, with its sole clinical project being ASP7317, a stem cell therapy for geographic atrophy. And the group's last big acquisition, of the gene therapy player Audentes, has been a disaster.

Stifel analysts highlighted Novartis and Roche as more likely suitors; both have a presence in eye disease, and have previously tried and failed in geographic atrophy. Both are also still active here: Novartis via its 2021 purchase of Gyroscope, and Roche through deals with Ionis and Lineage Cell Therapeutics. Roche recently discontinued another project, RG6312.

This apparent lack of interest from the big eye players could raise doubts about how they see the potential size of the geographic atrophy market, Stifel suggested. However, investors shrugged off such worries with Apellis’s stock closing flat yesterday.

It might just be that the group, with a market cap of nearly $10bn, is overpriced.

Approaching approval

Apellis’s main advantage is that its drug, Syfovre, is already approved. An early indication of how launch is going will come on Thursday when the group reports first-quarter results; consensus is for under $2m in sales, according to Evercore ISI.

Meanwhile Iveric’s avacincaptad pegol (Zimura) is in front of regulators, with a Pdufa date of 19 August. Although Iveric only enrolled patients with extrafoveal lesions in its pivotal trials, Evercore expects broad approval. Apellis included both foveal and extrafoveal subjects. Both compounds appear to have a stronger effect in extrafoveal lesions.

Both drugs are complement inhibitors, but Syfovre targets C3 while Zimura hits C5. While both have been shown to decrease geographic atrophy lesion growth, neither has produced a benefit in best-corrected visual acuity on a prespecified basis.

Iveric and Apellis presented data at the recent ARVO meeting, detailing post-hoc analyses suggesting improvements in vision. Here, Apellis focused on patients with extrafoveal lesions.  

Even Evercore’s Umer Raffat, an Apellis bull, has concluded that the drugs are probably “more similar than different from a biological activity perspective”.

In this context Astellas’s move makes sense. The question now is whether any big players are willing to shell out a premium to get their hands on Syfovre and compete with the Japanese group.