Most small companies with a regulatory filing and phase III data on the horizon would have enough on their plates. Not so Zogenix, which yesterday announced the acquisition of another rare disease player, Modis Therapeutics, despite already having plenty to do with its lead project, Fintepla.
As well as the strange timing, there are questions about the target itself. The hefty $250m up-front price for Modis looks rich given the untested market for its sole clinical asset, MT1621 – and that is if the project can even get approved based on data that can hardly be described as rigorous.
Zogenix’s chief executive, Stephen Farr, insisted on a conference call yesterday that the company had not taken its eye off Fintepla, but the stock fell 8%.
Prepare to launch
Zogenix’s cash reserves, which stood at $463m at the end of June, will not be wiped out by the deal, $175m of which is in cash and the rest in stock.
But any more hiccups with the Fintepla launch could leave the company regretting shelling out for Modis. The project was delayed in its lead indication, Dravet syndrome, by an FDA refuse-to-file letter in April; Zogenix plans to refile in the third quarter without the chronic toxicity studies requested, something it says the FDA has agreed to.
Even if this is the case, toxicity worries could still prove to be a stumbling block: Fintepla’s active ingredient is flenfluramine, half of the “fen-phen” diet pill that was found to cause serious heart problems. And Zogenix's rival GW Pharma is making the most of a head start with its rare epilepsy therapy Epidiolex.
One worry is that Modis lies outside Zogenix’s CNS wheelhouse, although it does fit with the bigger group’s rare disease focus. MT1621 is being developed for thymidine kinase 2 deficiency (TK2d), an inherited mitochondrial disease for which there are no approved therapies.
Perhaps more important is the uncertain market for MT1621. Zogenix claims that the disorder affects 650-2,500 US patients, but Stifel analysts note that only a small proportion have been identified, so the company will have its work cut out in raising awareness.
Mr Farr admitted that Zogenix would need a separate sales force for MT1621, but said this would be small, in the region of 10-20 reps. The company also hopes to expand MT1621 into other mitochondrial disorders, but did not give further details.
However, all this assumes that MT1621 will get the go-ahead, something that should not be taken as a given. Zogenix hopes to file for approval based on the completed 38-patient Retro trial and an ongoing open-label extension study.
Retro showed a purported survival benefit by comparing outcomes in MT1621-treated patients against untreated historical controls. A placebo-controlled trial would have been a better test. And, because TK2d can vary in severity, any differences in the makeup of the two cohorts could have had a big impact on the results. Mr Farr said the natural history cohort in Retro was well matched with the active arm.
Then there are side effects: two adult patients in Retro discontinued therapy after experiencing increases in liver enzymes.
Perhaps Zogenix is banking on FDA leniency in rare diseases, but the agency’s recent stance on Sarepta’s Vyondys 53 might herald a crackdown. If so, Zogenix’s timing could end up looking even worse.