JP Morgan – Celgene makes an eve-of-meeting Impact

Celgene’s $1.1bn swoop on the private group Impact Biomedicines was probably not the takeout that the deal-starved biopharma sector had been looking for on the eve of the JP Morgan healthcare conference.

But it shows Celgene betting a remarkable amount of money on the Jak2 inhibitor fedratinib – an asset that has been passed from pillar to post, including a US clinical hold and discontinuation by Sanofi along the way. And if it continues the trend of failed assets being resurrected then at least in this case the chances look relatively good.

Those familiar with the Jak craze of six or seven years ago will recall fedratinib (SAR302503) as an asset originated by Targegen, which was acquired by Sanofi for $75m up front. Around the same time Incyte became a front-runner in the Jak space, pacritinib was in trials at S*Bio before going through the wars at CTI Biopharma, and YM Biosciences was bought by Gilead for momelotinib.

Fedratinib reached phase III in myelofibrosis, but Sanofi scrapped development when the FDA put trials on hold after seeing cases of Wernicke’s encephalopathy, suggesting that his could be a treatment-related toxicity.

Signal not real?

This is where the story took a remarkable twist: the clinical hold was lifted, and the founder of Targegen acquired fedratinib from Sanofi, set up Impact to develop it, and raised $22.5m of private cash for the purpose.

The view was clearly that the Wernicke encephalopathy signal was not real, and the surprising buyout of Impact shows that Celgene agrees. The tide seems to have turned at last month’s Ash conference, where Impact argued that only one of the eight Wernicke’s cases seen in 877 fedratinib-treated subjects had been correctly diagnosed.

What is more, Wernicke’s – a neurological condition related to thiamine insufficiency – is preventable with thiamine supplementation, and is probably underdiagnosed in the general population. Sanofi might therefore have been rash in ditching the compound.

This is not to say that Celgene has picked up a bargain; $1.1bn up front, plus $1.25bn in approval milestones, is quite a bet to place on a company that has raised only $22.5m of private money plus a $90m royalty financing with Oberland Capital. Celgene wants to file fedratinib for myelofibrosis in mid-2018, but in its way stands Incyte’s marketed Jak1/2 inhibitor, Jakafi.

Still, fedratinib has shown efficacy not only in treatment-naive myelofibrosis in phase III, but also in subjects resistant to or intolerant of Jakafi, in the phase II Jakarta-2 trial. At today’s JP Morgan breakout session Celgene management said the group had been in myelofibrosis for eight or nine years and that, with Jakafi the only approved drug, the space was a “huge untapped opportunity”.

The company also played up the potential for additional business development activity; curiously, its chief executive, Mark Alles, called 2017 – when Celgene stock slumped 14% – “one of our best years”. The shares were trading down a further 2% today on the Impact deal.

EvaluatePharma sellside consensus sees Jakafi’s sales breaching the $2bn mark in 2022.

Biz dev

Fedratinib proving superior to Jakafi would for Impact’s founders be a victory snatched from the jaws of defeat. And it would indicate a disastrous business development decision on the part of Sanofi.

As if to raise more eyebrows about its biz dev strategy, Sanofi yesterday rejigged a 2012 alliance with Alnylam, effectively handing back co-development rights to the amyloidosis projects patisiran and ALN-TTRsc02 in return for global rights to fitusiran, an anti-thrombin III RNAi therapeutic in development for haemophilia A and B.

The decision seems curious because patisiran is seen by the sellside as a potential blockbuster, and having generated positive pivotal data has been filed, whereas fitusiran is still in phase III, and has 2022 consensus sales of just $167m. Each company retains a royalty interest in the assets the other has picked up.

Alnylan stock opened virtually flat this morning, so it is by no means clear to investors who got the better part of this deal.

This is an updated version of a story published earlier.

To contact the writers of this story email Jacob Plieth or Madeleine Armstrong at [email protected] or follow @JacobPlieth or @ByMadeleineA on Twitter. For live updates from the JP Morgan healthcare conference in San Francisco on January 9-12 follow @ByMadeleineA on Twitter.

See our full coverage from the JP Morgan conference here.