A year marked mostly by biopharma mergers and acquisitions (M&A) in the hundreds of millions of dollars could end with a blockbuster, depending how far Horizon Therapeutics (HZNP) gets, and how quickly its talks with a trio of potential suitors, all of them being corporate giants.
Horizon shares jumped 27% from $78.76 to $100.29 on Wednesday, the first trading day after the company announced that it was in M&A talks with Amgen (AMGN), Johnson & Johnson (JNJ)’s Janssen Global Services, and Sanofi (SAN, SNY), confirming a report in The Wall Street Journal. Shares continued their climb Thursday, rising 2% to $102.20 as of 12:45 p.m. The surge nearly wiped out the company’s year-to-date stock decline from $107.76 at the start of 2022, though Horizon has closed as low as $58.92 on August 30.
Horizon characterized the talks as “highly preliminary” and cautioned that they may or may not lead to a deal. Dublin-based Horizon is subject to Ireland’s Takeover Rules, under which the three suitors are required to either announce a “firm intention to make an offer for [Horizon],” or not, by 5 pm ET on January 10, 2023.
The talks are a switch from nearly two years ago, when Horizon chairman, president and CEO Tim Walbert told GEN Edge his company was looking to expand its pipeline by merging and acquiring other companies. Weeks later, Horizon completed a $3.05 billion acquisition of Viela Bio, a spinout of AstraZeneca’s former MedImmune subsidiary launched in 2018 with $250 million in capital.
All three would-be buyers of Horizon would be suitable suitors since they are all interested in acquiring drug developers focused on treatments for immunology and inflammation as well as orphan diseases, David Risinger, CFA, Head of Diversified Biopharmaceutical Research and a senior managing director with SVB Securities, observed Wednesday.
In a research note, Risinger outlined how a Horizon acquisition would benefit each of the potential buyers:
- Johnson & Johnson—Horizon would help J&J partially offset a drop in pharma immunology segment revenues that is expected over the next five years due to the loss of patent exclusivity for its multi-indication blockbuster Stelara® (ustekinumab)—from a peak of $10 billion in 2023 to $7 billion by 2028. Krystexxa could fit into J&J’s immunology franchise, Risinger said.
- Sanofi—“Horizon’s assets could fit with the company’s focus on I&I and Rare Disease,” though Risinger cautioned that the French pharma’s appetite for M&A is unclear: “We do not know if management wants to pursue an acquisition the size of HZNP when the company has solid organic growth prospects” beyond the U.S. patent expiration of the relapsing multiple sclerosis treatment Aubagio® (teriflunomide) this coming spring.
- Amgen—Horizon could help Amgen build upon its I&I franchise (including Enbrel® & Otezla® ) to enhance growth prospects. In a deal completed October 20, Amgen shelled out $3.7 billion to acquire ChemoCentryx, adding to the buyer’s portfolio Tavneos® (avacopan), a first-in-class treatment for antineutrophil cytoplasmic antibody (ANCA)-associated vasculitides (AAV), a rare, systemic autoimmune disease. “Horizon could help drive revenue & profit growth mid-late decade when Amgen faces generic and biosimilar pressures on key franchises,” wrote Risinger.
“We also see the potential for other bidders to emerge, but it is difficult to predict specific interest in Horizon’s current top two franchises,” Risinger added.
Horizon generates growing net sales from its top two marketed drugs, Tepezza®(teprotumumab-trbw), an insulin-like growth factor-1 receptor inhibitor indicated to treat thyroid eye disease; and Krystexxa® (pegloticase), a PEGylated uric acid specific enzyme indicated for the treatment of chronic gout in adult patients refractory to conventional therapy.
During the first three quarters of this year, Tepezza’s net sales leaped 37%, to $1.472 billion from $1.072 billion a year earlier, while Krystexxa net sales jumped 27%, to $500.1 million from $395.2 million. Tepezza and Krystexxa co-anchor Horizon’s orphan drug segment, whose combined net sales from eight marketed drugs grew 32% year-over-year, to $2.58 billion from $1.955 billion.
In reporting third quarter results on November 2, Horizon raised its investor guidance on full-year 2022 net sales to between $3.59 billion and $3.61 billion, compared to the previous range of $3.53 billion to $3.60 billion.
Also, Horizon raised guidance on ex-U.S. net sales of Tepezza from more than $500 million to more than $1 billion, citing further assessment of the ex-U.S. thyroid eye disease market opportunity and plans to launch the drug in Europe. Horizon maintained an earlier forecast of U.S. peak annual net sales of more than $3 billion, bringing global peak annual net sales expectations to greater than $4 billion.
The company also increased its U.S. peak annual net sales expectations for Krystexxa to greater than $1.5 billion from greater than $1 billion, citing use of the drug with immunomodulation in more than 60% of new patients, as well as “increased clinical conviction among physicians.”
The increased projection of Tepezza ex-U.S. net sales “may suggest that a company with a large ex-US commercial presence like JNJ could help drive ex-U.S. adoption,” Risinger concluded.
At the same time, Horizon raised its guidance for full-year 2022 net sales growth of Krystexxa to approximately 25% from more than 20%. That would propel Krystexxa sales from a projected $678.6 million to $706.875 million, based on the $565.5 million in net sales reported for all of 2021.
Horizon is unrelated to Horizon™, the gene editing and gene modulation tool company that was acquired in 2020 by PerkinElmer for approximately $383 million.
Bluebird sees no bounce from $102M voucher sale
During its clinical and commercial setbacks last year and this past winter, Bluebird Bio (BLUE) CEO Andrew Obenshain held, and analysts agreed, that a key to the company’s eventual turnround would be its ability to generate capital from selling the Rare Pediatric Disease Priority Review Vouchers (PRVs) it would receive upon FDA approval of its gene therapies.
Since August, the first two of Bluebird’s three gene therapy candidates have gone on to win FDA approvals, as well as PRVs associated with each. But when Bluebird reported Wednesday that it entered into an agreement to sell one of its two PRVs for $102 million, investors appeared to shrug at the news.
Shares of bluebird bio rose just 2%, from $7.65 to $7.79, on news of the pending voucher sale. In a regulatory filing, Bluebird disclosed the buyer as argenx—the antibody-based drug developer that until now has focused on immunology treatments.
Argenx has some cash to spend. During the first three quarters of this year, argenx generated $227.325 million from the launch of its first commercial treatment Vyvgart® (efgartigimod alfa-fcab), the first-and-only approved neonatal Fc recepor (FcRn) blocker in the U.S. more than half of that revenue, $131.329 million, was generated during the third quarter alone. Also in Q3, argenx filed a Biologics License Application (BLA) for subcutaneous efgartigimod as a treatment for generalized myasthenia gravis (gMG).
Argenx investors showed more enthusiasm for the deal, sending that company’s shares rising 7% on the EuroNext Brussels market, to an even €390 ($406.54).
One possible reason for the disparity in investor reactions: The $102 million that Argenx agreed to pay is less than the $110 million that an undisclosed buyer agreed to pay BioMarin Pharmaceutical for the PRV it gained when the FDA approved Voxzogo® (vosoritide) for Injection, indicated to increase linear growth in pediatric patients with achondroplasia five years of age and older with growth plates.
PRVs are valuable to drug developers because they can either be exercised in order to obtain a speedier priority review for a pipeline drug or biologic, in return for paying the FDA a fee ($1,524,039 in the current federal fiscal year that began October 1)—or sold to other drug developers.
Bluebird’s Obenshain hailed news of the pending voucher sale in a statement: “With the sale of our first priority review voucher, we have significantly strengthened our financial outlook.”
Bluebird finished Q1-Q3 2022 with a net loss of $298.81 million, including a $76.52 million net loss during Q3 alone. However, both figures are improved from the net losses Bluebird reported of $664.326 million for January-September 2021, including a net loss of $216.816 million for last year’s third quarter. The reduced net loss reflects a restructuring plan announced in April that eliminated about 30% of its staff (an estimated 155 jobs) during the second and third quarters. The restructuring is designed to generate $160 million in savings over the next two years.
Bluebird obtained the voucher it is selling, and the one it continues to hold, when it received FDA approvals for Skysona® (elivaldogene autotemcel or “eli-cel”) and Zynteglo® (betibeglogene autotemcel or “beti-cel”). Skysona is a one-time treatment approved in September that is designed to slow the progression of neurologic dysfunction in boys 4-17 years of age with early, active cerebral adrenoleukodystrophy (CALD). Zynteglo won FDA authorization in August as the first cell-based gene therapy for the treatment of adults and children with beta-thalassemia who require regular red blood cell transfusions.
“Monetizing these assets is a key part of management’s plan to capitalize the company,” Mani Foroohar, MD, Senior Managing Director, Genetic Medicines, and a senior research analyst with SVB Securities, wrote Wednesday in a research note. He kept Bluebird’s price target at $8 a share, (lowered earlier this fall from $10), and reiterated his firm’s “Market perform” rating on Bluebird shares.
In announcing the pending voucher sale, Bluebird said the non-dilutive capital to be generated would help fund ongoing launches of Zynteglo and Skysona, and help the company draw more capital by achieving near-term milestones, including the planned submission and FDA review of the company’s third gene therapy, lovotibeglogene autotemcel (“lovo-cel,” formerly called LentiGlobin® or bb1111) for sickle cell disease (SCD). Bluebird restated in its third-quarter results that it remains on track to file a BLA for lovo-cel in the first quarter of 2023, following completion of vector and drug product analytical comparability data for that BLA in the fourth quarter of this year.
“The Company continues to explore additional financing opportunities, including the monetization of its second PRV,” Bluebird stated, adding that it anticipated offering investor guidance for 2023 early in the new year.
Capitalization is a key challenge for Bluebird, which saw its shares plunge last year following a series of clinical and commercial setbacks that included clinical holds on eli-cel and beti-cel, and the spinoff its oncology business in November 2021. Bluebird spun off 13 oncology programs (seven clinical, six preclinical) into 2seventy bio, a public company headed by “Chief Kairos Officer” Nick Leschly, who served as Bluebird’s CEO or “chief Bluebird” from 2010 until the separation, which left the surviving Bluebird with three candidates and an R&D focus on severe genetic diseases.
The transaction is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Clinical strategy shift sinks Aeglea shares
Aeglea BioTherapeutics (AGLE) shares plunged 66% on Wednesday, from $1.22 to $0.415, after the company said it would not announce interim clinical data from its ongoing Phase I/II trial of pegtarviliase in the metabolic disorder classical homocystinuria in the fourth quarter of 2022 as previously planned. The company continues to enroll patients in the trial’s third cohort, with two patients having completed dosing.
“Aeglea looks forward to delivering a clinical update on the pegtarviliase program when more comprehensive data from the third cohort becomes available,” the company said in a statement.
The company also said it opted against participating in the Piper Sandler 34th Annual Healthcare Conference and 5th Annual Evercore ISI HealthCONx Conference, both held November 29-December 1, without stating a reason.
Aeglea cited a review of its near-term corporate and clinical development strategy related to its change of top leadership, capped by the appointment this week of Jeffrey M. Goldberg as President and CEO. Goldberg is a 25-year biotech industry veteran who served as President and CEO Immunitas Therapeutics from 2019-2021.
Goldberg succeeds Anthony Quinn, who resigned in August and shifted to an advisory role as the company began a restructuring that pivoted its pipeline toward advancing pegtarviliase (formerly AGLE-177) and shrank its workforce by 25% during 202, to 69 employees as of September 30 from 102 at the start of the year, according to regulatory filings.
Following Quinn’s departure, Jim Kastenmayer, JD, PhD, served as interim CEO. He has returned to his position as Aeglea’s general counsel.
The strategy review was sparked by Aeglea receiving a Refusal to File (RTF) letter from the FDA in response to its Biologics License Application (BLA) for its then-lead pipeline candidate pegzilarginase as a treatment for the rare disease Arginase 1 Deficiency (ARG1-D). According to Aeglea, the FDA sought additional data to support the drug’s effectiveness, as well as additional information relating to Chemistry Manufacturing and Controls (CMC). Aeglea shares plummeted 41% on the news.
FDA Fast Track nod, Nasdaq compliance lift Kintara
Kintara Therapeutics (KTRA) shares more than doubled this week through Thursday morning on a pair of positive developments. The upbeat week began on Monday when it announced that the FDA had granted its Fast Track designation to Kintara’s REM-001 as a treatment for cutaneous metastatic breast cancer (CMBC).
“We believe this designation is a key component of our future clinical and regulatory strategy as we continue to seek funding, in particular grants, to restart REM-001 clinical development as soon as possible,” Kintara President and CEO Robert E. Hoffman said in a statement.
Kintara’s top priority is securing funding to restart a 15-patient study in CMBC patients in advance of a Phase III trial. According to the company, REM-001 has shown clinical efficacy to-date of 80% complete responses of CMBC evaluable lesions following four Phase II/III clinical trials in CMBC patients who previously received chemotherapy and/or failed radiation therapy.
The good news continued on Wednesday, when San Diego-based Kintara disclosed receiving formal notice from The Nasdaq Stock Market that the company regained compliance with the exchange’s minimum bid price rule, which requires a share price of at least $1 for the last 10 consecutive business days.
Kintara shares jumped 18% on Monday, from $3.69 to $4.36, followed by a 36% leap on Tuesday, to $5.95, then a 13% gain on Wednesday, to $6.70. The surge continued into early Thursday, when Kintara rocketed another 39%, to $9.32 as of 12:45 p.m.