Dermira Inc. agreed to pay Roche Group up to $1.4 billion for global rights to the midstage interleukin-13 antagonist lebrikizumab for atopic dermatitis (AD) and other indications in hopes it will prove more effective than existing therapies, even with less frequent dosing. Dermira will record a $135 million charge related to the deal.

Roche, which abandoned earlier plans to advance lebrikizumab (formerly RG-3637) in severe asthma, retained rights to develop and sell it for interstitial lung diseases (ILDs) such as idiopathic pulmonary fibrosis.

If successful, the deal could help Menlo Park, Calif.-based Dermira secure AD sales that analysts estimate could surpass $1 billion annually within five years as the larger market for AD-focused biologics grows. It also puts the company into competition with Ballerup, Denmark-based Leo Pharma A/S, which pledged $115 million up front and up to $1 billion more in sales-based milestones to Astrazeneca plc last summer for rights to develop and commercialize tralokinumab in AD. Leo dosed the first patients in its phase III Eczema Tralokinumab trial no. 1 (ECZTRA 1) in June. (See BioWorld Today, July 5, 2016.)

"As we have seen in the psoriasis market, we believe that [the] AD market can likely sustain multiple blockbuster products over time as new differentiated therapies are introduced," Dermira CEO Tom Wiggans told investors during a conference call held Tuesday.

Despite the potential payoff, Dermira shares (NASDAQ:DERM) fell about 13.4 percent to $22.43 on Tuesday, "likely due to investor concerns about the deal in light of phase IIa [asthma] data that were relatively mixed," Leerink Partners analyst Seamus Fernandez wrote.

The Roche deal calls for Dermira to pay Roche $80 million up front, followed by $55 million in 2018. It will owe Roche another $40 million when starting the first phase III study of lebrikizumab (lebri); up to $210 million as it hits various regulatory and commercial milestones; and up to $1.025 billion more based on the achievement of certain thresholds for net sales. Dermira is responsible for virtually all efforts and related costs and decision-making related to the program, other than those associated with Roche's work in ILD, Dermira's chief financial officer and chief operating officer, Andrew Guggenhime, said.

During the first quarter of 2018, Dermira plans to initiate a phase IIb dose-ranging study assessing lebri in adults with moderate to severe atopic dermatitis. The trial will include evaluation of a loading dose and higher dose regimens of lebrikizumab than were explored in previous AD studies. One such earlier study, the phase II trial, Treble, tested lebri against moderate to severe AD inadequately controlled by topical corticosteroids (TCS), finding that a greater proportion of lebri-treated patients achieved EASI-50, IGA 0/1, pruritus visual analogue and severity scoring of atopic dermatitis index-50 scores compared with those in the placebo group, at week 12.

Luis Peña, Dermira's chief development officer, said lebri, a humanized monoclonal antibody, "offers opportunity to achieve high level of targeted coverage for extended periods of time," which he said could provide both increased efficacy and reduce dosing frequency. Dupixent (dupilumab), the severe AD treatment for which Regeneron Pharmaceuticals Inc. and Sanofi SA won FDA approval in March, requires dosing every two weeks vs. the monthly dosing explored for lebri to date. (See BioWorld Today, March 29, 2017.)

Evercore ISI analyst Umer Raffat said Dermira "likely feels good about the monthly dosing" and will experiment with even longer durations between doses in upcoming trials.

Meanwhile, Dermira's Wiggans said the firm will continue to advance Cimzia (certolizumab pegol), the chronic plaque psoriasis therapy for which it and partner UCB SA recently filed a supplemental biologics license application with the FDA. Separately, UCB also submitted a regulatory filing with the EMA. Both applications seek to expand Cimzia's indication to include treatment of adult patients with moderate to severe chronic plaque psoriasis.

The company is also working on submitting an FDA new drug application for glycopyrronium tosylate for excessive sweating in the second half of this year and aims to complete enrollment of its two phase III trials of olumacostat glasaretil in patients with acne vulgaris in the fourth quarter.