PERTH, Australia – Sydney-based gene therapy company Benitec Biopharma Ltd. saw its stock more than double following a global out-licensing deal with Axovant Sciences Ltd. valued at $187.5 million for its DNA-directed RNA interference (ddRNAi) therapy BB-301.

Under the terms of the deal, Benitec will receive $10 million cash up front and additional cash payments of $17 million when it completes near-term milestones for BB-301 for the treatment of oculopharyngeal muscular dystrophy (OPMD).

Benitec could receive up to $187.5 million in total payments upon completion of unnamed development, regulatory and commercial milestones for the compound, now named AXO-AAV-OPMD. Benitec also retains 30 percent of the global net profits on the compound.

OPMD is a rare progressive neuromuscular disease that is caused by a mutation in the polyA-binding protein nuclear 1 (PABPN1) gene. OPMD is characterized by eyelid drooping, difficulties in swallowing and limb weakness, and it affects roughly 15,000 patients in North America and Europe. There are no approved products to treat the disease.

AXO-AAV-OPMD delivers a combination of ddRNAi and inserts the PABPN1 gene to restore normal gene function. Genes are delivered via an adeno-associated viral (AAV) vector gene therapy in a one-time intramuscular administration, which silences the mutant PABPN1 gene and replaces it with a functional gene.

The company received orphan drug designation in the EU for AXO-AAV-OPMD. Pre-IND meetings with the FDA and Health Canada indicated there was "a clear path to the clinic for the OPMD asset," according to Benitec.

Axovant said it plans to begin a phase I study in 2019.

Axovant gets five more gene therapy programs

The two companies have also agreed to co-develop five additional gene therapy programs for which Benitec will receive full research funding and up to $93.5 million in development, regulatory and commercial milestones for each program.

The first of the five therapies will focus on developing a single vector "silence-and-replace" gene therapy product targeting the c9orf72 gene, which is associated with amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD).

Axovant is focused on developing therapies to treat neurologic conditions such as Parkinson's disease, OPMD, ALS, FTD and Lewy body dementia.

In June, Axovant licensed another gene therapy candidate (AXO-Lenti-PD) from Oxford Biomedica plc for Parkinson's disease.

Axovant had a major stumble in January in a failed phase IIb trial of its 5-HT2A receptor nelotanserin for Parkinson's disease. The company said it would evaluate the therapy for other applications in patients with dementia.

"The silence-and-replace technology is a unique approach in gene therapy, using a single vector to suppress mutant protein production while also restoring expression of the functional protein, and could be an elegant solution to tackling autosomal dominant genetic disorders," said Fraser Wright, Axovant's chief technology officer. "I look forward to collaborating with the research and manufacturing teams at Benitec to advance the progress of the platform and bring additional therapies into the clinic."

Deal allows Benitec to invest in R&D

Benitec Executive Chairman Jerel Banks called the Axovant deal transformational for the company because the funds will allow it to continue to invest in R&D and to build Benitec into a diversified biopharmaceutical company.

"Our management team is focused exclusively on expanding the research, development and commercial opportunities for the core 'silence-and-replace' platform," he said.

Benitec's approach to gene silencing overcomes many of the challenges of siRNA-based technology because of the way siRNA is introduced into the cell: ddRNAi causes the cell to produce siRNA itself, rather than introducing synthetic siRNA. And ddRNAi achieves that by producing a precursor molecule called short hairpin RNA (shRNA) in the nucleus, which enters the cytoplasm and is processed to siRNA by the cell's own machinery.

Benitec also uses gene therapy vectors to deliver the DNA. Its BB-201 gene therapy viral vectors to treat wet age-related macular degeneration (AMD) successfully delivered the ddRNAi technology to the back of the eye in nonhuman primates via intravitreal injection.

If successful, BB-201 would have a competitive advantage over drugs like Roche Holdings AG's Lucentis (ranibizumab) because the vectors would carry the payload to the back of the retina with a very high rate of transference and silence the production of the AMD-creating issue. (See BioWorld Today, Feb. 21, 2017.)

Benitec began to transform itself following a deal with Nantworks Inc. in 2017 that expanded its pipeline into oncology and helped the company recover after a setback in its lead hepatitis C program.

Benitec has had a tumultuous history. It listed on the Australian Stock Exchange (ASX:BLT) in early 2000 at a time when gene therapy was new and not well understood. The company then opened a research facility in the U.S. and got embroiled in a seven-year patent battle with Nucleonics Inc. over RNAi patents.

Although it came out with all of its claims supported by the U.S. Patent Office in 2011, Benitec had to restart its development program, because it had put the technology on the shelf while the litigation raged on.

Shortly after the listing, Benitec announced that it was shuttering its lead clinical program in hepatitis C virus (HCV), and the stock fell 55 percent. (See BioWorld Today, Feb. 29, 2016.)

The HCV program was terminated, not because it wasn't successful, but because of the stiff competition in the HCV space due to the increased availability of new HCV therapies, such as Gilead Sciences Inc.'s Sovaldi (sofosbuvir) and Harvoni (sofosbuvir/ledipasvir).

At the time, TT-034 was Benitec's only clinical-stage candidate and was intended to treat patients with genotype 1 HCV, the most common type of infection in the U.S. It represented what the company said would have been the first systemic administration of a ddRNAi therapeutic.

Although the HCV program didn't progress, it did provide the first proof of concept for Benitec's technology platform, and it showed a favorable safety profile. And, data from that program would be used to shape the clinical program in hepatitis B.

On the heels of the Axovant deal, Benitec saw its stock more than double on both exchanges it trades on.

On the Australian Securities Exchange (ASX:BLT), its shares edged up to A30 cents (US22 cents) when the deal was announced on Monday. On the previous trading day its stock was trading at A14 cents per share.

On Nasdaq, Benitec shares trading under the ticker BNTC were up 52 percent to $3.35 per share Monday.

Meanwhile, Axovant Sciences saw a modest 3 percent increase to $2.64 Monday for its shares on the Nasdaq where Axovant trades under the ticker AXON.