Allergan plc agreed to pay about $600 million cash and up to $1.1 billion in milestone-based contingent value rights (CVRs) to acquire the non-alcoholic steatohepatitis (NASH) specialist Tobira Therapeutics Inc. in a deal that adds two complementary candidates, cenicriviroc and evogliptin, to its growing R&D pipeline and heated up competitors' stocks on Tuesday.
"With the increasing rates of diabetes, obesity and other metabolic conditions in the U.S. and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society," said Allergan CEO and President Brent Saunders. "It is important that we invest in new treatments today so that health care systems, providers and patients have treatment options to face this challenge in the coming years."
Allergan's offer, which Saunders said fits "within a white space area of our global gastroenterology franchise," reflects a 500 percent premium to Tobira's Monday closing price. It will deliver $28.35 per share to Tobira stockholders and the potential for up to $49.84 per share more in a single CVR per share, payable based on the successful completion of certain development, regulatory and commercial milestones.
Cenicriviroc, or CVC, is an immunomodulator and dual inhibitor of CCR2 and CCR5. Tobira has been testing it for the treatment of NASH, primary sclerosing cholangitis, or PSC, and as an adjunct to standard of care in HIV. Evogliptin is a DPP-4 inhibitor, which the company has planned to develop for NASH in combination with CVC.
Little Tobira, which had just 20 full-time employees at the start of August, has endured a rocky ride. Company shares lost more than half their value in July, following news that Centaur, a phase IIb study of cenicriviroc failed to meet its primary endpoint: knocking two points off a score used to evaluate changes in NASH after a year of treatment. Success on a secondary and possibly more meaningful endpoint of Centaur, improvement of fibrosis, or liver scarring, may have given Allergan confidence in the potential of a pivotal phase III study expected to begin in 2017. (See BioWorld Today, July 26, 2016.)
"Ultimately, we view the takeout premium – perhaps shocking to some – as more a reflection of the market's miss-pricing of TBRA following Centaur results, than due to any outsized largesse on the part of Allergan," wrote Ed Arce, an analyst for H.C. Wainwright & Co.
Shares of Tobira (NASDAQ:TBRA) rocketed 720.9 percent higher on Tuesday to close at $38.91. Allergan shares (NYSE:AGN) fell $6.62, to close at $238.67.
Enthusiasm around the deal bubbled over to touch other NASH players. Shares of Intercept Pharmaceuticals Inc. (NASDAQ:ICPT), which is advancing its primary biliary cholangitis drug, Ocaliva (obeticholic acid), in NASH, rose 8.5 percent to close at $170.01, while shares of Lille, France-based Genfit SA (Euronext:GNFT) climbed 15.5 percent to €25.99 (US$29.04). Shares of Gilead Sciences Inc. (NASDAQ:GILD), which also has a sizable NASH pipeline, rose 3.5 percent to close at $81.78.
Shares of Conatus Pharmaceuticals Inc. (NASDAQ:CNAT), which is developing emricasan for the treatment of NASH cirrhosis, climbed 19.4 percent to close at $2.09. Steve Mento, the company's president and CEO, told BioWorld Today that he sees the Tobira deal as good for the NASH space. "I think it comes at an opportune time. One of the things that is apparent, especially when you're looking at early stage liver disease, is that the trials take a long period of time. The whole NASH space — really for the last year or so — has been kind of quiet," he said. "Having a deal of this magnitude helps everyone in the space and brings back some attention to NASH as a disease area that's going to be important in the long haul."
CALL FROM THE MALL
The Tobira buy extends an acquisitive chapter for Dublin-based Allergan, which picked up dermatology-focused Vitae Pharmaceuticals Inc. for $639 million last week and the eye care company Retrosense Therapeutics LLC for $60 million plus milestones a week before that. (See BioWorld Today, Sept. 15, 2016.)
Shortly after announcing its Tobira buy, Allergan added yet another new asset to the mix, with the acquisition of Akarna Therapeutics Ltd., a deal that delivers global rights to AKN-083, a preclinical farnesoid X receptor (FXR) agonist, also in development for the treatment of NASH.
Terms of the deal include an up-front payment of $50 million for San Diego-based Akarna, subject to certain adjustments, as well as potential clinical, regulatory and commercial milestone payments related to AKN-083. In addition, the acquisition includes a portfolio of additional development-stage FXR compounds — the class to which Intercept's Ocaliva belongs.
Akarna closed a $15 million series B preferred stock financing in February, with investments from Forbion Capital Partners, New Science Ventures and Third Point Ventures. (See BioWorld Today, Feb. 17, 2016.)