Pharma giant Abbott plunked down $110 million in cash to acquire AP214, a first-in-class alpha-MSH peptide derivative designed to prevent acute kidney injury (AKI) during major cardiac surgery in patients at increased risk, from privately held Action Pharma A/S, of Aarhus, Denmark.

Abbott, of Abbott Park, Ill., acquired global rights to develop and commercialize AP214 to prevent AKI and other relevant indications and assumed full responsibility for advancing the drug. The hormone analogue targets both systemic inflammation and cellular death caused by hypoxia that can occur during surgery. Currently, no drugs are approved to prevent or treat AKI associated with major cardiac surgery

In September 2011 , Action reported positive Phase IIb top-line results in patients undergoing major cardiac surgery with cardiopulmonary bypass who were at increased risk of developing AKI. AP214 reduced kidney injury and improved 90-day outcomes on a composite endpoint (death, dialysis and kidney function) and was safe and well tolerated compared to placebo.

As the next step, the pharma said it will conduct another Phase IIb study, expected to begin later this year.

Action will receive no milestones or royalties, which suits the company just fine. After a transition period, Action will share proceeds from the transaction with shareholders and wind down operations, an ebullient Ingelise Saunders, Action's CEO, told BioWorld Today. Although the company also has a preclinical modified MSH peptide analogue, AP405, designed to target inflammatory skin diseases, in the spring of 2010 the company essentially hitched its wagon to AP214.

"At that point in time, we made a decision that we wanted to find a partner that could take this program forward," said Saunders, former president and CEO of Denmark's ACE BioSciences and the UK's Celltech Pharmaceuticals plc and a veteran of Denmark's Novo Nordisk A/S, who joined Action in 2010 to focus on the clinical development of AP214 and position the asset for sale.

Abbott expressed early interest and was a logical suitor, since the company has two investigational treatments in development for chronic kidney disease. Bardoxolone, a first-in-class anti-oxidant inflammation modulator that activates Nrf2, is in Phase III development with Reata Pharmaceuticals, of Irving, Texas. Atrasentan, a compound discovered by Abbott scientists, is being evaluated in a Phase IIb study in patients with diabetic kidney disease.

Once the AP214 Phase II data were in hand, Action "kicked off a very aggressive process" to nail down a deal. So, although the asset acquisition came together in less than five months, "we had been talking to Abbott for a long time," Saunders said.

Given the difficulties faced by small biotechs in securing venture funding, Action was determined to relinquish its responsibility for extended product development.

"The plan for the last two years was to sell off the asset and get as much as we could up front so that we didn't have to participate in the financial risk of taking this project forward," Saunders explained.

In that regard, Action's strategy was similar to that of another virtual biotech, FerroKin BioSciencies Inc., which also plans to close after its single iron chelator candidate FBS0701 was scooped up in March by Ireland's Shire plc for $100 million up front and potential milestone payments of up to $225 million. (See BioWorld Today, March 16, 2012.)

The AP214 purchase netted a nice return for Action's European investors, which include Sunstone Capital, Global Life Science Ventures, SLS Invest, InnovationsKapital, Incuba Venture and Oestjysk Innovation. Founded in 2000, the company had raised €33 million (US$43.3 million) in four rounds, the most recent a €5 million financing shortly after Saunders joined the company.

The deal also brought a welcome surprise to Zealand Pharma A/S, of Copenhagen, Denmark, which picked up an $11 million royalty from Action and is entitled to a low single-digit royalty from Abbott on future sales of AP214, which Zealand called ZP1480.

In 2003, Action in-licensed Zealand's structure-inducing probe technology, designed for use with pro-opiomelanocortin derivatives, to modify its compound.

In addition to the cash, the deal showed the value of Zealand's engine in developing molecules that are safe and effective, according to David H. Solomon, the company's president and CEO.

"It's further validation of our model," he told BioWorld Today.

Jefferies & Co. analyst Peter Welford agreed with that assessment, writing in a flash note that Zealand's main focus remains on partner Sanofi SA's regulatory progress for lead compound Lyxumia (lixisenatide), a once-daily GLP-1 inhibitor for Type II diabetes, and initiation of Phase III combination trials with Lantus (insulin glargine). (See BioWorld Today, June 17, 2011.)

Action, which has meandered through various development strategies in its lifetime, took the right path when it focused on AP214, according to Jonathan Gertler, senior partner at Back Bay Life Science Advisors in Boston, which advised Action's management prior to and during the Abbott transaction. Whether biotechs develop a platform technology or a single asset, they must be singularly focused on demonstrating utility in clinical trials, he said.

"Biotechs often segregate business development activities from some of the core issues that go into the preparation of a drug candidate," Gertler told BioWorld Today. "We feel you have to link the clinical, the scientific, the regulatory, the market and the commercial dynamics before you begin the business development process."

In working with Action, Back Bay looked for a pharma partner "with commitment to the space, understanding of the science and resources," he added.

The acquisition agreement between Abbott and Action, which requires U.S. antitrust clearance, is expected to be completed by the end of this quarter.

Deals like Action's "are very encouraging for small biotechs," Saunders observed, proving "you don't need to get into all of these back-loaded deals where you're not part of the development, but you're part of the financial risk."