AGTC Catapults Premarket on $1 Billion+ Eye Disease Pact With Biogen

AGTC Catapults Premarket on $1 Billion+ Eye Disease Pact With Biogen
CAMBRIDGE, Mass. — Biogen, Inc. and AGTC (AGTC), a clinical stage biotechnology company developing adeno-associated virus (AAV)-based gene therapies for the treatment of rare eye diseases, entered into an agreement worth more than $1 billion to develop gene-based therapies for multiple ophthalmic diseases, the two companies announced this morning.

The deal is the result of more than 18 months of AGTC reaching out to larger pharmaceutical firms for a partnership to advance AAV therapies, Sue Washer, chief executive officer of AGTC said in an interview this morning. The company weighed its options with several of the bigger pharma companies that have been expressing interest in gene therapies before coming to terms with Massachusetts-based Biogen, Inc.. In Biogen, AGTC saw a “unique opportunity to work with a company that has a similar vision of scientific excellence,” Washer said.

“This is positive news for our company and it’s positive new for patients who will benefit from this partnership,” Washer said.

The two companies will focus on the development of a portfolio of AGTC’s therapeutic programs, including drug candidates for orphan diseases of the retina that can lead to blindness in children and adults.

The lead development programs in the collaboration include a clinical candidate for X-linked Retinoschisis (XLRS) and a pre-clinical candidate for the treatment of X-Linked Retinitis Pigmentosa (XLRP). XLRS, a disease affecting young males beginning during the teenage years, can lead to serious complications such as vitreous hemorrhage or retinal detachment during adulthood.

The first in human study for this indication has recently begun, and the company expects initial clinical data for this program in 2015. XLRP usually causes night blindness by the age of ten and progresses to legal blindness by an individual’s early forties. Both conditions represent significant unmet needs that may be addressed by replacing the single, faulty gene causing each disease.

“We expect this collaboration will further validate our novel adeno-associated virus (AAV) gene therapy platform and support the development of new therapies that may allow for transformative treatments for these rare inherited eye diseases and other clinical indications,” Sue Washer, president and chief executive officer of AGTC, said in a statement.

Following the early morning announcement of the deal, AGTC’s stock rocketed skywardsmore than 20 percent, hitting a morning high of $19.90 per share. Biogen’s stock ticked up slightly to a morning high of $407.98 per share.

The partnership will be a comfortable fit for Biogen, which has an established pipeline of ophthalmic treatments, includinganti-LINGO-1 for the treatment of acute optic neuritis (AON). Biogen said the drug was effective at the recovery of the optic nerve’s ability to transmit a signal from the retina to the visual cortex. Under terms of this morning’s deal Biogen will make an upfront payment in the amount of $124 million to AGTC, which includes a $30 million equity investment in AGTC at a price equal to $20.63 per share. When milestone payments are factored into the equation, AGTC will see more than $1 billion, which includes a payment of up to $472.5 million for the company’s two lead programs.

In addition, Biogen will make payments up to $592.5 million across the discovery programs, along with royalties in the mid single digits to low teen percentages of annual net sales, the companies said.

Under the agreement terms, Biogen will obtain commercialization rights for the XLRS and XLRP programs. AGTC will lead the clinical development programs of XLRS through product approval and ofXLRP through the completion of first-in-human trials.

Olivier Danos, senior vice president, cell and gene therapy at Biogen, said the collaboration will allow gene therapies to be used to “open possibilities for patients who suffer from diseases that are well understood, but have no adequate treatment.” Danos said the eye is an organ that provides an ideal setting for the “localized selective delivery of gene-based therapies.”

The deal still has to go through a regulatory approval, which could come sometime in August. The next 18 or so months for AGTC will be “business as usual” as the company’s lead drugs are brought through clinical trials and toward regulatory approval, Washer said. The bigger changes for AGTC will be the opportunity to use the infusion of capital from the Biogendeal to expand the company’s internally-controlled ophthalmic pipeline for orphan therapies. The infusion will also allow the Florida-base company to expand its operations to the ever-growing pharmaceutical hub of Boston. Washer said the company is eyeing property in Boston to house its business development and investor relations staff. Washer said the company has already hired some Boston-based staff, who are working out of their homes until an office location can be secured.

While Biogen expands its pipeline for eye-related issues, the company has also seen recent success in other areas, particularly in Alzheimer’s disease research. April Biogen announced its drug BIIB037, or aducanumab, led to reductions in brain amyloid plaque by as much as 71 percent. The plaque reduction was more pronounced as the dose of the drug increased and over time and Biogen also announced the drug was able to reduce cognitive decline.

Biogen is looking to begin a Phase III trial, which if it proves successful, would then lead the company to seek approval to market the drug.

Developing a treatment that target’s Alzheimer’s disease at the source, something that hasn’t yet successfully been managed, will be an expensive affair for any biotech company. Biogen’s executives speculated bringing the drug to market could cost approximately $2.5 billion, which would include costs of conducting clinical trials as well as construction of a manufacturing facility for the investigational drug.