Trust favourite Alexion options Stealth Bio’s mitochrondrial disease drug
US rare disease biotech and investment trust favourite Alexion Pharmaceuticals (NASDAQ:ALXN) has effectively added a new Phase III-stage programme to its R&D pipeline, by virture of an option deal covering Stealth BioTherapeutics’ lead product elamipretide for mitochondrial diseases. Stealth (NASDAQ:MITO), a $270m market cap US biotech that floated in February, is conducting a 218-patient Phase III study of elamipretide as a daily subcutaneous injection in primary mitochondrial myopathy, as well as smaller Phase II studies in Barth syndrome and dry age-related macular degeneration.
Alexion will make an initial $30m payment to Stealth covering the option fee, an equity investment and development funding. The option covers can be exercised after the outcome of Stealth’s Phase III trial in primary mitochrondial myopathy in Q1 2020. If exercised, the agreement coveres the co-development and commercialisation of elamipretide and provides for additional payments – undisclosed but presumably significantly larger – to include an option exercise fee, an additional equity investment, development funding and potential regulatory and commercial milestones. Primary mitochrondial myopathies are a group of disorders that are associated with changes in genetic material (eg depletions, deletions, or mutations) in mitochondrial DNA or with genes outside the mitochondria (nuclear DNA). These primarily affect skeletal muscle.
Alexion is the seventh largest holding at International Biotechnology Trust (IBT, 3.5% of NAV), the ninth largest at Biotechnology Growth Trust (BIOG, 3.6% of NAV), and the fourth largest holding for Worldwide Healthcare Trust (WWH, 3.9% of NAV), based on end August factsheets. Alexion was also in the top 10 holdings of Polar Capital Global Healthcare Trust (PCGH) as of the end of March, but had fallen out of this by August, so presumably the holding had been reduced or sold.
Alexion, which has a market cap of $21.6bn is famous as the developer of Soliris, until recently the world’s most expensive drug, that is used for a range of rare and ultra-rare conditions. Alexion has recently launched a long acting version of Soliris, called Ultomiris. Alexion is aims to covert Soliris patients over to its new drug – at least in the first indication of paroxysmal nocturnal hemoglobinuria – ahead of the possible introduction of biosimilar competition 9of which there are at least two in development). The Soliris/Ultomiris franchsise also faces potential challenges in several of indications from other molecules targeting the complement system. By chance, one of these “non-biosimilar” competitors – Ra Pharmaceuticals – has just been acquired by UCB, which means a better capitalised company will now be behind the challenge. The acquired firm’s key asset is zilucoplan, which ius in development for myasthenia gravis.