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Achillion loss of HCV deal with J&J signals switch

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By Randy Osborne
Staff Writer

Achillion Pharmaceuticals Inc.'s chief commercial officer, Joseph Truitt, said the firm "will certainly assess all the options for the hepatitis C virus [HCV] portfolio" after the ending of the deal by Johnson & Johnson (J&J) unit Janssen Pharmaceuticals Inc., but had no further guidance.

Nudged out of the HCV space by increasingly effective competitor drugs, J&J chose to scrap development of HCV treatment regimen JNJ-4178, a combination of three direct-acting antivirals: Achillion's NS5A inhibitor odalasvir (also known as ACH-3102), simeprevir (Olysio, J&J), and AL-335, an NS5B inhibitor that came to J&J by way of its buyout of South San Francisco-based Alios Biopharma Inc. for $1.75 billion. (See BioWorld Today, Oct. 1, 2014.)

Ending the program meant pulling the plug, too, on the potential $1.1 billion arrangement with Achillion, of New Haven, Conn., shares of which (NASDAQ:ACHN) fell 22 percent Monday, or $1.08, to close at $3.83.

Achillion entered the potential $1.1 billion deal in May 2015 and said it was disappointed by J&J's move, given positive results thus far with JNJ-4178. Included in the original terms was an equity investment of $225 million from the pharma heavyweight. Titusville, N.J.-based Janssen took about 18.4 million new, unregistered shares of Achillion at a price of $12.25 each as the up-front payment. (See BioWorld Today, May 20, 2015.)

J&J said ongoing phase II work with JNJ-4178 will be completed, but there will be no more development. Achillion henceforth will focus on advancing its complement factor D (CFD) therapies, and officials during a conference call pointed to the company's strong balance sheet of almost $370 million in cash and cash equivalents as of June 30. Chief Financial Officer Mary Kay Fenton said the burn rate has been running at about $20 million per quarter "and we anticipated during the second half of 2017 that would uptick slightly" to about $25 million. Based on CFD plans, "the level of annual spend will remain approximately unchanged. I don't want to give guidance on 2018 and 2019 yet, but it's in that family," she said, adding that, since HCV costs were borne by J&J, "this termination by Janssen does not impact our balance sheet or our burn rate."

Barclays analyst Geoffrey Meacham wanted to know more about the fate of the HCV program and whether another licensing deal might be feasible. CEO Milind Deshpande said his firm's "very recent market analysis and the profile that we are seeing for the combination regimen" suggest "significant value," but "beyond that, I think, in terms of licensing opportunities, how we want to proceed further is just too early to say."

Meanwhile, with ACH-4471 in the CFD effort, four phase II studies are ongoing or will start very soon, two in paroxysmal nocturnal hemoglobinuria (PNH) and two in C3 glomerulopathy (C3G), Deshpande said. "We will continue dosing PNH patients who are treatment-naïve, and the target enrollment there is eight to 12 patients. The second study that starts in PNH patients before the end of this year is going to be in patients who have suboptimal response to eculizumab [Soliris, Alexion Pharmaceuticals Inc.]. The second study will help us assess our thesis that inhibition of factor D will lead to improvements in hemoglobin [and] improvements in fatigue score because of the prevention of extravascular hemolysis. In C3G, the first study to start very soon is a 14-day, open-label study in C3G and IC-MPGN patients, where we will be monitoring changes in complement proteins like C3 and PV which are affected in [such patients]. In parallel, a second study in C3G will start before the end of this year, a double-blind, placebo-controlled study, which has a duration of six months."

Eyeing lampalizumab data

Deshpande said the key parameters targeted in the PNH research so far were lactate dehydrogenase, hemoglobin, fatigue score, PNH clone size and C3 fragment deposition on PNH erythrocytes, and "we have seen significant improvement" in all of them. Chief Medical Officer David Apelian said that, "quite notably, the patients' sense of well-being and fatigue greatly improved even in advance of the hemoglobin correction, which I think speaks to the impact on the immune system and the complement activation that occurs in this disease. Taken together, I think this represents a very meaningful proof of concept for ACH-4471 monotherapy and gives us confidence as we advance to the add-on phase of our switch strategy. And we expect to see, perhaps, similar synergies even on top of eculizumab treatment in those patients who are suboptimally responding, being that they are still anemic and, in many cases, still require transfusion with ongoing eculizumab. We feel strongly that by adding ACH-4471 at the apex of the pathway will give us really some synergy. That will be our stepping stone switch strategy for a switch to monotherapy."

Also a subject of talk on the call was Basel, Switzerland-based Roche Holding AG's recent disclosure that the primary endpoint was missed in Spectri, the first of two phase III studies evaluating the safety and efficacy of lampalizumab for geographic atrophy (GA) due to dry age-related macular degeneration. Lampalizumab did not reduce mean change in GA lesion area compared to sham treatment at one year. Given the lack of efficacy, further dosing in patients will be interrupted until the results from the second phase III study are evaluated, Roche said.

That matters because lampalizumab is an antigen-binding fragment of a humanized, monoclonal antibody directed against CFD, and Achillion has an early stage CFD program in GA. "It's clear that there is a disconnect between the data that were presented from [Roche's] phase II study and the top-line [phase III] results," Deshpande said, conceding "a note of caution here regarding how we can effectively use factor D for treatment of GA. We look forward to seeing the data from the second phase III trial. We continue to advance our small-molecule factor D inhibitors in the nonclinical setting, where we are assessing the safety, tolerability for long-term treatment duration to the back of the eye. And there are several other indications outside of GA that we are interested in," he said. The company will disclose "what those indications are, if we are convinced that factor D inhibition can make a difference," he added.

Leerink analyst Joseph Schwartz wrote in a report that "despite JNJ's reaffirmed commitment to the Achillion partnership on their recent analyst day, we saw limited market opportunity, even if the partnership had continued." Quashing the deal "turns the focus entirely onto the company's high-risk, high-reward" CFD bid, he said.