Reata, Abbott Ink Another $400M Up-Front Deal
By Marie Powers
A year after landing a $450-million up-front deal with Abbott for its lead antioxidant inflammation modulator (AIM) bardoxolone methyl, Reata Pharmaceuticals Inc. hit the rewind button, gaining another one-time $400 million license payment from the pharma giant to develop the rest of its second-generation AIM portfolio.
Last September's deal, for the exclusive rights to develop and commercialize bardoxolone methyl outside the U.S., excluding certain Asian markets, was one of the largest up-front offerings in biotech history – especially impressive considering that it covered a single compound. (See BioWorld Today, Sept. 24, 2010.)
Although the new global pact covers an entire portfolio, it still ranks among the largest disclosed up-front preclinical deals ever and fattens Abbott's 2011 shopping cart. In June, the Abbott Park, Ill.-based pharma paid Biotest AG $85 million up front as part of a $480 million autoimmune disease deal focused on BT-061 for rheumatoid arthritis and psoriasis. (See BioWorld Today, June 22, 2011.)
And in March, Abbott inked a $200 million partnership with Seattle Genetics Inc. for rights to pair Seattle's antibody-drug conjugate technology with Abbott's internal oncology target, though that deal was structured entirely in milestone payments, royalties and annual maintenance and research fees. (See BioWorld Today, Mar. 23, 2011.)
The new Reata-Abbott collaboration includes a large number of molecules in a broad range of therapeutic areas, including pulmonary, central nervous system disorders and immunology.
Abbott and Reata will equally share costs and profits for new AIMs in newly licensed indications except for rheumatoid arthritis and other select autoimmune diseases, in which Abbott will take 70 percent of costs and profits and Reata will take 30 percent.
The companies expect to move the collaboration's first compound into human trials next year.
The deal also includes a research agreement in which the companies will work together to discover molecules that exhibit the same pharmacology as the AIMs already in Reata's pipeline.
AIMs activate transcription factor Nrf2, promoting the production of a range of antioxidant, detoxification and anti-inflammatory genes while inhibiting NF-κB, a transcription factor that regulates many pro-inflammatory enzymes. Suppression of Nrf2 and activation of NF-κB have been associated with numerous chronic diseases, including multiple sclerosis, rheumatoid arthritis, chronic kidney disease, neurodegenerative disease and chronic obstructive pulmonary disease, and Reata's AIMs are expected to help treat those conditions.
A Phase IIb study of bardoxolone methyl suggested the compound may reduce the stage of CKD and improve estimated glomerular filtration rate and other measures of kidney function in most patients who receive the drug. In the study evaluating moderate (Stage IIIb) to severe (Stage IV) CKD and Type II diabetes, about 60 percent of patients receiving bardoxolone methyl experienced a reduction in the classification of the severity of their disease after 24 weeks of treatment.
In June, Reata and Abbott initiated the compound's pivotal multinational double-blind, placebo-controlled Phase III study, entitled BEACON, in approximately 1,600 patients with Stage I chronic kidney disease (CKD) and Type II diabetes. Top-line data are expected to report in 2013.
The companies' existing relationship played a major role in the follow-on deal, acknowledged Warren Huff, CEO of Irving, Texas-based Reata.
"[Abbott] recognized early on the importance of the clinical data that we had generated in the chronic kidney disease space," Huff told BioWorld Today.
"They've also gotten very interested in the pharmacology of our drug," he added, noting that Abbott has a vast understanding of the mechanics of inflammation through its work with Humira. A year of joint development on bardoxolone methyl increased Abbott's comfort level with Reata's team.
"Along the way, we began to talk together about the potential therapeutic opportunities that there are because of the mechanism of action," Huff said. "Because it's potently tissue-protective and anti-inflammatory, it's got the potential to provide a clinical benefit in pretty much any setting where the pathology involves inappropriate, chronic activation of inflammatory pathways."
The deal was crafted, Huff said, to take advantage of that broad range of applications.
"The deal is designed on the assumption that we're successful with the lead product, and we're looking to commercialize our follow-on products on a worldwide basis," he said. "I'd love to say it was deft negotiating, but the truth is [we were] doing really good development work in an area of completely novel pharmacology that's got high clinical impact."
Barbara Kosacz, a partner at Cooley LLP, who helped to negotiate the deal, agreed that the bardoxolone methyl arrangement laid the groundwork for a partnership that is even more collaborative, with the companies working mostly on an equal basis across a range of preclinical compounds.
"On the one hand, this is the kind of deal that can only happen when partners already know one another," she said.
Nevertheless, the terms also speak to the craving by big pharmas for good science.
"Pharmaceutical companies – not just Abbott – are interested in highly novel mechanisms of action that will yield transformational medicines and not just me-too medicines," Kosacz told BioWorld Today.
Thanks to the Abbott deals, privately held Reata now is "fully funded very comfortably" to break even, Huff said. Although Abbott took a minority stake in Reata last year, the new deal does not expand that investment, according to Huff, who maintained that Reata intends to build an independent commercial enterprise.
"Our motive is to build a standalone company," he said. "That's what we've been doing since the beginning."
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