Roche Inks $595M Deal for Chiasma's Acromegaly Drug
By Catherine Shaffer
A partnership between Roche AG and Chiasma Inc., of New York, promises to take the pain out of therapy for acromegaly, the overproduction of growth hormone.
Chiasma's Octreolin is an oral form of octreotide, an analogue of somatostatin that is currently given by injection. Under the agreement, Roche will have a worldwide exclusive license to the drug and will take responsibility for commercialization, with its Genentech Inc. subsidiary in charge of marketing. Chiasma will continue developing Octreolin through completion of pivotal Phase III studies for acromegaly.
Under the terms, Roche is offering $65 million with potential milestones of $530 million and tiered, double-digit royalties on Octreolin net sales.
Chiasma CEO Fredric Price said the deal was the result of a calculated strategy by the company.
"Most companies that have delivery technology. . . . They do a little preclinical work, then they show some positive animal models and go to drug companies," Price told BioWorld Today. That path leads to an early stage deal, and the company gets a modest paycheck out of it. "A small amount of research payments, small milestones, small royalties," Price said.
When Price took the helm of Chiasma in 2008, he wanted to pursue a different business model than the typical early stage route. "It's not because I'm arrogant," Price said. "History has shown there's almost no value there. If you take a look at the companies that have tried to do this, they're out of business or have a terribly low valuation."
Instead, he proposed to Chiasma's board that the company should look for drugs that have been overlooked and have "very wide therapeutic windows," and a huge market opportunity with clear unmet need expressed by patients, nurses and physicians.
The board approved Price's strategy. There would be no early stage licensing. "If you're in Phase III, nobody cares if your technology is a delivery system, or what the origin of your business plan is," Price said. Other questions common to early stage deals, such as animal toxicity studies, market research and so forth have already been settled.
The company created a list of "three to four drugs" that were viable with Price's proposed strategy, and the top candidate on the list was ocreotide. Price, who is an investor in the company himself, said Chiasma had four venture capitalists on board who supported the strategy. "I had to put a budget together to show them how much money we had to raise. . . . For four years, we funded it ourselves."
Chiasma gained a fifth venture investor in mid-2012.
Octreolin is a peptide drug formulated with Chiasma's TPE technology. Chiasma has completed four studies in healthy volunteers showing that the pharmacokinetic profile of the product is similar to that of commercially available injected octreotide and has the same pharmacodynamic effect of reducing growth hormone.
The company began enrolling in its Phase III trial in the fourth quarter of 2011. The primary outcome measure of the trial is IGF-1 concentration, assessed at the end of seven months of drug treatment with the goal of age-normalized IGF-1 concentration. The secondary outcome measures are safety and tolerability.
Octreotide injections are notoriously painful. Price described the injection process in detail. He said ocreotide is a "thick, viscous substance" that needs a "gigantic" 19-gauge needle – the kind of needle referred to as "the eiffel tower" in Europe.
"The nurse sticks it in the rear, up to 2 inches. You've got a giant needle going in up to 2 inches, and the push – because it's thick and very viscous fluid – it takes anywhere between 45 and 60 seconds. It is incredibly painful," Price said.
Most patients, according to Price, need a topical anaesthetic or take an anti-anxiety drug or systemic painkiller before receiving the injection, and it leaves a substantial welt. "It's just an awful experience."
It's that nightmarish injection experience that Chiasma contended will drive demand for its oral version.
Price said octreotide sells $1.4 billion per year. "If we could do this with convenience, with a pill and a glass of water, an enormous number of patients would want to switch."
Price also said octreotide has a "very wide therapeutic window," meaning it can be given in tiny amounts to be therapeutically effective, and yet it has few side effects if dosed too high.
Price said Chiasma's pipeline contains other drugs that it expects to have similar market properties to Octreolin, but that it does not release information on investigational products until it has clinical results to share.
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