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Theravance shows Janssen intestinal fortitude in potential $1B JAK deal

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By Marie Powers
News Editor

Theravance Biopharma Ireland Ltd., a unit of Theravance Biopharma Inc., is set to receive $100 million from Janssen Biotech Inc., a subsidiary of New Brunswick, N.J.-based Johnson & Johnson, as part of a global co-development and commercialization deal for TD-1473. The oral, intestinally restricted pan-Janus kinase (JAK) inhibitor targets inflammatory intestinal diseases, including ulcerative colitis (UC) and Crohn's disease.

A bigger payday awaits. Dublin-based Theravance is eligible to receive up to $900 million in additional payments if Janssen elects to remain in the collaboration following completion of phase II activities. Should that occur, Theravance and Janssen will jointly develop and commercialize TD-1473 in inflammatory intestinal diseases, sharing profits in the U.S. and expenses related to a phase III program at a split of 67 percent to Janssen and 33 percent to Theravance, which also is eligible for double-digit tiered royalties on ex-U.S. sales.

Theravance, which plans to report fourth-quarter and full-year 2017 financial data later this month, had about $390 million in cash as of Dec. 31, according to Renée Galá, the company's senior vice president and chief financial officer.

Investors welcomed the news on Janssen, lifting Theravance shares (NASDAQ:TBPH) more than 20 percent at Wednesday's high before the stock settled at $28.01 for a gain of $3.57, or 14.6 percent.

Discovered internally, TD-1473 borrowed from the company's work in respiratory disease, differing from other oral JAK inhibitors under development in inflammatory bowel disease (IBD). While showing high affinity across the JAK family of enzymes – including JAK1, JAK2, JAK3 and TYK2 – that play a vital role in cytokine signaling, TD-1473 acts directly at the site of inflammation in the intestinal wall, limiting systemic exposure.

"A few years ago, given our ongoing research efforts, the company was looking at how we could design research programs to create transformative medicines," Rick Winningham, chairman and CEO, told BioWorld. "We looked at where we had been successful historically, and that had been in respiratory medicines. From there, we looked at what area we could leverage, based on an explosion of knowledge, and that was immunology."

Predecessor Theravance Inc. (now Innoviva Inc.) had a storied respiratory disease partnership with Glaxosmithkline plc. With Mylan NV, Theravance Biopharma is developing revefenacin (TD-4208) to treat chronic obstructive pulmonary disease. Last month, the FDA accepted the new drug application for the nebulized long-acting muscarinic antagonist, setting a PDUFA date of Nov. 13. (See BioWorld Today, Oct. 21, 2016.)

Considering its prowess in localized delivery to treat respiratory illnesses, the company's scientists took to studying other tissues in the body that might respond in a similar manner.

"We landed on inflammatory diseases of the intestine," Winningham said.

JAK inhibitors were emerging as "terrific anti-inflammatory medicines, having great effect on suppressing immune response," he pointed out. Their downside was systemic immune suppression.

The Theravance research team began to tinker with the design of an oral agent that would pass through the stomach and be absorbed, instead, through the walls of the small and large intestines to suppress inflammation only in those tissues. The result was TD-1473.

Preclinical data, presented in 2016 at the Congress of the European Crohn's and Colitis Organisation in Amsterdam, showed the candidate produced potent and selective pan-JAK inhibition and was capable of achieving high colonic levels without significant systemic exposure following oral dosing. The findings sparked a flurry of interest in the asset, according to Winningham.

Theravance then moved TD-1473 into the clinic. Data from the first cohort of its phase Ib study, reported in August 2017, showed minimal systemic exposure in patients – consistent with an initial study in volunteers – and no evidence of systemic immunosuppression or infections. A >/= 1-point reduction in Mayo rectal bleeding subscore was reported in seven of 10 patients who received TD-1473 compared to just one of three placebo recipients.

At that point, talks with Janssen – which had been progressing for "a while," Winningham said – escalated.

"We thought they could bring much more to the table than just money," he said. "They could make our development programs for '1473 more effective because of their knowledge of inflammatory bowel disease."

"This really vindicates an approach of targeting localized disease with localized medicine," added Brett Haumann, senior vice president of clinical development and chief medical officer. "The whole philosophy here, which turned Janssen's head, is that we found a mechanism here which treats from the outside in rather than from the inside out. We're treating the contact surfaces and the tissues that are inflamed but we're not treating the rest of the body. That's a big contrast from other therapies."

Seeking to 'climb further up that efficacy dose curve'

By midyear, Theravance expects to complete the second and third cohorts in the phase Ib UC study to inform the dose range for the next set of studies. In the second half of the year, the company plans to initiate a phase IIb/III adaptive design induction and maintenance study in UC, along with a parallel phase II study in Crohn's. Following completion of the Crohn's study and the IIb induction portion of the UC study, Janssen can elect to proceed with an exclusive license for TD-1473 in return for a payment of $200 million. Janssen then would assume subsequent development of TD-1473 in Crohn's while Theravance continues to advance the UC program through completion of phase IIb/III.

Timing of the collaboration worked to the advantage of both parties. Even at the talking stage, Janssen shared its "deep-seated expertise in designing creative programs" with Theravance, Haumann told BioWorld, resulting in the adaptive phase IIb/III design. Taking patients from a dose-ranging induction study and putting them into the pivotal maintenance program will enable Theravance to begin generating pivotal data this year. "That's a real step forward for us in terms of accelerating the ulcerative colitis program," Haumann said.

Similarly "pleasing" to Theravance is the ability to accelerate TD-1473 in Crohn's rather than following what was expected to be a sequential path for the second indication, he added.

"What you're seeing here is a smarter, faster program because of this collaboration," Haumann said.

Theravance retained the option to co-commercialize TD-1473 in the U.S., with Janssen set to assume ex-U.S. commercialization responsibilities. The remaining $700 million in the pact are linked to development and commercialization milestones.

The deal includes backup compounds, also in the IBD space.

Several recent Janssen deals suggest the J&J unit is highly motivated to identify the next Remicade (infliximab) as the blockbuster TNF-alpha ligand inhibitor faces the loss of patent exclusivity and competition from biosimilars. (See BioWorld, July 25, 2017, and Jan. 25, 2018.)

Last year, Janssen sealed a potential $990 million deal with Protagonist Therapeutics Inc., of Newark, Calif., for the co-development and commercialization of PTG-200, an oral peptide IL-23 receptor antagonist. That arrangement covers all indications, including IBD. (See BioWorld Today, May 31, 2017.)

For its part, Theravance remains "invested in looking at several other opportunities" for its localized JAK inhibitor approach, Haumann said.

"At one point in time, people believed that the way to treat asthma was through systemic steroids," Winningham pointed out. "When companies came around and developed the means to deliver inhaled corticosteroids into the lungs, that transformed the treatment of asthma because it spared the rest of the body from the side effects associated with chronic steroid use. That's what we hope to do with our approach here."

Haumann cited the UC program underway for the JAK inhibitor Xeljanz (tofacitinib, Pfizer Inc.), observing that it validated the mechanism but "can't drive true efficacy" in UC at 10 mg – the top dose under investigation in ongoing trials.

"We have a different approach here," he added, "so we think we can climb further up that efficacy dose curve to get to true rates of improvement."

In a company update, Evercore ISI analyst Josh Schimmer liked the deal and the terms.

"Should this program prove safe and effective in larger clinical trials, the commercial potential of the product could easily surpass $1 [billion] in annual revenue," he wrote. "Overall, we see the deal as an important validation for the program, particularly given JNJ's expertise in autoimmune diseases with its demonstrated success in the development of programs including Remicade, Stelara and Simponi."

Theravance, Schimmer added, "is playing a cost-efficient long-game, initially pursuing joint commercial arrangements that help manage financial requirements while over time building out commercial capabilities and financial resources to take greater ownership of programs."