Would-be therapies in respiratory syncytial virus (RSV) took center stage with Johnson & Johnson's (J&J) plan to take over Alios Biopharma Inc. for $1.75 billion, gaining a pipeline that includes the phase II oral nucleoside analogue AL-8176 in RSV and a uridine nucleotide (nuke) analogue, AL-335, for hepatitis C virus (HCV) – another, less loudly touted driver for the deal.
Alios' press release seemed to highlight the RSV aspect, but analyst Michael Yee with RBC Capital Markets called the buyout "a hep C nuke acquisition in disguise," noting that Alios not only has AL-335 with potent preclinical activity across HCV genotypes, but also AL-516, a purine nucleotide analogue in preclinical studies going into phase I next year.
The boards of South San Francisco-based Alios and J&J, of New Brunswick, N.J., have agreed to the deal, expected to close in the fourth quarter of this year. Alios could not be reached, as the companies were holding an all-hands meeting Tuesday to explain what the takeover will mean for employees.
"We generally agree that the deal was in good part for RSV drug AL-8176, which has completed positive phase II data similar to Gilead Sciences Inc.'s positive phase II data earlier this year," Yee wrote in a research report, but the HCV piece is important. Alios also has candidates for influenza and rhinoviruses.
In RSV, Foster City, Calif.-based Gilead is working on the oral fusion inhibitor GS-5806; J&J may have an internal program with a fusion inhibitor, too. Wells Fargo analyst Brian Abrahams said "the price paid [in the Alios deal] highlights the significant opportunity and unmet need in RSV, where there are 150,000 hospitalizations per year for children alone, with upwards of 178,000 hospitalizations per year among elderly patients." Gilead's compound is underappreciated, Abrahams wrote in a research report, conceding that AL-8176 is undergoing tests in hospitalized infants but GS-5806 has yet to move into pediatric trials.
In HCV, AL-335 differs structurally from Alios' nuke analogue, VX-135, which targets the NS5B polymerase and is partnered with Cambridge, Mass.-based Vertex Pharmaceuticals Inc. VX-135 was the subject of a potential $1.5 billion deal with Alios in 2011, but it ran into problems when patients developed elevated liver enzymes. Earlier this year, Vertex said no further investments would be made in the asset and the firm would try to out-license it. AL-335, for its part, yielded promising preclinical data at the American Association for the Study of Liver Diseases meeting earlier this month. (See BioWorld Today, June 14, 2011.)
Others in the HCV space include Achillion Pharmaceuticals Inc., of New Haven, Conn., suggested by some as a potential takeover target for J&J or another big pharma concern. Achillion is developing ACH-3422, a nuke pro-drug of a uridine analogue for HCV. In June, the company began dosing for seven days in patients with genotype 1 chronic HCV as part of the ongoing phase I trial, with proof-of-concept results due this fall, which puts the candidate well ahead in the race and thus "attractive to J&J or others hoping to compete in the HCV space," in Abrahams' view.
HERE COMES LVD/SOF,TOO
Alios' RSV therapy has turned up positive data after treating healthy volunteers infected with RSV within 12 hours, similar to Gilead's program, "so we will continue to watch this, which in some ways 'validates' Gilead's RSV program and opportunity," in the opinion of Yee, who estimated that an RSV drug could be a $1 billion product.
At the same time, "we clearly think the long-term 'call option' upside here is the Alios nukes, if those can show a 4-log reduction in HCV virus and have a good safety profile," Yee wrote, acknowledging such an outcome "is not a lay-up, as we know development of nukes can be extremely difficult and the bar for continued progression is very high." Vertex, for example, he reminded investors, dropped not only VX-135 but another nuke, because of low efficacy.
In June, big pharma's appetite for HCV nukes was proved by Whitehouse Station, N.J.-based Merck's buyout of Idenix Pharmaceuticals Inc., of Cambridge, Mass., for $24.50 in cash per share, or about $3.85 billion, in a 300 percent-plus premium. Merck reaped Idenix's IDX21437, a uridine nuke analogue NS5B polymerase inhibitor for which the firm had just disclosed data from a phase I/II trial. During the seven-day proof-of-concept part of the study, IDX21437 yielded mean maximum 4.2 log10 IU/mL to 4.3 log10 IU/mL reductions for patients infected with HCV genotypes 1, 2 or 3 receiving 300 mg once daily. Results with IDX21437 stacked up against Gilead's Sovaldi (sofosbuvir) in the same class. Multiple bidders came to the table for Idenix, making Achillion's program likely soon to find a buyer. Approved late last year by the FDA, Sovaldi has established efficacy as part of an HCV regimen in patients with genotypes 1, 2, 3 or 4 infection, including those with hepatocellular carcinoma who meet Milan criteria (i.e., awaiting liver transplantation) and those with HCV/HIV-1 co-infection. (See BioWorld Today, April 24, 2014, and June 10, 2014.)
Deutsche Bank analyst Alethia Young noted that J&J recently reported $900 million in quarterly sales with its HCV protease inhibitor Olysio (simeprevir) combined with Sovaldi. "This combo is off-label and likely will get limited use after Gilead's all-oral [regimen] is approved in early October," she wrote in a research report. Gilead in April said the FDA granted priority review to the company's new drug application for a once-daily fixed-dose combination of the NS5A inhibitor ledipasvir 90 mg and Sovaldi 400 mg, often called LVD/SOF, in adults with chronic HCV genotype 1 infection. The PDUFA date is Oct. 10.
"Alios plans to start its phase I program around year-end with [its] nuke, so at fastest would give Achillion around a nine-month lead," Young pointed out in a research report. "We think developers will look for phase II-ready assets in the next 12 months," as was the case with Idenix. "We still view Achillion's data readout in phase I as a highly relevant catalyst and
[could provide] a meaningful lead over competitors," she added.