Exclusive rights to Assembly Biosciences Inc.'s preclinical gastrointestinal (GI) microbiome programs and additional GI programs secured with a $50 million up-front from Allergan plc could yield a much bigger payday, the company revealed Tuesday.

Development milestones for the programs are set at up to about $630 million and commercial milestones could near $2.15 billion for up to six different indications, according to a regulatory filing. The rewards are tied to successful development of two ulcerative colitis and Crohn's disease candidates, ABI-M201 and ABI-M301, respectively, as well as two additional compounds to be identified by Assembly for irritable bowel syndromes (IBS) with diarrhea, constipation or a mix of both. Tiered royalties based on net sales were also included in the deal.

The outsize milestones in the Allergan deal are reflective of the market opportunities in colitis, Crohn's disease, and IBS, totaling more than $10 billion, Assembly's President and CEO Derek Small told BioWorld Today. "Having Allergan as a partner is great for us. There's really not a more progressive GI-focused company in the world right now," he said. "No one that I know of is investing as heavily in GI expansions globally as Allergan is right now."

Assembly maintained rights to develop its first microbiome therapeutic, AB-M101, designed to cure recurrent C. difficile infection as well as rights to partner microbiome therapeutics in other areas such as metabolic disorders, immunotherapy and autoimmune diseases.

Earlier investments in GI assets have paid off well for Dublin-based Allergan, which collected revenue of nearly $1.3 billion during the first nine months of 2016 from the sales of products including Linzess (linaclotide), Asacol (mesalamine), Carafate (sucralfate) – both now facing generic competition – and other medicines.

Allergan and Assembly will share development costs up to $75 million through proof-of-concept (POC) studies, with Allergan picking up two-thirds of the costs and Assembly taking on one-third, though the partners have options to pursue a different split if pre-POC development costs over-run the $75 million mark. All post-POC development costs will be carried by Allergan.

The Allergan-Assembly deal could also be a win for tiny Marlboro, NJ-based Therabiome LLC, which stands to earn ascending milestone payments from Assembly on drug delivery technology incorporated into oral targeted delivery formulation, Gemicel. The relatively modest payments stem from Assembly's November 2013 licensing deal with the company spanning from IND filing to market approval, which would trigger a $3 million payment per product. Assembly has global rights on sublicensing the technology.

Assembly joined Nasdaq and acquired its microbiome program as a result of its merger with Ventrus Biosciences Inc. in July 2014.  (See BioWorld Today, March 20, 2015.)

Carmel, Indiana-based Assembly is also advancing a program of direct-acting oral antivirals intended to cure hepatitis B virus, an effort for which it landed a nice, if indirect gift from Allergan: the option to co-promote its licensed microbiome products in both the U.S. and China, where the HBV-infected population is estimated to encompass as many as 90 million people.

"We're long on HBV," said Small. "Our ability to establish a commercial capability sooner with this partnership with Allergan and really learn from some of the best gives us an opportunity to leverage that into the HBV program."

The microbiome deal, Allergan's first public foray into the space, adds the company to an ever-evolving list of companies with interests in the space, including Enterome Bioscience SA, Janssen-partnered Vedanta Biosciences Inc., Second Genome Inc., and Seres Therapeutics Inc.

Shares of Assembly (NASDAQ:ASMB) rose 3.5 percent on Tuesday to close at $12.89. Shares of Allergan (NYSE:AGN) gained $1.15 to close at $221.25.

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