DUBLIN – Leo Pharma A/S is putting biologic therapies at the heart of its strategy by making two big bets in a dermatology alliance with Astrazeneca plc under which it will take on development of tralokinumab, an interleukin-13 (IL-13) inhibitor, in atopic dermatitis, and the troubled IL-17 receptor inhibitor brodalumab in plaque psoriasis.

The Ballerup, Denmark-based firm is paying $115 million up front and could pay up to $1 billion more in sales-based milestones for rights to tralokinumab in dermatitis and potentially other dermatology indications. In the brodalumab deal, Leo is replacing Laval, Quebec-based Valeant Pharmaceuticals International Inc. as Astrazeneca’s European partner, but Valeant will retain rights to the U.S. and other territories outside of Japan and several other Asian countries, where Tokyo-based Kyowa Hakko Kirin Co. Ltd. holds rights. (See BioWorld Today, Sept. 2, 2015.)

Terms were not disclosed but are in line with the original deal between Valeant and Astrazeneca, which comprised $100 million up front, $170 million in pre-launch milestones and $175 million in sales-based milestones.

London-based Astrazeneca is retaining rights to tralokinumab for nondermatology indications, including asthma, in which a phase III trial is ongoing. The agent has also completed a phase IIb trial in atopic dermatitis, but it trails dupilumab, an anti-IL-4 receptor (R)-alpha inhibitor, which Paris-based Sanofi SA and Tarrytown, N.Y.-based Regeneron Pharmaceuticals Inc. are co-developing.

Last month, they reported positive data from a third phase III trial, in which dupilumab plus corticosteroid therapy significantly outperformed corticosteroid therapy alone – 39 percent of patients in the drug treatment arm achieved total or near-total clearing of their skin lesions after 16 weeks, whereas just 12 percent of those in the control arm did. A regulatory submission is expected in the current quarter and, given dupilumab’s fast track status, an approval could follow early in 2017.

The two agents share the same broad mechanism of action – IL-4 and IL-13 both bind IL-4R-alpha and induce similar allergic and hypersensitive reactions. Hitting the receptor, as dupilumab does, counters the effects of each cytokine. Targeting IL-13 selectively could result in a subtly different response.

Leo Pharma expects to start a phase III in the first quarter of 2017, the firm’s executive vice president for global research and development, Kim Kjoeller, told BioWorld Today, with a regulatory filing to follow about three years later.

By taking on brodalumab, Leo is entering tricky territory. Its originator, Amgen Inc., of Thousand Oaks, Calif., axed the molecule in May last year after it was linked to episodes of suicidal ideation and of actual suicide in patients. Astrazeneca decided to persevere, but it has since offloaded development to partners. Although the drug is highly active in plaque psoriasis, with about 85 percent of patients achieving a 75 percent reduction from baseline in the Psoriasis Area and Severity Index score, several other agents are also highly effective without the safety handicap.

Novartis AG, of Basel, Switzerland, gained FDA approval for Cosentyx (secukinumab), which blocks IL-17A, in January 2015 and reported $176 million in first-quarter sales this year. Indianapolis-based Eli Lilly and Co. gained FDA approval on March 22 for Taltz (ixekizumab), an agent that also blocks IL-17A.

Leo has taken on European rights following an assessment that the signals seen with brodalumab are more likely due to the co-morbidities associated with psoriasis than to the action of the drug. “For cardiovascular disease, depression/anxiety as well as suicidal ideation, a more than twofold excess risk exists for patients with moderate to severe psoriasis as compared to the background population – this also extends to suicidal ideation behavior (SIB),” Kjoeller stated. “In our review of the data we did not find support for a causal association between the treatment and SIB. However, it is important to stress, that as this is an important co-morbidity it needs to be monitored carefully among patients with moderate to severe psoriasis,” he added.

Leo took its first step into biologics development for inflammatory skin conditions last year in a preclinical deal worth up to $116 million with Argen-x NV, of Breda, the Netherlands. (See BioWorld Today, May 22, 2015.)

It is, at the same time, keeping faith with its small-molecule heritage. Its biggest move to date was its €675 million (US$751 million) acquisition of Astellas Pharma Inc.’s dermatology portfolio. That transaction, which closed on April 1, is expected to boost annual turnover by about 20 percent. Leo reported earnings before interest and taxes of DKK694 million (US$104 million) on sales of DKK8.5 billion in 2015. That transaction represented business as usual. The Astrazeneca alliance is a whole new ball game.