Alexion Pharmaceuticals Inc. and Stealth Biotherapeutics Corp. reached a deal for an option to co-develop and commercialize elamipretide for mitochondrial diseases.

Stealth receives an initial $30 million for an equity investment, option fee and development funding, along with the possibility of additional option-related and milestone-dependent payments if the option is exercised. Elamipretide, an aromatic-cationic, cell-permeable tetrapeptide, is in a phase III study for treating primary mitochondrial myopathy. Alexion received an exclusive option to partner with Stealth to develop subcutaneous elamipretide in the U.S. for primary mitochondrial myopathy and Barth syndrome. Alexion can exercise the option after the study results are delivered.

The trial, MMPOWER-3, is to evaluate the safety and efficacy of elamipretide in patients with primary mitochondrial myopathy followed by an open-label extension. The randomized, parallel assignment, quadruple-masked study began in October 2017. The primary endpoints are change in distance walked as measured by the six-minute walk test and change in the Total Fatigue score on the Primary Mitochondrial Myopathy Symptom Assessment, a patient-reported outcome measure. Secondary endpoints include safety and tolerability, as well as patient- and clinician-reported outcomes. Patients completing the double-blind portion of the study are eligible to continue into an open-label extension. A data readout from the study is expected in January.

Stealth’s other pipeline assets, including SBT-272, are not included in the option. SBT-272 is a mitochondrial targeting molecule in preclinical development to treat rare neurodegenerative diseases involving mitochondrial dysfunction. Stealth expects to advance it into a phase I trial by the end of this year.

Should Stealth and Alexion decide to co-develop and co-promote elamipretide in the U.S., Alexion would receive exclusive rights to develop and commercialize subcutaneous elamipretide outside the U.S.

Evercore ISI analysts said on Thursday that they would have preferred to see Stealth keep full rights, “but with a difficult biotech tape and uncertain financing market, it might have been even more dilutive to do so. As such, [Alexion] is a strong commercial partner which can maximize the speed and depth of adoption. [The deal also] gives [Alexion] a potentially very important [near-term] pipeline catalyst.”

The deal is complex, but Reenie McCarthy, Stealth’s CEO, said the company had not been working on it for very long, in the scheme of deals.

“Alexion said to us in early summer, ‘Why don’t we talk about the U.S. because we’re established here,” McCarthy told BioWorld. “This is a fairly large and untapped market for an orphan disease that isn’t super well understood. That made sense.”

The deal will allow Stealth to grow its commercial infrastructure, she added. The companies plan, should the phase III data be positive and the option exercised, to bring in 40 to 60 sales representatives, with Alexion bringing half of them, allowing the company to grow at what McCarthy called a “sustainable pace.”

Also, if the study data are positive, McCarthy said an FDA approval is possible in the third quarter of 2020.

“We look to launch and launch strong,” she added.

When asked on Thursday morning’s Alexion conference call why the companies didn’t wait until after the phase III results were tallied before announcing the deal, McCarthy said it was something she had thought long and hard about but, in the end, the company just wanted to get started as soon as possible.

“But as you can imagine, it takes time to do a partnership and we really see that each month that we lose of market potential given what we think is very significant market potential here, is a loss frankly to our stakeholders,” she said.

Both company stock offerings closed higher on Thursday, with Stealth (NASDAQ:MITO) leaping 11% to close at $7.10 and Alexion (NASDAQ:ALXN) rising 3.7% to close at $98.35.

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