With Alexion Pharmaceuticals Inc.'s acquisition of Achillion Pharmaceuticals Inc. for about $930 million up front, Alexion expands and diversifies its pipeline into familiar territory – treating complement-mediated diseases.

Blue Bell, Pa.-based Achillion is developing oral, small-molecule factor D inhibitors for treating complement alternative pathway-mediated rare diseases, including paroxysmal nocturnal hemoglobinuria and C3 glomerulopathy.

An Alexion strength is inhibiting C5 in rare diseases. It's about 86% of the company's current revenues, but Achillion takes a slightly different space in the complement system – the alternative pathway, inhibiting factor D production, which is believed to address uncontrolled complement activation. The treatment also strengthens patients' ability to fend off infection by leaving the rest of the complement system intact.

"We believe this approach has the opportunity to help patients with diseases not currently addressed through C5 inhibition," said Ludwig Hantson, Alexion's CEO.

Achillion's stock (NASDAQ:ACHN) was a big winner on the news as it surged 72% higher Wednesday, while Alexion (NASDAQ:ALXN) sagged 5% on the day.

While Achillion's shareholders have yet to approve the deal, as does the FTC, it is expected to close in the first half of 2020.

Boston-based Alexion will receive the cash currently on Achillion's balance sheet, estimated to be $230 million as of Sept. 30. Alexion also gets Achillion's two clinical-stage medicines: danicopan (ACH-4471), which is in a phase II study, and ACH-5228, which is in phase I. The deal includes nontradeable contingent value rights of $1 per share to Achillion shareholders should danicopan be approved by the FDA, and another $1 per share if and when ACH-5228 begins a phase III study.

In May, Achillion reported interim data from the phase II paroxysmal nocturnal hemoglobinuria (PNH) trial assessing the safety and effectiveness of factor D inhibitor danicopan in combination with Alexion's intravenous Soliris (eculizumab). The results showed the combination improved anemia levels and decreased transfusions. PNH is thought to be caused by a mutation resulting in the absence of receptors normally present on red blood cells that interact with the complement system.

"Achillion is targeting the fourth quarter for the full phase II readout and plans to work closely with the FDA to advance the development of danicopan as an add-on therapy for PNH patients with [extravascular hemolysis] into phase III in 2020," said John J. Orloff, Alexion's executive vice president and head of R&D, in Wednesday's conference call.

PNH is a chronic, progressive and life-threatening ultra-rare blood disorder characterized by the destruction of red blood cells. The process is mediated by uncontrolled activation of the complement system, a component of the body's immune system. Alexion has developed two treatments for PNH. It also has therapies for atypical hemolytic uremic syndrome, anti-aquaporin-4 antibody-positive neuromyelitis optica spectrum disorder and anti-acetylcholine receptor antibody-positive generalized myasthenia gravis.

'Defensive play'

ISI Evercore analysts wrote that the transaction is a "strong strategic rationale as a defensive play" for Alexion against its competitors, especially Apellis Pharmaceuticals Inc., which is deep in the complement space. Apellis' lead candidate, APL-2, an infused C3 inhibitor. The analysts said ACH-5228 "could compete effectively with APL-2 on convenience/delivery while potentially offering lower risk of infections." They also noted data from Apellis' PEGASUS phase III study vs. Soliris in anemic PNH patients is expected by year-end. "We expect positive top-line, but are keeping an eye on infection risk given C3 inhibition," they added.

Late last year, the FDA approved Alexion's Ultomiris (ravulizumab-cwvz), a long-acting C5 complement inhibitor administered every eight weeks for treating adults, a less frequent dosing option compared to Soliris. A phase III study designed to support use of Alexion's long-acting C5 complement inhibitor in complement inhibitor-naïve patients with atypical hemolytic uremic syndrome met its primary endpoint. (See BioWorld, Jan. 29, 2019.)

Alexion has been busy in the past month as its executive vice president and chief financial officer, Paul Clancy, is moving on and will be replaced by Aradhana Sarin, the company's chief strategy and business officer. The company expanded its neurology portfolio by teaming with Stealth Biotherapeutics Corp. to co-develop and commercialize elamipretide for mitochondrial diseases. Elamipretide is being evaluated in a phase III study in patients with primary mitochondrial myopathy, a genetic mitochondrial disease that has no currently approved therapy. The phase III data are expected in the first quarter of 2020.

"This option will provide the opportunity to treat patients with Barr's syndrome and Leber's hereditary optic neuropathy, two rare diseases with significant need," Orloff noted in Wednesday's call.

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