The business of cancer therapy in the U.S. is where the big money is, and the Menarini Group, a privately held Italian pharma and diagnostics company, just got a place at the table with its acquisition deal worth up to $677 million for New York’s Stemline Therapeutics Inc.
Stemline’s shareholders will be offered $12.50 per share, with $11.50 of it in cash up front along with one non-tradeable contingent value right for $1 in cash per share on the first sale of Elzonris (tagraxofusp) after its EMA approval, which could come this year.
Elzonris is FDA-approved for treating adults and pediatric patients, ages 2 and older, for blastic plasmacytoid dendritic cell neoplasm (BPDCN), a rare and aggressive disease of the bone marrow and blood. Elzonris launched in the U.S. in January 2019 and brought Stemline $11.8 million in net revenue in the fourth quarter of 2019.
Stemline’s stock (NASDAQ:STML) had a mammoth trading session May 4, closing at $12.10 per share and up 154.84% on the day. On Friday, shares had dropped 9%, closing at $4.75 each.
The acquisition is Menarini’s first step into the U.S. oncology market. The global group is an active player in 136 counties and relies on international partners in research, manufacturing and diagnostics. The company is in the clinic with five candidates for oncological treatments that include solid tumors, lymphomas and leukemia.
According to financings tracked by BioWorld and deals and grants logged in Cortellis, the therapeutic areas of cancer and neurology/psychiatry attracted the highest amounts of investments last year, with a collective $101.9 billion and $27.5 billion raised, respectively. Public biopharma companies in those areas have also seen their share prices increase despite COVID-19 concerns pervading the general markets.
In the past 12 months, Stemline’s shares peaked at $17.50 on Aug. 7, 2019, when the company announced its proposed public offering of 5 million shares of its common stock. The company said it would use the net proceeds for commercial activities of Elzonris, on clinical trials for additional indications, including chronic myelomonocytic leukemia, mycosis fungoides, the most common form of cutaneious T cell lymphoma, and acute myeloid lymphoma. It also said it would fund clinical development of other pipeline candidates, including SL-801 (felezonexor), an oral, small molecule that reversibly inhibits exportin-1, a nuclear export protein overexpressed in a variety of solid and hematologic malignancies.
Since that peak, Stemline shares drifted steadily lower. J.P. Morgan’s Jessica Frye wrote Monday morning that Stemline’s stock is depressed at its current levels. She also expects Elzonris will launch in the EU in late 2020.
The transaction, expected to close in the second quarter of 2020, will be funded through Menarini’s existing cash resources. The company said it will support Elzonris’ further development by leveraging its commercial infrastructure in Europe and other ex-U.S. geographies
The FDA’s December 2018 approval of Elzonris, which is directed to the interleukin-3 (IL-3) receptor-alpha, made it the first drug ever approved for BPDCN. The green light arrived two months ahead of the date by which the regulator was expected to release its decision. Elzonris, which had orphan status in both the U.S. and Europe, was granted an FDA breakthrough designation in August 2016 and priority review in August 2018.
A biological conjugate, Elzonris consists of human IL-3 linked to a truncated diphtheria toxin that targets ILR-3-alpha on cancer stem cells. Its efficacy was studied in two cohorts of patients in a single-arm trial.
BPDCN is very rare, and accounts for just 0.44% of all hematologic malignancies and 0.7% of cutaneous lymphomas, according to epidemiological data compiled by Cortellis.
Menarini also is adding its expertise to COVID-19 efforts. In late April, Menarini-Silicon Biosystems, part of the Menarini Group, which has a presence in Bologna, Italy, and Huntingdon Valley, Pa., said that it is exploring the possible use of its Cellsearch technology to study the progression of COVID-19 disease and potentially identify patients who may be at risk of developing the most severe complications of the disease.