Selecta Biosciences Inc., of Watertown, Mass., and Stockholm’s Swedish Orphan Biovitrum AB (Sobi) signed a licensing agreement for SEL-212, which is designed to control serum uric acid, reduce immunogenicity and allow for repeated monthly dosing when treating chronic refractory gout.

Sobi, which specializes in rare diseases, assumes responsibility for development, regulatory and commercial activities for SEL-212 in all markets outside of China. Sobi will make initial payments to Selecta of $100 million, including a $75 million up-front license fee and a $25 million private placement of shares of Selecta common stock. Selecta could receive milestone payments of up to $630 million if certain regulatory and development targets and sales thresholds are met. Selecta also could receive tiered double-digit royalties on net sales.

In the two companies’ share purchase agreement, Sobi will invest $25 million in a private placement of 5.41 million shares of Selecta common stock at a purchase price of $4.62 per share, representing a 20% premium to the volume-weighted average price during the 10 days prior to signing.

Selecta stock (NASDAQ:SELB) took a pounding in the U.S. on Friday, sinking 27.37% to close at $2.68 per share. Meanwhile, on the Stockholm Stock Exchange, Sobi (STO:SOBI) closed down only about half a percentage point.

SEL-212 deploys Selecta’s Immtor technology with pegadricase, a pegylated formulation of uricase. Immtor stimulates dendritic cells so that they send tolerogenic messages to naïve T cells to develop into T regulatory cells.

Despite Selecta’s market downturn, Mizuho Securities’ Difei Yang wrote Friday that the deal is a positive for the company as it derisks its lead asset so it can focus on developing other applications of Immtor while still participating in the upside of SEL-212's commercial performance.

“We view today’s selloff as a buying opportunity,” Yang wrote.

H.C. Wainwright and Co. analyst Raghuram Selvaraju also viewed the deal as a positive, noting that Sobi “constitutes a very strong partner for Selecta” given its extensive expertise in commercializing drugs for rare diseases.

Sobi sells Alprolix (eftrenonacog alfa) for treating hemophilia B, Elocta (efmoroctacog alfa) for treating hemophilia A, Gamifant (emapalumab) for treating hemophagocytic lymphohistiocytosis, and Ruconest (recombinant C1 esterase inhibitor) for treating hereditary angioedema.

Selecta expects top-line results from the phase II Compare trial of Immtor and pegadricase vs. Krystexxa (pegloticase, Horizon Therapeutics plc) in the third quarter of 2020. The study is evaluating a once-monthly dose of SEL-212 compared to biweekly doses of pegloticase, with the primary endpoint of the maintenance of serum uric acid levels of <6 mg/dL at three and six months.

SEL-212 is prepped and ready for a phase III study set to begin in the second half of 2020, the company said.

The FDA cleared Krystexxa in September 2010 for gout in adults who don’t respond to conventional therapy or can’t tolerate it. Typically tried against the condition are drugs that lower the amount of uric acid in the blood, such as the xanthine oxidase inhibitors allopurinol and febuxostat. The former was approved as Zyloprim and the latter as Uloric, but both have since become available in generic form.

Xanthine oxidase inhibitors (XOIs) dominate the treatment landscape for chronic gout in the U.S. Allopurinol is the most heavily prescribed XOI, according to DRG, because it is an inexpensive generic, physicians have widespread familiarity with its use and it has produced satisfactory efficacy in achieving target serum uric acid levels in most patients. Uloric, a more-potent xanthine oxidase inhibitor than allopurinol, captured the highest patient share in second-line treatment for newly diagnosed patients.

The total gout population in the U.S. includes more than 8 million people, but the number of treatment-refractory patients is much smaller. Still, at least 100,000 could be candidates for treatment with a uricase enzyme product, according to estimates by Wainwright’s Selvaraju, and Krystexxa has captured only a few thousand of them.

Selecta and Asklepios Biopharmaceutical Inc. (Askbio) announced a strategic partnership in August 2019 to jointly develop, manufacture and commercialize targeted therapeutics for next-generation adeno-associated virus gene therapies in areas of high medical need. Under the terms of their license agreement, Selecta is eligible to receive up-front and milestone payments of more than $240 million plus royalties on product sales. The companies expect to enter the clinic by year-end.

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