As PDUFA dates near for the antisense drug inotersen and a competing therapy in hereditary transthyretin amyloidosis, or hATTR, Ionis Pharmaceuticals Inc.'s potential $1.7 billion deal with spinout Akcea Therapeutics Inc. was designed to prepare for launch, but not everybody was impressed – at first, anyway.

ISI Evercore analyst Joshua Schimmer said Thursday morning he heard from investors about what they called the "absurdity" of the deal. J.P. Morgan's Jessica Fye remarked in a report that, "while we are not surprised by this agreement, given the evolution of management's tone on partnership over the past six months, we believe this update will receive a mixed response, given that Ionis did not find a more experienced partner."

That tone turned up during remarks earlier this week at the Cowen Healthcare Conference, when Brett Monia, Ionis' chief operating officer, said the company was "looking at a variety of partnerships right now to maximize the commercial value of inotersen. We want to be able to bring this drug to patients as fast as possible and as successfully as possible, and we want to have a large ownership in the commercialization of inotersen."

Shares of Cambridge, Mass.-based Akcea (NASDAQ:AKCA) closed Thursday at $28.14, up $7.80, or 38.4 percent, while Ionis (NASDAQ:IONS), of Carlsbad, Calif., ended at $52.18, down $2.59.

Under the terms of the deal, Akcea will pay Ionis an up-front licensing fee of $150 million, payable in shares of common stock priced by reference to a recent trading average. Akcea will have rights to commercialize inotersen and AKCEA-TTR-LRx globally. To support commercialization of inotersen, Ionis will purchase $200 million of Akcea common stock, also priced by reference to a recent average.

When the arrangement is complete, Ionis' ownership in Akcea will increase by 7 percent, from 68 percent to 75 percent, totaling about 64.1 million shares. Regulatory clearance of inotersen and AKCEA-TTR-LRx in the U.S. and EU will trigger milestone payments to Ionis of $50 million and $40 million, respectively, with more payouts due upon approval of both programs in various other geographies. The license fee and initial milestone payments may be made in Akcea common stock at fair market value.

Commercial profits and losses from inotersen will be split 60 percent to Ionis and 40 percent to Akcea until the first commercial sales of AKCEA-TTR-LRx, after which the profits and losses will be split evenly. The costs of the development of AKCEA-TTR-LRx and the profits from its commercialization will be shared 50-50, and the license for the pair of drugs includes sales milestone payments of up to almost $1.3 billion.

Nothing is approved in the U.S. for hATTR, though some patients may benefit from a liver transplant, which could substantially reduce the amount of TTR protein made in the body.

Laidlaw analyst Yale Jen said he views the tie-up as "positive, since Akcea is likely the best option as an immediately available [and a] better controlled venue to commercialize inotersen, especially given the shorter available period leading up to approval. An Ionis in-house commercialization setup might take more time to establish," he pointed out in a report. "Other external commercial partner prospects might also take longer time before gaining enough knowledge for launching hATTR treatment in a rather competitive environment." What's more, "having Akcea launch inotersen could save on costs benefit by leveraging Akcea's existing infrastructure, such as case management," he wrote.

ISI's Schimmer sounded upbeat, too, in contrast to some investors he heard from. "From our perspective, this is a slight relative positive for Ionis, because we had assumed Ionis would have full ownership of the U.S. TTR franchise, which we see as negative value due to our cautious commercial outlook for the program," said his report. "But now it can at least partially offset costs." On the other hand, Ionis owns 75 percent of Akcea, which means a deal scenario is "not that much better, but at least it's better than Ionis funding 100 percent," he added.

Plenty of room in TTR for more therapies

During a conference call with investors, Stifel analyst Stephen Willey called the deal "interesting," and asked about previous talk that seemed to suggest "perhaps the creation of another subsidiary to house some of the Ionis orphan assets. Should we now presume, on a going-forward basis, that perhaps Akcea is the most logical repository for wholly owned Ionis orphan assets that are approaching commercialization?"

Ionis CEO Stanley Crooke said that "the strategy remains the same. Our goal long term is to have multiple or at least several commercial affiliates" to help with drugs that "we believe [are] appropriate for a focused, information-transfer, high-touch sales effort, as well as multiple large pharma partners to deal with the drugs that really need the scale that those partners bring." Akcea will "certainly be a strong bidder, I'm sure, a strong candidate for additional drugs in the future," he said.

Later, J.P. Morgan's Fye wanted to know how competitive partnering talks have been recently. Crooke said he was "very pleased with the interest we had. It came in the form of two or three different shapes. Our central question with the large companies was, 'Are they committed to rare disease? Are they committed to TTR as a disease entity that is going to matter long term to them? And can they be ready to launch?' All of the companies that we expected to be bidders were bidders." He cited "a number of smaller, regional and rare disease-focused companies" at the table as well. "After we came to the preliminary decision to commercialize ourselves in the U.S. and partner in the rest of the world, those [firms] took center stage," he said, adding that the "conversations had proceeded quite far down the road. Many of those companies are anxious to bid on other territories."

PDUFA dates are due this summer for inotersen and patisiran, an RNAi therapeutic targeting TTR from Cambridge, Mass.-based Alnylam Pharmaceuticals Inc. Inotersen bears an FDA decision deadline of July 6, patisiran Aug. 11.

Piper Jaffray's Edward Tenthoff said in a report earlier this month that analysts at his firm "remain confident in FDA approval" of patisiran by the PDUFA date, with clearance in the EU expected in the second half of this year. "We understand the FDA is not planning an [advisory committee meeting], in our view, based on the overwhelming Apollo [trial's] safety and efficacy data." Alnylam will file for approval with the Pharmaceuticals and Medical Devices Agency in Japan around the middle of this year.

The market has plenty of room for more than one TTR player, in the view of Cowen analyst Eric Schmidt. He said last month that, "should inotersen gain regulatory approval, we continue to think that [the drug's] differentiated convenience profile (at-home, subcutaneous delivery), solid supportive dataset, and potentially competitive pricing could enable the drug to capture a meaningful portion of the TTR market."