DUBLIN Biotie Therapies Oyj is going for broke by dramatically restructuring its capital base in order to fund phase III trials of its Parkinson's disease drug, tozadenant (SYN115). Shares in the Turku, Finland-based company dropped almost 11 percent Thursday on news that it plans to raise €95 million (US$102 million) in debt and equity finance, in a move that will result in a significant level of dilution for existing shareholders. The company's current market cap is just €74.3 million.
Biotie has already secured commitment for the plan from investors representing more than 50 percent of its equity, but it requires a two-thirds majority of the votes present at the company's annual general meeting next month to make it happen. "I should think we are quite comfortable that we will be able to go forward with the long-term shareholders," Biotie CEO Timo Veromaa told BioWorld Today.
Biotie has also secured advance commitments for a €42.5 million debt offering, which will take the form of a directed issue of convertible notes and warrants. It aims to seek another €42.5 million in a U.S. IPO on Nasdaq, in which it will offer 530 million new shares. Should the IPO go ahead, the convertible notes will be converted into shares, at a strike price of €0.15 per share. Participants in that leg of the transaction include Vivo Capital, Orbimed, Versant Ventures and funds managed by the Baupost Group, as well as certain existing investors in the company.
Biotie has opted to seek backing for tozadenant from the financial markets, having failed to secure industry buy-in for the program. Tozadenant, a selective inhibitor of the adenosine A2A receptor, was previously the subject of a potential $460 million licensing deal with Brussels, Belgium-based UCB SA, but the latter exited the agreement more than 12 months ago. (See BioWorld Today, March 24, 2014.)
Biotie had initially aimed to secure a replacement deal in order to take the program forward but soon after decided to take on the program itself, Veromaa said. Tozadenant is in development as an adjunct to levodopa therapy and has already hit the primary endpoint of a 12-week, dose-finding phase IIb trial in 420 patients, the results of which were published in the August 2014 issue of The Lancet Neurology.
That study contained four treatment arms 60 mg twice daily, 120 mg twice daily, 180 mg twice daily and 240 mg twice daily plus a placebo arm. The study investigators concluded that those in the 120-mg and the 180-mg arms found the drug generally tolerable and experienced significant reductions a mean of 1.1 hours in their off-time, that is the period during which levodopa and/or dopamine agonists failed to control symptoms.
The upcoming phase III trial will, if the financing is secured, commence in midyear. It will assign patients to one of two treatment arms 60 mg twice daily or 120 mg twice daily or a placebo arm. The company is including the lower dose at the behest of the FDA, Veromaa said, as the agency wanted to see what the lowest possible dose would deliver in terms of efficacy. "There was a good number of patients [in the phase IIb study] who fared remarkably well with that dose," Veromaa said. The 120-mg dose attained the best result overall, in terms of efficacy and tolerability, he said.
The phase III trial will be twice the duration of the phase IIb trial, which could result in a cleaner separation of the treatment arms from the placebo arm. "At 12 weeks, you still have quite a bit of the placebo effect you see in all neurodegenerative diseases, particularly Parkinson's," Veromaa said. Top-line data on the 24-week study are expected by the end of 2017. After six months, all patients will cross over into an open-label, 12-month extension study, which will generate additional safety data.
The primary endpoint will again be mean reduction in "off-time." Secondary endpoints include increase in "on-time," patient and physician assessments and changes in patients' Unified Parkinson's Disease Rating Scale scores.
FIRST IN ITS CLASS?
Biotie's current valuation is in contrast with that of its erstwhile takeover target, Newron Pharmaceuticals Spa, of Milan, Italy, which is now worth about CHF384 million (US$402 million). That deal unraveled when Newron's partner, the Merck Serono arm of Darmstadt, Germany-based Merck KgAa walked away from a deal on another Parkinson's drug, Xadago (safinamide). (See BioWorld Today, Oct. 31, 2011.)
Newron secured another deal, with Milan-based Zambon SpA, and the drug gained European approval as an add-on therapy to levodopa in February, while it is under regulatory review at the FDA. The two drugs are not directly competitive, Veromaa said. "By and large, safinamide is a monoamine oxidase B inhibitor," he said. "If we are successful, this promises to be the first product with this mechanism of action in the U.S. or Europe."
The drug class has so far failed to make much impact in either the clinic or the marketplace, however. The most significant casualty to date was preladenant, which Merck & Co. Inc., of Whitehouse Station, N.J., dropped following lack of efficacy in three phase III trials. (See BioWorld Today, May 28, 2013.)
Biotie exited 2014 with €32.4 million in cash, having posted a pre-tax loss of €35.2 million. It already has one product on the market, Selincro (nalmefene), which is approved for reducing consumption in people who are alcohol dependent. Copenhagen, Denmark-based H. Lundbeck A/S is commercializing the product, but Biotie is not forecasting significant royalty income until the end of this year, which marks the first full year of the product on the market in Europe.
The drug has had a mixed reception from health technology assessment agencies so far. The UK's National Institute for Clinical Excellence recommended its use in the UK's National Health Service, while Germany's IQWiG concluded that it offers users no additional benefit.
Shares in Biotie (HELSINKI:BTH1V) closed Thursday at €0.163, down €0.017.