Asklepion Pharmaceuticals LLC is collecting a $27 million up-front payment from Retrophin Inc., plus about 661,278 shares of stock and the potential for $37 million more in sales-milestone payments, along with tiered royalties on the back end, thanks to a January agreement for the rights to Cholbam (cholic acid) once the drug was approved by the FDA.

That happened late Tuesday, when U.S. regulators cleared Cholbam for the treatment of rare bile acid synthesis disorders caused by single enzyme defect and for patients with peroxisomal disorders, including those in the Zellweger spectrum class.

Asklepion also is transferring ownership of a pediatric priority review voucher, "something that the FDA encouraged us to apply for," Asklepion CEO Gary Pasternack told BioWorld Today. "We really weren't focused on it. We were focused on the approval of the drug and our ability to benefit the kids."

Retrophin benefited as well, with shares (NASDAQ:RTRX) closing Wednesday at $19.85, up $5.09, or 34 percent, after trading as high as $20.12.

Cholbam is the first medication cleared by the FDA to turn off a genetically damaged bile synthesis pathway and block its toxic products from harming the liver. Work at Cincinnati Children's Hospital and Medical Center – specifically, Kenneth Setchell and James Heubi – identified the diseases that are involved when the pathway is allowed free rein, and approval by the FDA was based on two pivotal trials that showed improved liver-function test values and restoration of growth assessed by weight gain in comparison to the natural history of untreated patients. Some of those who took part in the experiments have been healthy on therapy, exhibiting normal liver function for more than 16 years.

Baltimore-based Asklepion, with about a dozen employees, "has been around since 2006," Pasternack said, and was formed thanks to a "single large Australian investor with a charitable bent." Setchell and Heubi "had a long-running, effectively compassionate-use open-label study," he said. "They realized that they weren't going to be able to treat these patients forever. At some point in time, people retire. While they're not yet at retirement age, they began to realize that there had to be a better, more permanent, self-sustaining solution for the patients they were committed to."

The number of such patients in the U.S. is "a moving target," Pasternack said, calling 3,000 a "ballpark" figure for single-enzyme defects, with peroxisomal disorders "probably in the same zip code. Nobody actually knows for sure. The problem is that there's not a distinctive phenotype." In some genetic diseases, "the pediatrician can walk into the room and from across the room say, 'This child has that disease,' because of the way they look," he said. "In the worst forms, the kids with single-enzyme defects certainly attract attention because they have a rip-roaring cholestatic hepatitis. They're really very sick. Those are the kids in the study that tended to get identified first. A lot of kids are sickly and have some evidence of liver disease, but it's non-specific, so until someone either identifies either a genetic lesion or, more commonly, abnormal bio-acids or other bio-products in their urine, they escape diagnosis," he said. "We believe there are a lot of kids out there like that."

Pasternack called the Retrophin deal an example of "the system really working. We started out with some wonderful science, and combined that with the efforts of a dedicated team," and benefited from a "very rigorous" but helpful FDA. With cash in hand from Retrophin, "we'll now pivot and go full-force into a phase III trial," a randomized, double-blind, placebo-controlled study with the next product candidate, an intravenous nitric-oxide agonist, he said.

'A BIG REACH'

"In children undergoing open-heart surgery to repair congenital lesions, about a third of them will develop post-operative pulmonary hypertension, which is a terrible complication that's responsible for a lot of morbidity and mortality in the procedure," Pasternack said. "In fact, almost all of the mortality comes out of that complication." The compound emerged from research done at Vanderbilt University by Marshall Summar and Frederick Barr.

Asked about an alliance for the nitric-oxide drug, Pasternack said it's "way too early to say anything other than we're developing with an idea towards getting it out and reaching children. Certainly, marketing it ourselves would be one possibility. For a long time, we thought we were going to take on and commercialize the cholic-acid product ourselves, but we really thought that everybody's goals could be better served, and we could reach more children, by partnering with Retrophin. Our focus right now is doing a convincing pivotal trial and getting the drug registered so that discussions about how to best get it out into the market become relevant."

There's more in the pipeline. "I can't really talk about them but we have some earlier-stage projects at various stages," Pasternack said, noting that Asklepion – the name indicates a sanctuary dedicated to Asclepius, Greek god of medicine – has "kept under the radar" since its founding. Money from the Retrophin agreement will "in some measure [let us] increase our internal resources here, but we'll continue with the model of using outside people who are absolutely at the top of their game," he said, since the company's mission has been to find "some of the best collaborators and consultants we've been able to find, wherever they are in the world. We've been able to develop a big reach."

Retrophin, of New York, in late 2012 completed its reverse merger with Desert Gateway Inc., and transitioned to a publicly traded company. The firm markets Thiola (tiopronin) for cystinuria, which leads to kidney stones, and Chenodal (chenodeoxycholic acid) for gallstones, with the latter provided directly to patients by way of a distribution partner, Dohmen Life Science Services, of Memphis. At the phase II stage, Retrophin has sparsentan (RE-021) for focal segmental glomerulosclerosis, a rare kidney condition that affects between 25,000 and 50,000 patients in the U.S.