Hours away from pricing its initial public offering (IPO), Civitas Therapeutics Inc. eschewed independence in favor of a marriage with Acorda Therapeutics Inc., which agreed to purchase the company for $525 million in cash. Acorda has the marketed products Ampyra (dalfampridine) to improve walking in patients with in multiple sclerosis, Zanaflex (tizanidine hydrochloride) to manage spasticity and Qutenza (capsaicin) to manage postherpetic nerve pain, plus a half-dozen candidates in a range of neurological and related conditions. With the purchase of Civitas, of Chelsea, Mass., Acorda gains global rights to phase III-ready CVT-301, an inhaled formulation of levodopa (L-dopa) designed to treat debilitating motor fluctuations, known as "off" episodes, associated with Parkinson's disease (PD).

The drug could represent a peak U.S. sales opportunity of more than $500 million, and officials at Acorda, of Ardsley, N.Y., said a potentially bigger prize is the underlying Arcus pulmonary delivery technology, which originated in the lab of scientist and serial entrepreneur Robert Langer of the Massachusetts Institute of Technology, who sits on the Civitas board.

The final piece of the package is a manufacturing facility with commercial-scale capabilities in Chelsea, Mass.

Of the total deal, $35 million will be used to pay costs related to a Civitas change-in-control. Acorda expects to complete the acquisition in the fourth quarter.

On a conference call with investors and analysts early Wednesday morning, Ron Cohen, Acorda's president and CEO, stressed the "shared mission" and "substantial synergies" between the companies and pointed to the "strategically compelling" opportunity for CVT-301 in light of the significant unmet medical need associated with "off" episodes, which can occur daily in PD patients and last for minutes to hours at a time.

The pivotal phase III study of CVT-301 is expected to begin enrolling early next year. Acorda plans to follow the Civitas playbook and seek a 505(b)(2) filing for the drug candidate.

"CVT-301 has generated a strong set of clinical data, and we expect an abbreviated regulatory pathway to approval in the United States," Cohen said, with a new drug application (NDA) filing coming as early as year-end 2016.

Civitas, which did not respond to interview requests, has been on a roll. Last month, the company landed a $55 million series C, bringing its equity capital to approximately $118 million over three rounds. Two days after closing the series C, Civitas disclosed its intention to seek another $86.2 million through the IPO to fund the phase III trial for CVT-301. (See BioWorld Today, Sept. 12, 2013, and Aug. 28, 2014.)

The company was launched in 2009 as a spinout from the pulmonary delivery division of Alkermes Inc., which built the Chelsea facility for the commercial-scale production of dry powder Arcus-based products. Alkermes retained a significant equity position in the company and held the lease on the manufacturing plant. With the Acorda deal, that stake translates into a payment of approximately $60 million plus a single-digit royalty on sales of CVT-301.

The rescue treatment would be self-administered and adjunctive to standard-of-care oral L-dopa to boost levels, as needed. The Arcus technology comprises a reusable, pocket-sized, breath-activated inhaler. Studies with CVT-301 also were funded, in part, by grants from the Michael J. Fox Foundation for Parkinson's Research.

Cohen stressed that Acorda had been watching the therapy progress since 2012 – a year after Civitas raised its $20 million series A round from founding investor Longitude Capital and co-lead Canaan Partners – and was not an 11th-hour maneuver. (See BioWorld Today, Jan. 10, 2011.)

"Make no mistake," Cohen said. "This was very carefully accumulated knowledge, for more than a year, that culminated in a point in time where we saw an opportunity that we were able to just slip through and get it done."

ARCUS PLATFORM OFFERS 'ALL KINDS OF POTENTIAL'

Acorda ramped up its business development plan, added spokesman Jeff Macdonald, when biotech veteran Michael Rogers joined the company in October 2013 as chief financial officer. Those efforts accelerated with the appointment in May of Andrew Hindman as chief business development (BD) officer. Hindman, most recently president and CEO of privately held Tobira Therapeutics Inc., was a member of the teams that produced early BD wins for Gilead Sciences Inc. and the transformative Proteolix Inc. deal for Onyx Pharmaceuticals Inc. (See BioWorld Today, Oct. 13, 2009.)

Acorda also prepped its balance sheet. Ampyra is generating "healthy" sales, Macdonald said – $87.4 million in the second quarter for an increase of 21 percent quarter over quarter and 12 percent year over year. Ampyra, a potassium channel blocker, was approved by the FDA in 2010 as the first therapy to improve walking in patients with MS. The potassium channel blocker is marketed outside the U.S. as Fampyra (prolonged-release fampridine tablets) under a licensing agreement with Biogen Idec Inc., of Cambridge, Mass. (See BioWorld Today, Jan. 25, 2010.)

In June, the company closed a convertible debt financing, raising more than $300 million. As of June 30, the company was sitting on a war chest of $727.7 million in cash and equivalents.

Landing the Civitas assets takes some of the sting out of Acorda's most recent setback. In May, the company was dealt a complete response letter by the FDA related to its NDA for Plumiaz (diazepam) for epileptic cluster seizures. Acorda had hoped to gain approval this year for the nasal spray version of the benzodiazepine therapy. Instead, the company is looking at an additional trial. Acorda has said only that discussions are under way with the agency to determine the size and design of that study. (See BioWorld Today, May 5, 2014.)

Cohen insisted the Civitas deal had "no direct relationship" to its work on Plumiaz, which was added to Acorda's pipeline through the $11 million takeover of privately held Neuronex Inc., of Morrisville, N.C., also financed through Ampyra revenues. (See BioWorld Today, Feb. 17, 2012.)

Cohen hinted wheels are turning at Acorda in relation to the Arcus technology.

"There are already ideas about where we could go with this," he said on the conference call. "It was very attractive to have a proprietary technology that gives you all kinds of potential."

PLAYERS 'JOCKEYING TO GAIN CONTROL' OF PD MARKET

Analysts liked the deal. ISI Group's Mark Schoenebaum was among the first to weigh in with the comment that "the strategic fit (specialty neuro) is obvious."

He also cited Cohen's assertion to use the acquisition as a global "launchpad" for its specialty neurology business. Acorda has a U.S. sales force, and holding global rights to CVT-301 may give the company the incentive to do the same in the EU. "If they don't buy infrastructure, they may build one organically," Schoenebaum wrote, though he characterized the European market opportunity as less than that in the U.S., at "several hundred million" dollars.

"We really like this acquisition," added Cowen and Co. analyst Phil Nadeau. "For the past several years, ACOR's stock has been held back by a lack of visible growth drivers. With today's acquisition, ACOR has added a promising phase III candidate to its pipeline. Moreover, as ACOR already fields a neurology salesforce in the U.S., this is as close to a 'hand in glove' acquisition that one can find."

The Street agreed. Acorda's shares (NASDAQ:ACOR) flirted with its one-year high of $39.95, closing at $37.62 for a gain of $8.27, or 28 percent.

Shares of the small Canadian biotech Cynapsus Therapeutics Inc. also were helped by the deal, gaining 8 percent to close at 56 cents. Cynapsus, of Toronto, is developing a sublingual form of injectable Apokyn (apomorphine, Vernalis plc), the only FDA-approved drug to manage "off" episodes in PD patients. The company has a phase II study of its candidate, APL-130277, under way, with data expected to report next month, according to Anthony Giovinazzo, president and CEO. Provided the findings are positive, Cynapsus plans to initiate the phase III program in late December or early next year, with a 505(b)(2) NDA filing in the U.S. in mid-2016.

Giovinazzo said Acorda's purchase of Civitas, in combination with the potential $658 million H. Lundbeck A/S deal for Chelsea Therapeutics International Ltd. in May, signals that players are "jockeying to gain control" of the PD market. (See BioWorld Today, May 9, 2014.)

"It sends a message to a number of biopharmaceutical companies and specialty pharmaceutical companies that the space is getting difficult to acquire a footing in," Giovinazzo told BioWorld Today.

Cynapsus has nondisclosure agreements with a number of these players, and the two deals "prove the interest in the space and set floors on asset valuation," he said.