When Renovo Group plc went public in April, CEO and Founder Mark Ferguson promised investors he'd have a partner for the anti-scarring drug Juvista in about a year. Ferguson delivered on that promise yesterday, unveiling a deal with Shire plc worth up to $825 million.
"There was considerable interest in partnering Juvista; this was a competitive process," Ferguson said in a conference call Wednesday.
Shire won out by offering a package that includes $125 million up front: $75 million in cash and $50 million in equity purchased at £2 (US$3.97) per share, a slight premium to Renovo's Tuesday closing price of £1.87 per share.
In addition to the up-front payment, Renovo may receive up to $175 million in regulatory milestone payments: $25 million upon FDA acceptance of the biologics license application and between $50 and $150 million upon approval, depending on the label granted. Ferguson said the high end of the range would apply to a broad label for the use of Juvista to prevent scarring in any surgical procedure, while the lower milestone would apply to a very limited label in only one or two types of surgeries. He reminded investors that the Juvista clinical trial program is designed to support the broad label and said he believes the company has "a very good chance" of getting that label.
Commercialization milestone payments comprise the largest part of the deal: up to $525 million. Ferguson declined to specify the sales targets, saying only that they were lower than the $4 billion figure put forth as an estimate of the potential U.S. market for the drug.
Renovo retained the right to commercialize Juvista in EU member states and will cover the costs of trials specifically designed to support EU approval. Shire will fund trials designed to support U.S. approval, with the two companies sharing the costs of trials intended to support both regulatory filings. Shire holds the right to commercialize Juvista outside the EU and will pay Renovo escalating royalties "typical for a drug in Phase III development," Ferguson said. From its share of the pie, Renovo will cover a low single-digit royalty owed to OSI Pharmaceuticals Inc.
Investors seemed to like the deal, pushing shares of Manchester, UK-based Renovo (LSE:RNVO) up 14 percent, or £0.27, to close at £2.14 (US$4.25) on Wednesday. Shares of Basingstoke, UK-based Shire (NASDAQ:SHPGY) dipped 89 cents to close at $72.56.
Juvista is an injection of human recombinant Transforming Growth Factor beta3 (TGF-beta3), a protein present in high levels in developing embryonic skin and in embryonic wounds that heal with no scar, but found at lower levels in adult wounds that scar. Four Phase II trials have shown that a single injection at the time of surgery improves scarring, and Ferguson said the drug has demonstrated an "excellent safety profile" in the 1,500 patients to receive it.
"The rule of thumb is that there is a 70 percent response rate to the drug," Ferguson said. Of the responders, "about half get a clinically significant improvement in scarring, and about half get a really spectacular improvement in scaring," he added.
An additional seven European Phase II trials in various surgical indications are ongoing with Juvista, and data should be available later this year and early next year.
Renovo is continuing to manage the drug's development, with Shire providing guidance and regulatory expertise. The companies anticipate beginning a Phase III program in mid-2008.
Renovo also is conducting a pilot trial in the U.S. to evaluate Juvista in scar prevention following surgery to remove keloid scars, which form at the site of a healed injury.
In addition to running its Phase II and upcoming Phase III trials with Juvista, Renovo has a pipeline of other anti-scarring drugs to keep busy with. Zesteem (estradiol) is in Phase III for the acceleration of healing, while Juvidex (mannose-6-phosphate) is being studied for the prevention of scarring in the eye, and Prevascar (human recombinant interleukin-10) may be applicable in preventing scar tissue that interferes with nerve healing.
Ferguson also pointed to "a number of candidates that could enter the clinic within the next year" and said Renovo will provide a specific plan later in the year for allocating funds between precommercialization activities, Juvista trials and other products.
Renovo consumed £10.4 million during the six months ending March 31. At that point, the company had £50.4 million in cash remaining, not including £2.3 million in recently received interest and the up-front payment from the Shire deal.