The deal will give the German pharma access to an adeno-associated viral vector platform that has generated multiple commercial and clinical stage assets across a broad range of indications from rare diseases to chronic conditions.
The in-house portfolio includes treatments for Pompe and Parkinson’s diseases and congestive heart failure. Asklepios (Askbio) also has spun out programs in hemophilia and Duchenne muscular dystrophy. In addition, the Research Triangle Park, N.C.-based company has a contract development and manufacturing business, with customers including Pfizer Inc. and Takeda Pharmaceutical Co. Ltd.
The purchase price will be paid as $2 billion up front, with the remainder based on milestones. Of the milestones, 75% are expected to be due within the next five years.
Bayer said Askbio will remain autonomous. That will “preserve its entrepreneurial culture as an essential pillar for nurturing successful innovation,” the pharma said in a statement announcing the deal.
Askbio too, stressed the importance of being at arm’s length. Bayer’s “worldwide reach and translational expertize” along with “the retention of Askbio’s independent structure” means the two companies are “positioned to provide accelerated development of gene therapies,” said Sheila Mikhail, CEO and co-founder of Askbio.
Stefan Oelrich, president of Bayer’s pharma business, said the deal advances the pharma’s strategy of building new therapeutic platforms, including in cell and gene therapies. “Askbio supports us in establishing highly innovative treatment options for patients and further strengthens our portfolio,” he said.
The acquisition of Askbio builds on the August 2019 purchase of Bluerock Therapeutics Inc., a cell therapy specialist Bayer launched and funded with the venture capital firm Versant Ventures in 2016, backed by a $225 million series A. Bluerock is using induced pluripotent stem cells to develop therapies for cardiovascular, neurodegenerative and immunological disorders.
Bayer paid $240 million up front in cash, with $360 million to come in milestones for total ownership, valuing Bluerock at $1 billion. The pharma has set up a separate unit to oversee its cell and gene therapy assets and said it aims to establish an “innovation ecosystem” in this field.
In a financial update at the end of last month, Berlin-based Bayer said it is planning further investments to bolster the product pipeline, as well as in-licensing agreements and bolt-on acquisitions.
Diversification is necessary
Late to make a strategic move into cell and gene therapy, Bayer is feeling the pressure to diversify, with its two best selling drugs, the anticoagulant Xarelto (rivaroxaban) and macular degeneration treatment Eylea (aflibercept) both starting to lose patent protection in 2023.
Meanwhile, Bayer’s crop science unit has taken a big hit from COVID-19 due to low commodity prices and reduced biofuel consumption. This part of the business is still reeling from the 2018 acquisition of U.S. agricultural chemicals firm Monsanto Inc. for $66 billion, which left Bayer with liability for thousands of U.S. lawsuits claiming Monsanto’s herbicide Roundup causes cancer. In June Bayer announced it would pay $10.1 billion to $10.9 billion to settle more than 125,000 claims.
In the year following the acquisition of Monsanto, Bayer’s share price fell by more than 40%, prompting the announcement in November 2018 of a major restructuring to cut costs by €2.6 billion (US$3.1 billion). Faced with the additional drag of COVID-19, which has hit sales in both the pharma and crop businesses, at the end of September Bayer added a further €1.5 billion of cost cutting.
Since the start of 2020, Bayer’s share price has fallen from $81.20 on Jan. 3 to $50.20 on Oct. 26.
Askbio has been hard at it developing gene therapies since its formation in 2001, and claims roots in the field dating back almost 40 years, to when co-founder Jude Samulski was first to demonstrate it was possible to clone adeno-associated viral vectors for therapeutic purposes.
The company had a hand-to-mouth existence until Baxter International Inc. (now Takeda) acquired its hemophila program in 2014. Askbio subsequently sold its Duchenne muscular dystrophy product, vested in spin out Bamboo Therapeutics, to Pfizer Inc.
Askbio went on from there to secure $235 million funding in April 2019, with TPG Capital and Vida Ventures investing $235 million for a minority stake.
Despite Askbio’s pedigree, there’s clearly some way to go before gene therapies could fill the gaps Bayer faces when Xarelto and Eylea go off patent. The lead program, in Pompe’s disease, started phase I/II development in January 2019, while in February 2020 Askbio announced its subsidiary Nanocor had dosed the first patient in a phase I trial of NAN-101, a treatment for congestive heart failure.