Turns Out Gilead May Have Wanted Tobira Too
October 19, 2016
By Mark Terry, BioSpace.com Breaking News Staff
In late September, Dublin-based Allergan acquired San Francisco-based Tobira Therapeutics in a deal that could hit $1.695 billion. They paid $28.35 per share in cash up front, as well as up to $49.84 per share in Contingent Value Rights (CVRs) based on various development, regulatory and commercial milestones. Although it seemed fairly clear at the time that Allergan was positioning itself for entry into the NASH market, investors and analysts were puzzled over why it was paying at least a 500 percent premium, which could hit 1,600 percent, if all the milestones were met. Particularly since Tobira’s Phase IIb trial didn’t meet its primary endpoint in July.
Michael Mele, writing for Seeking Alpha, has a pretty good idea why.
First, there was a bidding war. Tobira’s 14D-9 filing on October 3 indicates that at least two companies—Allergan for sure, and probably Gilead Sciences as well—were bidding for the company.
To get to exactly why, particularly in light of Tobira’s failed trial, understanding NASH is required.
Non-alcoholic steatohepatitis (NASH), sometimes dubbed the “silent” liver disease, resembles alcoholic liver disease, but appears in people who drink little or no alcohol. But, it can be quite severe and lead to cirrhosis. According to the National Institute of Diabetes and Digestive and Kidney Diseases, NASH affects 2 to 5 percent of people in the U.S. There are currently no specific treatments besides weight loss, increased physical activity, and avoiding alcohol and unnecessary medications. The market for NASH is projected to be about $35 billion annually at its highest.
There are at least three components to NASH, fibrosis, inflammation and a metabolic component. It is likely that a successful treatment will require that all three are addressed.
Which circles back to Tobira’s failed trial of cenicriviroc (CVC). Although it failed to meet its primary endpoint, improvement of NAFLD Activity Score, it did meet its secondary endpoint. The drug showed a statistically significant improvement in liver fibrosis—one of the three components of NASH.
Mele writes, “Therefore CVC could potentially be one piece of a future cocktail treatment. This thesis is further bolstered by Allergan’s subsequent purchase of Akarna and the company’s FXR Agonist, which would target the metabolic aspect of the disease. It’s likely Allergan’s intention to utilize the two components in tandem going forward.”
Gilead, for its part, acquired Phenex Pharmaceuticals, along with their FXR Agonist, renamed GS-9674, which targets the metabolic component of NASH. It also acquired Nimbus Apollo, and picked up GS-0976, an ACC inhibitor, in the deal. Mele believes Gilead will probably try some combination of these drugs with two of its in-house pipeline candidates, GS-4997 and Simtuzumab.
GS-4997 is an ASK-1 inhibitor currently in Phase II trials both with and without Simtuzumab. GS-4997 is being evaluated for its effects on the inflammatory component of NASH.
Simtuzumab is a monoclonal antibody that works against fibrosis. The problem there is that Simtuzumab has not done terribly well in clinical trials in fibrosis of the lungs and in pancreatic cancer. To which Mele writes, “Cue Tobira. As stated previously, CVC demonstrated a clinically meaningful improvement in liver fibrosis, and theoretically could be combined with any of Gilead’s current compounds. This would alleviate the reliance on the unreliable Simtuzumab and the uncertainty regarding the anti-fibrotic potential of Gilead’s current pipeline.”
In addition, the five of the milestones related to the Gilead acquisition of Tobira involve combination therapies.
Mele also points out that there is another big player in NASH, which is Intercept Pharmaceuticals , which has a drug called Ocaliva (obeticholic acid), which has been approved for PBC and is in a Phase IIIa trial for NASH. A lot of investors wish Gilead or someone would buy Intercept. Mele is skeptical because both Gilead and Allergan have already bought non-bile acid FXR Agonists. Ocaliva is a non-bile acid FXR Agonist. And Gilead has already expressed concern over Ocaliva’s safety profile and unpredictability.
“It is likely that Gilead Sciences lost out in the bidding war for Tobira Therapeutics, missing the opportunity to acquire an asset with proven anti-fibrotic potential and allowing Allergan to burst on to the scene in NASH,” Mele writes. “If approved, Intercept’s OCA will have first mover advantage, but in the years to come I expect it to be displaced by combination therapy.”