FDA Bestows Breakthrough Therapy Designation on Dyax Corp.'s HAE Drug As Suitors Circle

Published: Jul 07, 2015

FDA Bestows Breakthrough Therapy Designation on Dyax's HAE Drug As Suitors Circle
July 7, 2015
By Mark Terry and Riley McDermid, BioSpace.com Breaking News Staff

Scrappy Burlington, Mass.-based Dyax Corp. announced today that the U.S. Food and Drug Administration (FDA) has given its DX-2930 for hereditary angiodema (HAE) a Breakthrough Therapy designation.

HAE is a rare disorder that is an acute inflammation caused by low or dysfunctional levels of C1 esterase inhibitor (C1-INH), a naturally occurring molecule. HAE is characterized by severe, often painful swelling of the extremities, GI tract, genitals and larynx. It affects about 1 in 50,000 people.

The designation could make the firm even more attractive as a takeover target. In June, Dyax began attracting the notice of much larger suitors because DX-2930 represents a threat to much larger Irish company Shire , who previously had the only drug approved to treat HAE.

Michael Yee, an analyst at RBC Capital Markets, said that a host of companies will likely be interested in acquiring $3.6 billion Dyax, including Shire (SHPGY), Alexion Pharmaceuticals Inc. , Sanofi and BioMarin Pharmaceutical Inc. .

“Any of the key players in orphan drugs could be interested,” Yee told Bloomberg in June, saying he’d expect any bid to weigh in at around $39 per share. “Dyax has a game-changer in DX-2930. A lot of orphan companies would probably like to own this asset.”

Shire’s drug Cinryze is the only approved drugs for the treatment of hereditary angioedema, or HAE, in which tissues swell rapidly and uncontrollably, sometimes blocking the flow of oxygen to the lungs or limbs of a patient. It costs around $630,000 annually for patients, a price tag that raked in $503 million in 2015, even though the market for HAE is relatively tiny.

But when compared to Dyax’s DX-2930, Cinryze has only a 50 percent reduction in attacks, versus DX-2930’s 88 percent, a difference that has both analysts and Wall Street taking notice.

“DX-2930 could well impact Shire’s business several years down the road,” David Steinberg, an analyst at Jefferies, wrote in a note to investors.

For its part, Shire has said it is keeping a close eye on the market, saying in an emailed statement to reporters last week that it “has a full program of current and potential programs in HAE, and we will continue to monitor the HAE landscape and act appropriately.”

DX-2930 is a fully human monoclonal antibody that inhibits plasma kallikrein (pKal). pKal is inhibited by C1-INH.

“Receipt of Breakthrough Therapy designation is a key milestone for the DX-2930 development program,” said Burt Adelman, executive vice president of research and development and chief medical officer of Dyax in a statement. “We look forward to taking full advantage of the opportunities that Breakthrough Therapy designation allows in order to maximize the possibility of a rapid path to approval.”

Dyax Corp. stock seemed to take the news in stride. It is currently trading at $27.49 per share. Early yesterday morning shares were trading for $26.08. Overall the stock took a big jump from $16.76 on March 31, 2015 to $30.45 on April 8.

Six brokerage firms polled by Zacks Research gave the stock a short-term consensus price target of $28.50, with the highest at $35 while the lowest was $19.

Analysts at Vetr upgraded Dyax stock from a “sell” to a “hold” and set a $25.05 price target, based on a June 4 research note. Jefferies Group analysts gave the company a “buy” rating on June 2, with a price target of $31.00. Oppenheimer analysts downgraded stock from “outperform” to “market perform” and set a $26.00 price target back on May 11.

On June 8, David Mclachlan, a Dyax director, sold 75,000 shares of company stock for $25.63, a total of $1,922,250.00.

Dyax has a strong licensing and funded research portfolio that includes nine drugs. In the last quarter Dyax licensed the drugs to other pharmaceutical companies for about $4 million. Included in those deals are Cyramza, which is licensed to Eli Lilly and Company and is approved for several cancer types and is currently in clinical trials for other cancers.

The company also currently markets another drug for HAE, Kalbitor, which brought in about $16 million in the last quarter, with expectations of $60 to $70 million in sales this year.

Michael Douglass, writing for The Motley Fool on June 30, said he thought the company was too expensive based on the stocks revenue opportunities. And although the promise of DX-2930 is good, it’s still early days.

“On one hand, you have a company with a diverse pipeline and revenue streams, an exciting (if still early stage) drug for HAE attack prevention, and a great potential growth path ahead. But you pay for quality, and with a $3.8 billion market cap, Dyax trades at seven times its projected sales for 2019 (according to analyst estimates, courtesy of S&P Capital IQ). Looks like heavy expectations are already build into the price.”


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