PTC Therapeutics to Buy Agilis Biotherapeutics in Deal that Could Exceed $945 Million

PTC Therapeutics is buying Agilis Biotherapeutics in a deal that has the potential to exceed $945 million with a priority review voucher thrown into the mix as well.

PTC Therapeutics, headquartered in South Plainfield, New Jersey, focuses on rare diseases. It currently has two approved therapeutics, Translarna (ataluren), which is marketed in the European Union for ambulatory patients five years and older with Duchenne muscular dystrophy (DMD) caused by a nonsense mutation in the dystrophin gene. The other is Emflaza (deflazacort), approved in the U.S. for DMD in patients five years of age and older.

Agilis Biotherapeutics is headquartered in Lynnfield, Massachusetts and Cambridge, Massachusetts. It too focuses on rare diseases, in this case rare genetic diseases that affect the central nervous system. Its lead programs focus on Aromatic L-Amino Acid Decarboxylase Deficiency (AADC-D), Friedreich’s ataxia (FA) and Angelman syndrome (AS).

Under the terms of the deal, PTC will pay Agilis $50 million in cash and about $150 million in PTC common stock. There are near-term future milestones over the next two years for $60 million, including the acceptance of a Biologics License Application (BLA). Also, there are “success-based milestones” related to various regulatory approvals of Agilis’ three most advanced programs that offer a potential of $535 million. There are also tiered commercial milestones worth $150 million and two to six percent of annual net sales for the therapies for Friedreich ataxia and Angelman syndrome.

In addition, part of the success-based milestones includes a priority review voucher. A priority review voucher is a program from the U.S. Food and Drug Administration (FDA) that allows the holder to expedite the review process, coming to a decision within six months. Companies that obtain a priority review voucher can either use it to enter the six-month timeframe or it can be sold to another company.

Most recently, Spark Therapeutics, which received a priority review voucher for the approval of its Luxturna eye disease gene therapy, sold it to Jazz Pharmaceuticals for $110 million. That’s quite low. The record sale of a priority review voucher was in August 2015, when United Therapeutics sold its voucher to AbbVie for $350 million.

“The addition of the gene therapy platform transforms PTC and aligns with our vision of being a leader in the treatment of rare disorders,” said Stuart Peltz, PTC’s chief executive officer, in a statement. “We are impressed with the clinical results shown by the AADC program and are excited with the potential to quickly bring this therapy to patients. We look forward to advancing the Friedreich ataxia and Angelman syndrome programs into the clinic in the next two years.”

The merger is expected to close in the third quarter of this year.

In after-hours trading, PTC stock climbed 9.4 percent after closing up 4.5 percent. Martin Auster, an analyst with Credit Suisse, launched PTC stock coverage with an “outperform” rating and a $49 price target. He noted that PTC’s pipeline drug risdiplam for spinal muscular atrophy (SMA) could rival Biogen’s Spinraza, and dubbed it a potential “superstar.”

Spinraza requires an injection into the spinal canal. Risdiplam is taken orally. Auster wrote that he expects risdiplam to “largely supplant Spinraza’s current market leadership and position it as the best option for patients unable to receive gene therapy. We also see risdiplam as a potential option for patients receiving gene therapy who experience waning (effectiveness) or an incomplete response.”