Medivir Beefs Up Cancer Pipeline With $238 Million Deal

STOCKHOLM--(BUSINESS WIRE)--Regulatory News:

Medivir AB (Nasdaq Stockholm: MVIR) today announces that it has entered into an agreement to acquire two clinical stage oncology programs from Tetralogic Pharmaceuticals Corporation (Nasdaq: TLOG), advancing and expanding its clinical pipeline. The acquisition includes remetinostat, a skin-directed HDAC inhibitor, and birinapant, a bivalent SMAC mimetic, and all intellectual property and data associated with Tetralogic’s HDAC inhibitor and SMAC mimetic projects.

Remetinostat Clinical Program

Remetinostat is a topical, skin-directed inhibitor of histone deacetylases (HDACs) and has a strong link to Medivir´s existing expertise in protease inhibition. The compound was designed to effectively inhibit HDACs within cutaneous lesions, but to be rapidly broken down in the bloodstream, preventing the side effects associated with systemically administered HDAC inhibitors.

Remetinostat is currently in a late phase II program aimed to treat early stage cutaneous T-cell lymphoma (CTCL), a chronic, orphan hematologic cancer that presents in the skin. There are few drugs available for the treatment of the disease, and those currently available have generally poor tolerability. As a result, patients are in need of safe and effective new treatment options which remetinostat may represent. The estimated addressable market for early-stage CTCL in the US alone is approximately USD 900m annually.

Medivir currently plans to start a phase III trial with remetinostat in the second half of 2017.

Birinapant Clinical Program

Birinapant is a bivalent, second mitochondrial activator of caspases (SMAC) mimetic that binds cellular inhibitor of apoptosis proteins (cIAPs) and induces their degradation. cIAPs are part of the ubiquitin proteasome system, and birinapant therefore ties in well to Medivir’s existing interests in modulators of protein ubiquitination. Medivir currently plans to start two different clinical studies with birinapant:

• A phase I study in combination with KeytrudaTM(pembrolizumab), a PD-1 inhibitor from Merck & Co., Inc. (MSD outside of the US and Canada, “MSD”), in patients with solid tumours, subject to transfer to Medivir of the clinical trial agreement between Tetralogic and MSD and receipt of KeytrudaTMsupply. Preclinical studies have shown that SMAC mimetics such as birinapant are able to enhance the response of T-cells to tumour antigens, and the objective of the planned phase I study is to investigate the safety of the combination and the potential of birinapant to enhance response rates seen with KeytrudaTMalone. PD-1 inhibitors such as KeytrudaTMare immuno-oncology products that have substantially improved treatment outcomes for patients with solid tumours. Revenues of PD-1 inhibitors as reported by MSD and Bristol-Myers Squibb in the last twelve months have totalled approximately USD 3.2b. The PD-1 inhibitor market is expected to continue to grow from increasing use and expansion of the number of indications for which they are approved.
• A phase II program, to investigate birinapant in combination with platinum-based chemotherapy for the treatment for high-grade serous carcinomas (HGSCs), including ovarian cancer, in collaboration with clinical investigators at UCLA. The UCLA team have identified that platinum-resistant cells in HGSCs are highly susceptible to birinapant-platinum co-therapy in approximately half of patients, and have developed a bioassay to enable patient selection. High-grade serous carcinomas are tumours that are believed to be derived from cells in the fallopian tube and can present as ovarian, endometrial, tubal or peritoneal cancer. The majority of ovarian cancer cases are high-grade serous carcinomas and these patients have a very poor survival rate. The ovarian cancer market size overall is estimated to be USD 840m, with those patients resistant to platinum treatments representing the group with highest unmet need.

Financial Consideration and Third-Party Arrangements

The acquisition has been structured to provide an upfront cash payment, but with the majority of financial consideration tied to successful clinical development, regulatory approvals and sales milestones. Medivir will also assume agreements or certain obligations with other third parties, including the MSD agreement regarding KeytrudaTM, subject to confirmation from MSD.

The acquisition includes the following potential payments to Tetralogic and other third party licensees:

• Upfront cash consideration of USD 12m;
• Remetinostat development milestones through regulatory filings of up to USD 20m;
• Remetinostat regulatory approval milestones of up to USD 45m;
• Remetinostat tiered royalties capped at an aggregate of 13%;
• Additional remetinostat commercialization milestones of up to USD 31m, primarily based on substantial sales achievement levels;
• Birinapant development milestones and research support of up to USD 20m;
• Birinapant tiered royalties capped at an aggregate of 10%; and
• Additional birinapant commercialization milestones of up to USD 110m, primarily based on substantial sales achievement levels.

Strategic Overview

“This is a transformative transaction for Medivir and an important part of our strategy to expand our pipeline with programs in later stage clinical phases, shifting the balance from research to clinical development. The acquisition enables Medivir to build critical mass in development and secures visible value generation, with expected near-term and continuous news flow from multiple studies. These assets are complementary to our oncology efforts in early phases. Both programs have an excellent fit with the Medivir scientific platforms and we are uniquely positioned to recognize the value of both of Tetralogic’s clinical assets,” says Niklas Prager, CEO & President of Medivir.

Richard Bethell, CSO of Medivir continues, “We are excited to have acquired these two projects, both of which have the potential to meaningfully advance the care of cancer patients. Medivir has a track record of discovering and developing drugs that are targeted to specific tissues, so we are well placed to rapidly progress remetinostat for the treatment of early-stage CTCL. Many patients with this disease are urgently in need of new treatments that are both safe and effective. We also believe that birinapant, through its effects on both immune and tumour cells, offers the potential to improve the treatment of a number of different cancers. We look forward to rapidly advancing both of these agents into the next round of clinical studies.”

Closing Conditions

The transaction is subject to confirmation by MSD of agreement transfer to Medivir, the consent of the Tetralogic Senior Noteholders, approval of the Tetralogic shareholders and other customary closing conditions. Medivir expects the transaction to close by year end 2016.

Advisors

Medivir’s legal advisor is Wiggin and Dana LLP.

INVITATION TO CONFERENCE CALL AND WEBCAST

Medivir will be conducting an analyst and investor conference call/webcast tomorrow 3 November, at 14.30 CET. Niklas Prager CEO, Ola Burmark CFO and Richard Bethell CSO will be presenting and will be available for questions.

To join the conference call, please dial:
Sweden +46 (0)8 566 426 96
Europe +44 20 300 898 17
USA +1 855 831 5946

The webcast can be accessed on the website: www.medivir.com

This information is information that Medivir AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the CFO set out above, at 21.30 CET on 2 November 2016.

About Medivir

Medivir is a research based pharmaceutical company with a research focus on oncology and infectious diseases. We have a leading competence within protease inhibitor design and nucleotide/nucleoside science and we are dedicated to develop innovative pharmaceuticals that meet great unmet medical need. Our commercial organization provides a portfolio of specialty care pharmaceuticals on the Nordic market. Medivir is listed on the Nasdaq Stockholm Mid Cap List.

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