- Idera Pharmaceuticals Inc. and BioCryst Pharmaceuticals Inc. have signed a definitive merger agreement in an effort to strengthen their standings in the field of rare disease treatments.
- BioCryst investors will own 51.6% of the stock of the combined company — a name for which has yet to be chosen — while Idera shareholders will own the remaining 48.4%. The new company will start with a net cash balance of about $243 million, according to a Monday statement.
- The merger creates a more extensive clinical pipeline for the two players, including three mid- to late-stage candidates aimed at tackling a variety of diseases. From BioCryst comes a treatment for hereditary angioedema (HAE), BCX7353. On its end, Idera is contributing IMO-2125 and IMO-8400, drugs under investigation in PD1-refractory melanoma and dermatomyositis, respectively.
Rare disease drug development has taken off over the last few decades, lifted by the perks offered in the Orphan Drug Act. The Food and Drug Administration received nearly 600 requests for orphan drug designation in 2016, a record high that underscored how lucrative the space has become due to tax credits, market exclusivity and blooming sales.
Big pharmas and biotechs have conducted costly M&A to snag some of those returns. Shire plc dropped $32 billion in early 2016 to acquire Baxalta Inc., creating the "leading biotechnology company focused on rare diseases," according to Shire head Flemming Ornskov. Most recently, Sanofi SA agreed to buy Biogen Inc.'s hemophilia spinoff Bioverativ Inc. for $11.6 billion.
Idera and BioCryst's merger gives them a better shot at competing in a field red-hot with new investment.
On a Jan. 22 investor call, executives noted that, in addition to the cash balance, the combined company will have a procurement contract worth at least $20 million coming sometime in 2018, and will continue conversations with strategic partners for out-licensing IMO-2125 in indications beyond refractory melanoma. What's more, consolidation activities following the deal's close should reduce expenses.
Executives expect the combined company's cash position will allow them to advance key late-stage programs past their next milestone event.
"This merger wasn't contemplated under creating clinical operations synergies," Vincent Milano, CEO of Idera, said during the call. "It's really about ... not only diversifying the risk, but creating greater opportunities for greater returns by putting the two companies with their two respective talent bases and experiences together, and also the two discovery engines where we think we can enhance the number of rare disease targets."
Notably, Idera and BioCryst spent a combined $90 million on R&D over the first nine months of 2017.
The new company will have several clinical developments to look forward to this year. Execs anticipate Phase 3 trials for IMO-2125 and BCX7353 (in a capsule formulation) will kick off in the first quarter, while Phase 2 data for IMO-8400 and BCX7353 (in a liquid formulation) will come later in the year.
Milano will helm the combined company and serve as a member of its board of directors. BioCryst CEO Jon Stonehouse will also serve as a member of the board. The company will have its headquarters at Idera's current base in Exton, Pennsylvania, and a consolidated research center in Birmingham, Alabama.
Idera and BioCryst expect the merger to complete in the second quarter.