- The Medicines Co. has sold off its infectious disease business to Melinta Therapeutics Inc. for $270 million in upfront and guaranteed payments, and plans to channel that added money into further development of its cholesterol drug inclisiran.
- The payments include $215 million in cash and $55 million worth of Melinta common stock. The New Haven, Connecticut-based biotech pulled a reverse merger earlier this year with Cempra Inc. wherein its own stock was exchanged for Cempra shares and its investors ultimately held about 52% of the new company.
- Per its latest deal, Melinta picks up three marketed Medicines Co. products: Vabomere, for complicated urinary tract infections; Orbactiv, for serious Gram-positive bacterial infections; and intravenous Minocin, for bacterial infections. The companies expect the deal to close in the first quarter of 2018.
Medicines Co. is putting all its chips on inclisiran, an RNA interference drug that inhibits production of PCSK9. Following solid results from the Phase 2 ORION-1 trial, the company set forth on an ambitious late-stage program that includes a Phase 3 study of 3,000 patients with atherosclerotic cardiovascular disease (ASCVD) and familial hypercholesterolemia (FH) and a large cardiovascular outcomes study set to enroll 14,000 patients.
All that clinical work comes with a large price tag, however. In the first nine months of 2017, Medicines Co. spent $66.4 million on developing inclisiran, accounting for more than half of its cumulative R&D expenses. Meanwhile, the company reported $59.8 million in total net revenue across those three quarters, a 58% decline from the same period in 2016
Medicines Co. has been looking to offload non-core businesses since initiating a strategic review in late 2015. Selling off its infectious disease unit is perhaps the most substantial step in that direction so far. Of the $10.9 million in net product revenues the company snagged during the third quarter, Minocin and Orbactiv were responsible for about $9 million. Yet with the focus exclusively on inclisiran, executives believe such products are better suited under Melinta's ownership.
"We believe Melinta will grow these products strongly and — as both partner and shareholder — we look forward to their success as we focus our efforts and resources on inclisiran," Medicines Co. CEO Clive Meanwell said in a Nov. 29 statement from Melinta.
In a separate statement, Meanwell said the deal gives his company enough cash to push inclisiran through the Phase 3 study, as well as cover the drug's manufacturing costs and recruitment of the cardiovascular outcomes trial.
Last month, Medicines Co. revealed plans to layoff about 300 employees to bring its total workforce headcount below 60.
Conversely, Melinta comes away from the deal with a much-needed portfolio expansion. While the biotech secured new pipeline assets through the reverse merger with Cempra, its only marketed product is Baxdela (delafloxacin), a fluoroquinolone antibacterial indicated for acute bacterial skin and skin structure infections.
Market researchers also note that it's a good time to be a anti-infective drug manufacturer; Grand View Research, for instance, estimated in a recent report that the global therapeutic market for the top six infectious diseases — which includes human papillomavirus and tuberculosis — will reach $86.2 billion by 2025.
"The assets we are purchasing are an ideal complement to our existing business, allowing us to focus on multiple valuable segments of the anti-infectives market simultaneously," Melinta CEO Dan Wechsler said.
Notably, Medicines Co. is transferring its whole infectious disease business to Melinta, meaning employees will also be switching over. The deal, therefore, adds anti-infective professionals to Melinta's commercial team, which the biotech has been beefing up in preparation for Baxdela's launch.
In a Wednesday note, Jefferies analyst Biren Amin said the investment bank had talked with Medicines Co. and was told almost all the drugmaker's infectious disease personnel would head over to Melinta.
From a monetary standpoint, Melinta is paying $165 million in cash at the deal's close, plus $25 million at both the one-year and 18-month anniversary of the closing. Medicines Co. will also reap royalties on net sales of Vabomere, Orbactiv and Minocin that vary by geography and total net sales. In the U.S., for instance, Medicines Co. will receive 5% royalties on Vabomere if net sales are between $50 million and $100 million, but that figure could go as high as 25% if Vabomere net sales exceed $500 million.