- Neurocrine Biosciences, a San Diego-based biotech focused on neuroscience, said Tuesday it has licensed seven psychiatry drug programs from pharmaceutical giant Takeda in a deal valued at more than $2 billion.
- The deal adds diversity to Neurocrine's pipeline, which is mostly filled with drugs for movement disorders, women's health and genetic diseases. Three of the seven Takeda programs are in human trials for conditions like schizophrenia and treatment-resistant depression. Neurocrine now has full rights to those drugs and will develop and commercialize them.
- Neurocrine will pay Takeda $120 million upfront and could tack on another $1.9 billion in development and commercial milestones later. Takeda will get double-digit royalties on net sales of any products that stem from the deal, and can choose to equally split profits with Neurocrine on an asset-by-asset basis. But Takeda would forfeit downstream payments on any drug it shares with Neurocrine.
While every therapeutic area experiences setbacks in drug development, neuroscience has a reputation for being especially challenging. Acadia Pharmaceuticals, Sage Therapeutics and Intra-Cellular Therapies, for instance, each had psychiatric drugs fail in Phase 3 testing within the last year.
Yet, the high demand for effective treatments presents large sales opportunities for any company that can bring a drug to market. Neurocrine's Ingrezza, which was approved in 2017 to treat a movement disorder called tardive dyskinesia, generated just north of $750 million in 2019. Wall Street analysts expect the drug to bring in more than $1 billion this year.
Neurocrine, which gets almost all its revenue from Ingrezza, has been trying to expand its portfolio over the past few years. In 2017, it bought rights to Ongentys, a Parkinson's disease drug that just last month received approval in the U.S.
"If you want to focus on movement disorders, you have to be involved and you have to be bringing something special to the Parkinson's market," Kevin Gorman, Neurocrine's CEO, said in an interview last month, speaking about how Ongentys fits into his company's strategic plans.
Neurocrine has also worked on its pipeline, inking research deals last year with Xenon Pharmaceuticals and Voyager Therapeutics that focused, respectively, on a rare type of epilepsy and gene therapies for Parkinson's.
While these deals have provided Neurocrine with a couple more clinical-stage assets, the company's stock price suggests investors don't see much value in its existing pipeline, Stifel analyst Paul Matteis wrote in a Tuesday note to clients.
The deal with Takeda, however, could gin up some interest. While Takeda's drugs are "high risk," Matteis argues that Neurocrine is likely to have a positive return on investment should just one of the three clinical-stage assets succeed. The deal "makes lots of sense from a company building perspective," he wrote.
Neurocrine shares were up about 1.7% late Tuesday morning, trading at a little more than $117 apiece. The biotech's share price has risen 37% over the last year.
Meanwhile, for Takeda, the partnership provides flexibility — letting it to pick and choose which drugs it wants to split profits on — as well as greater bandwidth to work on other projects.
In a statement, Sarah Sheikh, the company's head of neuroscience, said Neurocrine's help will get more psychiatry medicines to patients while also allowing Takeda to focus more on its experimental treatments for neurodegenerative diseases and rare neurological disorders such as narcolepsy.
The three clinical-stage programs Neurocrine picked up through the deal are TAK-653, a Phase 2-ready drug in development for treatment-resistant depression; TAK-041, a Phase 2-ready program for anhedonia; and TAK-831, which is in Phase 2 testing for the negative symptoms of schizophrenia. Matteis wrote that, while his team knows less about TAK-041, the other two drugs are based on "promising scientific rationale."