- Zogenix is expanding its pipeline beyond lead drug Fintepla, saying Monday it will pay $250 million upfront to acquire Modis Therapeutics, a privately-held biotech developing a treatment for an ultra-rare neuromuscular disorder.
- Modis' experimental drug, called MT1621, improved outcomes for patients with thymidine kinase 2 deficiency, or TK2d, in a retrospective Phase 2 clinical trial, Zogenix said.
- "Based on the compelling clinical data generated to date, we believe that MT1621 has the potential to significantly alter the course of the disease and improve outcomes in patients with TK2d," Zogenix CEO Stephen Farr said in a Monday statement. Zogenix expects the deal to close in September.
Farr's confidence notwithstanding, investors appear to have some doubts about the deal, sending Zogenix's stock was down 12% Monday.
Beyond the $250 million Zogenix will pay upfront — split between $175 million in cash and $75 million in Zogenix common stock — the deal also outlines additional payments of $100 million for U.S. approval and $50 million for European approval. Modis would also receive a 5% royalty on any net sales of MT1621.
One key question for Zogenix will be establishing a market for the ultra-rare disease, Stifel analyst Paul Matteis wrote in a client note Monday.
In selling the deal to investors, the company estimated there are between 650 and 2,500 TK2d patients in the U.S. However, only a small subset of that estimate are already identified, Matteis said, making disease awareness efforts particularly important.
The drug also needs a path to approval. Modis conducted a retrospective Phase 2 study that it called pivotal, enrolling 38 patients for up to seven years of treatment. Compared to a natural history dataset of 68 patients, the company found a statistically significant benefit to MT1621.
It's unclear if that will be sufficient to file with U.S. and European regulators. Zogenix said it expects to have meetings with regulators in early 2020 to confirm next steps.
Modis started a prospective Phase 3 study earlier this quarter, continuing treatment for Phase 2 patients as well as enrolling new patients.
Zogenix also reaffirmed its plans to resubmit to the Food and Drug Administration its drug Fintepla (fenfluramine hydrochloride) for Dravet syndrome this quarter. A regulatory hiccup earlier this year delayed the first filing, with Zogenix receiving a Refusal to File letter from the agency.
The company also expects topline results for Fintepla in Lennox-Gastaut syndrome, another rare version of epilepsy, in early 2020.