Concert Pharma, Jazz Pharma Strike $120M Deal for Narcolepsy
If there was ever an occasion to play some Miles Davis around a Boston biotech company’s office, today is the day.
Lexington, MA-based Concert Pharmaceuticals has the right to play it cool, or at least crack a few music jokes, after striking a collaboration with another musically inspired company—Dublin, Ireland-based Jazz Pharmaceuticals (NASDAQ: JAZZ).
The deal calls for the two companies to work together on a modified version of sodium oxybate (Xyrem) for narcolepsy, a neurological disorder that leads to excessive daytime sleepiness. Under the deal, Jazz will get the worldwide commercial rights to Concert’s compounds that swap in deuterium elements into sodium oxybate, including one dubbed C-10323. In return, Concert gets an undisclosed upfront payment and could collect another $120 million, if it hits certain development and commercial milestones, and escalating royalties that could run into the low-double digit percentage of sales, Concert CEO Roger Tung says. Jazz will be primarily responsible for ongoing development.
The deal is important for Concert, as it provides a shot of cash to keep its 50-person R&D operation moving along in the year after GlaxoSmithKline ended a collaboration to develop a new type of protease inhibitor for HIV. It’s another validation for Concert’s chemistry platform, in which it uses deuterium to modify existing drugs to give them enhanced properties. Although the Concert drug hasn’t yet entered clinical trials, Jazz is hoping it will provide a long line extension for its franchise drug sodium oxybate, which was first FDA approved in 2002. The drug is cleared for narcolepsy to reduce excess daytime sleepiness and reduce cataplexy (weak or paralyzed muscles) attacks. Sales have been booming recently, up more than 60 percent, to $102.6 million in the most recent quarter ended Sept. 30. The first patents on the drug begin to expire in 2019 and 2020, according to the FDA Orange Book.
“This deal is moderately meaningful in the immediate term, because upfront cash is always welcome, but it’s potentially very meaningful in the long term,” Tung says. “Xyrem is a substantial drug. It’s expected to hit the $800 million range in peak annual sales, and what we believe we have is a differentiated new molecule with different properties, new IP, and a compound that could provide an improved medicine for narcoleptic patients, and be used in other sleep related disorders. We think the commercial potential for the drug is substantial.”
While jokes about harmony between Concert and Jazz circulated months ago when talks began, the humor, unfortunately, has mostly run its course. “It’s been so long that we’ve been working on this, I’ve lost the humor,” Tung says.
Concert sought out this deal with Jazz on the belief that by swapping in a deuterium isotope into sodium oxybate, it could come up with an improved form of the fast-growing narcolepsy treatment. As Concert continued to run a series of animal tests, in rats and dogs, it put together a data package that suggested the new formula might be more efficiently absorbed, and last longer in the bloodstream, than the existing drug, Tung says.
“At first, the data package we had was interesting, but maybe not compelling,” Tung says. “Over the course of time we talked with Jazz, we continued to do research on our end, and the data got more compelling.”
It’s too early to say whether the improved properties will amount to anything in human beings. But if Concert can deliver that kind of drug—which could last longer, and can be more efficiently absorbed at a low dose—then it would be valuable. The existing form of sodium oxybate, as a treatment for narcolepsy, needs to be taken in a relatively large liquid dose, once before bed, and again after about four hours of sleep, Tung says. The high dose can lead to nausea, dizziness, and headaches, among other side effects, and when abused, it can cause more serious effects like convulsions, respiratory depression, coma, and death, according to the Xyrem prescribing information.
On a practical level, it’s also not ideal to treat a sleep disorder by asking people to wake up in the middle of a normal 7-8 hour sleep cycle.
Concert hopes to be in position to file an application to the FDA to begin clinical trials of the new drug later this year. But because of the history of abuse with the compound, Concert may have to clear some extra hurdles with the Drug Enforcement Administration before it goes ahead in clinical trials, Tung says.
The new program helps provide a little more diversification to Concert’s pipeline of drug candidates. The company, founded in 2006, has another partnership with Aliso Viejo, CA-based Avanir Pharmaceuticals (NASDAQ: AVNR) to make a deuterium-modified form of dextromethorphan as a treatment for neurological and psychiatric disorders. Between the new Jazz partnership, the Avanir deal, and the previous collaboration with GlaxoSmithKline, Concert has been able to support its R&D shop without any new equity capital since 2008, Tung says.
While those deals are enough to pay most of the bills, the truly big event at Concert is still about six months away. The company recently announced it completed enrollment of a mid-stage clinical trial of CTP-499, its lead drug candidate for diabetic nephropathy, a type of kidney damage that people get with diabetes. This trial has randomly assigned 182 patients to get either the new Concert drug or a placebo.
If that drug hits its goal of reducing a sign of kidney damage in the urine after 24 weeks, then Concert will take on a different profile as a company. It still retains 100 percent ownership of CTP-499, although if the data are positive from this Phase II trial, it will likely seek a partner to help it take the compound all the way through the third and final phase of clinical trials normally required for FDA approval.
As the diabetes epidemic continues to grow, a number of competitors have been pursuing treatments for diabetic nephropathy, including Mountain View, CA-based ChemoCentryx (NASDAQ: CCXI), as well as New York-based Pfizer (NYSE: PFE) and Eli Lilly (NASDAQ: LLY).
“We are on the cusp of being a Phase II-completed company, which will put us into a different kind of situation,” Tung says. “We have a lot going on, with first-in-class compounds, and best-in-class compounds. We’re excited about the technology.”