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With Asklepion Deal, Retrophin Gets a New Drug—And a Voucher

Xconomy New York — 

It was a rough 2014 for Retrophin, which was busy moving on from its former CEO’s ouster. But things brightened up a bit this morning, as the company not only added a new drug to the fold, but also get ahold of an asset that’s been making waves in biotech over the past year—a so-called “priority review voucher.”

First, New York-based Retrophin (NASDAQ: RTRX) said today that the FDA has approved cholic acid (Cholbam), a treatment for bile acid synthesis and peroxisomal disorders, a set of rare genetic defects that cause liver disease and other problems, like neurological dysfunction. With the FDA decision, Retrophin exercised its option to buy the developer of that drug, Asklepion Pharmaceuticals, of Baltimore, MD—and all of the rights to the drug—for $27 million in cash and 661,278 shares of Retrophin stock. Asklepion’s backers could get another $37 million in future payments, and stand to get royalties on sales of cholic acid as well.

But Retrophin got more than just a drug in the deal. The FDA granted Asklepion a priority review voucher for winning FDA approval of cholic acid, and ownership of the voucher will now go to Retrophin. The FDA awards these vouchers to companies that bring treatments to market for neglected tropical diseases and rare pediatric diseases, and enable a faster review once a company asks for FDA approval of a drug. The vouchers can cut to four months a process that typically takes 10 months—potentially adding millions in extra revenue for a company looking for a leg up. What’s more, they can be used for any drug in a company’s pipeline, and they’re transferable—Retrophin can turn around and sell its voucher to the highest bidder if it wants.

That’s why these vouchers have become highly valuable of late. Gilead Sciences (NASDAQ: GILD) bought one from Canadian firm Knight Pharmaceuticals for $125 million in November (Knight got the voucher because of a drug for leishmaniasis). And Regeneron Pharmaceuticals (NASDAQ: REGN) paid BioMarin Pharmaceutical (NASDAQ: BMRN) $67.5 million for one last summer (BioMarin won the voucher when it got FDA approval of a drug to treat Morquio A syndrome). In Regeneron’s case, a voucher could help the company be first to market with a new class of cholesterol-lowering drugs, leapfrogging rival Amgen (NASDAQ: AMGN).

The voucher’s potential value is part of the reason Wall Street cheered Retrophin’s deal this morning—shares are up more than 34 percent pre-market.

Asklepion won this voucher because its drug treats bile acid synthesis disorders from a single enzyme defect—a rare disorder that affects one out of every 9 million babies born—and peroxisomal disorders, which affect one in 50,000. Retrophin bagged an option in January to buy the company.

Today’s FDA approval and the acquisition of Asklepion are welcome news for Retrophin, which is moving on from a messy divorce from former CEO Martin Shkreli. The company recently completed deals to send some of the assets Shkreli acquired when leading Retrophin—an oxytocin nasal spray, mecamyamine (Vecamyl), and ketamine—to Shkreli’s new startup, Turing Pharmaceuticals. Stephen Aselage was named Retrophin’s interim CEO on Sept. 30. The company is now built around development candidates for a rare kidney disorder called focal segmental glomeruloscerosis and pantothenate kinase-associated neurodegeneration, a life-threatening neurological disorder; two marketed products for kidney stones and gallstones; and now the Asklepion drug.