Enobia Pharma Corp of Montréal, Canada was purchased by Alexion Pharmaceuticals Inc., of Cheshire, Conn., at the end of 2011 for $610 million up front and $470 million in sales and regulatory milestones. Was this the result of good strategic planning?
Strategic planning is a big part of every new biotech’s efforts to plot a direction and a focus for their long term operation. Even through the best laid plans often go awry, planning for the both the expected and unexpected is a good business practice. The question is whether Enobia and Alexion had strategic plans that led to the recent purchase.
Enobia started out focused on the treatment of bone disorders with their recombinant enzyme drug candidate for the replacement of a functional enzyme known as PHEX, the deficiency of which leads to X-linked hypophosphatemia -- a form of rickets. Rickets is a disorder by which the bones of children do not mineralize properly, and X-linked hypophosphatemia results in impaired bone development and growth in children. Enobia's lead product, ENB-0040 (asfotase alfa), is a human recombinant targeted alkaline phosphatase enzyme-replacement therapy for patients suffering with hypophosphatasia.
Having tested their product in preclinical trials, Enobia raised cash and hired executive staff to build out a company capable of taking the product to market. In 2005 Benoit Huet was hired as their CEO. Prior to joining Enobia he was President of Actelion Pharmaceuticals Canada, where he successfully established the Canadian division and launched the company’s first product on the market. He had been responsible for the development, registration and market introduction of a major compound in diabetes for Novartis Pharmaceuticals. In 2007 Enobia appointed Hal Landy, MD as the company's VP medical affairs & chief medical officer. In 2008 Julie Anne Smith was appointed as Enobia's vice president, chief commercial officer, and Jayant Aphale, PhD., MBA was appointed as vice president, manufacturing and process sciences.
ENB-0040 was awarded orphan designation in the US and EU in 2008 and Fast Track status in 2009. In 2010, a Phase 2 trial showed improvements in muscle strength and lessening of pain. Since then they have initiated trials in additional age groups to extend the patient pool that their drug can treat.
Enobia has raised enough capital to take them into Phase 3 and potentially to an NDA. They raised $40 million through a private placement in 2011 to support ongoing clinical work on ENB-0040, This was on top of more than $100 million raised in venture capital and $1 .2 million that came through an FDA Orphan grant.
Alexion Pharmaceuticals had a similar story with Soliris™ (eculizumab) for PNH, a rare form of hemolytic anemia. This is an acquired genetic blood disorder characterized by destruction of red blood cells by the body's immune system. Alexion was formed in 1992 and went public four years later with a focus on providing treatments for ultra-rare diseases. In 2006, they purchased a biopharmaceutical manufacturing facility that is used primarily to produce Soliris™. In 2007, they received marketing approval in the US and the EU. In 2010, they received marketing approval in Japan.
In 2011 Alexion acquired Taligen Therapeutics, Inc., a privately held development-stage biotechnology company based in Cambridge, Mass. Taligen’s R&D programs include potential drug candidates for various genetic and orphan diseases, such as paroxysmal nocturnal hemoglobinuria (PNH), age-related macular degeneration (AMD) and organ transplant. As of the end of September, 2011 Alexion’s revenues were over $500M with a course set to earn over $700M by the end of the year. They have cash and it looks like they want to spend it on augmenting their pipeline with drugs for rare diseases. Thus the purchase of Enobia seemed to be in line with their corporate focus.
It would appear that Enobia and Alexion both had strategic plans that led to Alexion acquiring Enobia for their rare disease treatment. This purchase ranks up there with the Plexxikon buyout for $935 million in 2011, the purchase of ZymoGenetics by BMS for $885M in 2011, the purchase of Facet Biotech by Abbot for $722M in 2010, the purchase of Calistoga by Gilead for $600M in 2011 and Eurand by Axcan Holdings for $583M in 2010. If all the sales and regulatory milestones are met, the investors in Enobia will receive 7½ times their investment. This seems like quite a good payoff for them. Bruce Booth makes a point in his blog that he expects more of these exits in 2011. It may be that times are getting better for biotechs that have good treatments, have good strategic plans and can execute their plans.
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