Big pharmaceutical companies are always on the hunt for promising drugs from smaller biotechs. But the reverse is true, too, and that can lead to creative deals such as the arrangement between New York startup Ovid Therapeutics and Japanese pharma giant Takeda announced this morning.
Ovid, formed in 2015 by ex-Teva Pharmaceutical and Bristol-Myers Squibb executive Jeremy Levin (pictured), has bought an experimental rare disease drug from Takeda. Financial terms aren’t being disclosed, but the companies will equally split costs and profits. Takeda also receives an equity stake in Ovid and could earn future payments if the drug progresses through clinical testing.
The companies will develop the drug, TAK-935, for a group of rare epilepsies and perhaps other neurological diseases. A Phase 1b/2a trial in patients with rare diseases causing chronic epilepsies—among them Dravet syndrome, Lennox-Gaustaut syndrome, and Tuberous Sclerosis Complex—will begin this year. Though medications like benzodiazepines are available to help stop epileptic seizures, no drugs are approved specifically for these conditions.
TAK-935 blocks an enzyme primarily expressed in the brain, cholesterol 24-hydroxylase, thought to play a role in neurological diseases such as epilepsy. Takeda has tested the drug in four different Phase 1 trials so far.
With the deal, Ovid continues its strategy of plucking assets from pharma’s shelves that it can develop for rare genetic neurological diseases. The company’s first deal was to license gaboxadol, a one-time insomnia drug candidate from Danish firm Lundbeck, and develop it for the rare diseases Angelman syndrome and Fragile X syndrome under the name OV-101. A Phase 2 trial for Angelman began late last year; Levin wouldn’t say when to expect data. Ovid also has an intravenous form of OV-101 called OV-102.
Pharma companies scrap development of experimental drugs all the time. Sometimes those drugs don’t work or are unsafe. Other times they no longer fit a company’s strategic goals, or they might be best suited for a different disease. They can still be valuable “if you look at [them] with a very different lens,” Levin says.
Why didn’t Takeda develop TAK-935 on its own after running safety studies on the drug? Spokesperson Paul Graves said that a partnership with a “specialized company” in rare neurological diseases, Ovid, represented the “best opportunity to maximize the clinical development” of the drug.
Levin says Ovid provides “complementary” skills to Takeda: It is focused on rare or orphan diseases and has close alliances with patient advocacy groups, which typically aren’t the focus of a large company like Takeda. Patient perspectives are increasingly important in drug development—they can help companies and regulators understand diseases and their symptoms, and thus how to design better trials. The Food and Drug Administration has moved cautiously toward more patient involvement in its evaluation, and doing so caused a rift last summer when the agency’s drug director Janet Woodcock overruled staff scientists to approve a drug for Duchenne muscular dystrophy.
There’s a “different mindset and skillset” in engaging the patient community for a rare disease, and thinking about the development of goals for clinical trials, says Ovid chief finance and business officer Yaron Werber. “This is our expertise,” he says.
Pushing dormant pharma programs forward under new ownership isn’t a new idea, but it has started to take on a variety of different forms. New Enterprise Associates formed orphan drug accelerator Cydan Development in 2013 so a team of experts could scour the globe for promising projects in rare diseases, sift through them, find some winners, and form companies around them. Two—Vtesse and Imara—have emerged already around drugs for Niemann-Pick Type C1 disease and sickle cell diseaes. Cydan hopes to eventually sell both startups should it get good early data.
The idea behind Waltham, MA-based Tesaro (NASDAQ: TSRO) when it formed in 2011 was to buy up cancer drug candidates and rely on an expert team to develop them. Tesaro now has one drug on the market, and a second could be approved this year. Boston Pharmaceuticals was formed in 2015 with a similar concept. Vivek Ramaswamy has built three companies—Axovant Sciences, Myovant Sciences, and Dermavant Sciences—off a plan to similarly find deep discounts in pharma’s garbage bins and develop them quickly with loads of new cash. Axovant (NYSE: AXON) and Myovant (NYSE: MYOV) have both gone public over the past year.
Levin says that the Ovid/Takeda alliance is different than other efforts because Takeda is sticking around to work on the drug instead of selling it or spinning it into a new company. “I believe what you’re seeing is perhaps the beginning of the next wave of thoughtful transactions,” he says.
Ovid will lead development of TAK-935 in the U.S., Europe, Canada, and Israel, while Takeda will do the same in Japan and has an option for Asia and certain other unspecified countries.
Ovid is based in Manhattan, but it is opening up a lab in Cambridge, MA, next month to work with Takeda’s U.S. group on TAK-935. It’ll be staffed with 15 to 30 employees, Werber says.