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Neurocrine Inks $50M Xenon Pharma Deal to Expand Into Epilepsy

Xconomy San Diego — 

Neurocrine Biosciences is paying $30 million cash and taking a $20 million equity stake in Xenon Pharmaceuticals to license a clinical-stage epilepsy drug and collaborate on other potential treatments for the seizure-causing brain disorder.

The Xenon (NASDAQ: XENE) deal is the second one San Diego-based Neurocrine has struck this year in a bid to expand the landscape of neurological disorders for which it can offer treatment.

For its $50 million, Neurocrine gets the rights to Xenon’s experimental treatment for a rare, hereditary form of early-onset epilepsy caused by mutations to the gene SCN8A. Mutations to that gene can cause epilepsy that is resistant to treatment, according to the Cute Syndrome Foundation, a nonprofit that raises awareness of and funds research into rare genetic mutations associated with pediatric epilepsy.

Between 500 and 1,000 children are affected by the disease, called SCN8A developmental and epileptic encephalopathy, for which there is no FDA-approved treatment, according to Neurocrine. Burnaby, British Columbia-based Xenon’s experimental drug, XEN901, could also potentially treat focal seizures, the most common type of seizure experienced by people with epilepsy. Such seizures affect 1 million people, half of whom don’t respond to existing treatments, according to Neurocrine.

Neurocrine says it plans to file papers with the FDA in midyear 2020 to begin its first trial of XEN901. The investigational drug becomes the second rare disease treatment in its clinical pipeline; the biotech is also advancing a drug candidate for a genetic endocrine condition called congenital adrenal hyperplasia.

The San Diego company also gets the rights to three preclinical candidates, and has committed up to $1.7 billion in potential payments associated with XEN901 and those programs. Xenon has the option to fund half of the US development costs of one of its programs in exchange for increased royalties. The partnership includes a research collaboration for up to three years with a minimum of the equivalent of 10 full-time employees at Xenon.

Neurocrine’s purchase of Xenon shares amounts to $14.20 each, a 20 percent premium over the $11.83 closing stock price Friday. When the market closed Monday, Xenon’s stock price was $12.31 per share, up 4 percent from Friday. (Neurocrine closed at $116.76 per share, virtually unchanged.)

The arrangement echoes a licensing and research collaboration that Neurocrine struck nearly a year ago that expanded its scope to gene therapy research. In January the company paid Voyager Therapeutics (NASDAQ: VYGR) $115 million cash and bought $50 million worth of shares in the Boston-based company for the rights to an investigational gene therapy for Parkinson’s disease, plus three other preclinical gene therapies. At the time Neurocrine was advancing another Parkinson’s treatment—a drug called opicapone that is now under FDA review as an adjunct to the common levodopa/carbidopa combo medication—but had no gene therapies in its pipeline.

Neurocrine’s flagship drug is valbenazine (Ingrezza), which the FDA approved in 2017 as the first treatment for tardive dyskinesia, a debilitating side effect of long-term use of some psychiatric drugs. But valbenazine didn’t remain patients’ sole option for long. Later that year Israel’s Teva Pharmaceutical (NYSE: TEVA) received a nod from the agency for its treatment for the condition, deutetrabenazine (Austedo). The Teva drug is also approved to treat chorea, or involuntary movements, in patients with the neurological disorder Huntington’s disease (HD). Neurocrine is in late-stage testing of valbenazine to treat HD-associated chorea.

The San Diego biotech’s other focus is women’s health. In partnership with AbbVie (NYSE: ABBV), the company last year saw its treatment for pain associated with endometriosis, elagolix (Orilissa), reach commercialization. AbbVie is testing the drug as a treatment for uterine fibroids and polycystic ovary syndrome, too.

Neurocrine, headed by CEO Kevin Gorman (pictured), in the first nine months of this year reported about $544 million in revenue compared to nearly $320 million in the same months the year prior.