Pharmaxis Ltd (ASX:PXS) is becoming a more enticing target for drug acquisition and partnerships as it continues to develop its fibrosis and inflammation drugs.
The company is looking to build on its prior drug commercialisation success which saw it do a deal in 2015 in with a potential value of over A$750 million.
The successful drug was to treat the liver disease, non-alcoholic steatohepatitis (NASH).
Pharmaxis is targeting LOXL2 to reduce liver fibrosis and the liver disease NASH and has received strong interest from large pharmaceutical companies.
Mergers and acquisitions are increasing in the fibrosis and NASH space and there is evidence of structural pressure on big pharma to drive this M&A trend further.
Growing M&A environment
A number of players have started consolidating the NASH space and recent business development deals have clearly been competitive auctions
The number of deals in the space has increased over the last five years.
Pharmaxis have one of the only unencumbered clinical stage assets in the anti‐fibrotic space.
The company sees it as an obvious acquisition target for consolidators looking for combination therapies.
The range of upfront/acquisition prices paid before earn outs for pre‐clinical to phase 2 assets in the last 2 years has been ~$50‐400 million.
Pharmaxis’ current enterprise value is circa $60 million.
Background
Pharmaxis is a pharmaceutical research company with a portfolio including two respiratory products approved in various world markets and a research pipeline focused on areas of high unmet clinical need in inflammatory and fibrotic diseases.
The company’s product pipeline is founded on its expertise in the chemistry of amine oxidase inhibitors.
This expertise has attracted interest from leading pharmaceutical companies looking to make acquisitions or partner in this rapidly expanding area of medical need.
In May 2015, Boehringer Ingelheim acquired the Pharmaxis phase 1 investigational drug PXS-4728A, to develop it for the treatment of the cardiometabolic liver-related condition NASH.
This involved an upfront payment of €27.5 million and a total potential deal value of over A$750 million.
Boehringer is due to pay another milestone when they commence a phase 2 trial expected in 2017.
LOXL2
Activation of LOXL2 in the human body leads to fibrosis. Pharmaxis is targeting LOXL2 to reduce liver fibrosis and the liver disease NASH.
Competing drugs are about to enter phase 3 and are attracting attention due to their stage of development but there is no sense that these drugs will be a solution.
A significant number of big pharma companies are investing in the NASH space with Deutsche Bank forecasting the NASH market to be valued at $35 billion by 2025.