Pharmaxis (ASX:PXS) has reported that its partner Boehringer Ingelheim is on track to commence a phase 2 clinical trial of the drug PXS‐4728A for the liver disease NASH in the second quarter of 2017.
The commencement of the trial will trigger a milestone payment to Pharmaxis of €18 million (~A$25 million).
In May 2015, Boehringer Ingelheim acquired the Pharmaxis phase 1 investigational drug PXS-4728A, to initially develop it for NASH.
This involved an upfront payment of €27.5 million and a total potential deal value of over A$750 million.
In addition, the company’s drug discovery team has wasted no time in developing another high potential asset with its LOXL2 inhibitor program targeting fibrosis.
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.
PXS-4728A update
Boehringer has reported on plans for a second indication for PXS‐4728A.
A second indication attracts the same overall milestone value as the first indication but with more weighting given to milestones closer to approval.
The timing of the start of the phase 2 study and the associated milestone payment to Pharmaxis have not yet been advised.
Realising an additional value creation point for Boehringer will further validate the Pharmaxis business model of excellence in early stage drug discovery driving a clinical pipeline in fibrosis and inflammation assets that can be partnered by large Pharma companies.
LOXL2 update
Pharmaxis is targeting LOXL2 to reduce fibrosis in diseases such as NASH, pulmonary fibrosis and kidney fibrosis.
Together with its U.K. collaborator Synairgen, Pharmaxis has selected two lead compounds which have now commenced preclinical toxicology studies.
This means that the discovery phase has been completed and the two candidates have cleared all of the necessary pre‐clinical tests.
The toxicology studies started recently are the last step before commencement of human phase 1 clinical studies scheduled for the second half of 2017.
Pharmaxis intends to partner these drugs after phase 1 trials and this latest advance was met with great interest by representatives of the many large pharmaceutical companies attending the recent JP Morgan conference in San Francisco.
Analysis
Deal values for phase 1 assets in fibrosis remain high with Gilead Sciences, Inc. (NASDAQ:GILD), Allergan and Bristol-Myers Squibb Co (NYSE:BMY) all acquiring anti fibrotic drug programs in the last 6 months with upfront payments for these deals all over US$100 million and total deal values often in excess of US$1 billion.
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 with the number of increasing over the last five years.
Despite a large number of drugs under development to treat the metabolic and inflammatory drivers of fibrosis, Pharmaxis is one of only a few companies developing drugs that directly target fibrosis itself.
Its program should therefore attract significant interest from big pharmaceutical companies who are looking for assets to help build and differentiate their franchises in this large, competitive and valuable market where there is still a high level of unmet need.
If Pharmaxis compounds clear the toxicology studies by mid-year then expect interest to build rapidly and a significant licensing deal in early 2018 when the company completes phase 1 clinical trials.