ASX healthcare stocks look to partner up to fund drug development

It takes two: ASX biotechs are turning to partners to fund drug development. Pic: Getty Images

ASX healthcare stocks increasingly turning to licensing and partnering deals to fund drug development
Dimerix has five regional licensing deals for its phase III kidney drug candidate DMX-200
Prescient sees partnering potential for its oncology drug candidate PTX-100 which in phase II trial for a rare blood cancer

 

ASX healthcare companies are increasingly looking to tap into licensing and partnering deals to fund the next stage of drug development, offering an alternative to potentially dilutive capital raisings.

Some ASX biotechs have already shown just how valuable that strategy can be with
Dimerix (ASX:DXB) having struck five regional licensing deals for its lead drug candidate DMX-200.

DXB has secured more than $80 million in upfront payments with potential milestone payments of around $1.9 billion, on top of future royalties.

The deals are helping DXB fund the global development of DMX-200, which is now being tested in its ACTION3 phase III trial for rare kidney disease focal segmental glomerulosclerosis (FSGS).

The company has also been well funded to progress its clinical pipeline, recently acquiring the phase II-ready asset DMX-652 with its initial focus on acute kidney injury (AKI).

CEO Dr Nina Webster told Stockhead commercial partnerships were a powerful way to both fund innovation and accelerate growth.

“The revenue generated through these collaborations provides a valuable source of non-dilutive funding, helping advance our pipeline while simultaneously preserving shareholder value and reducing reliance on equity capital.

“Furthermore, access to our partners’ expertise, networks and development capabilities in their territories allows us to achieve far more together than we potentially could independently.

“The result is not only additional funding, but an exponential growth in knowledge, capability and commercial reach that benefits our programs and ultimately the patients we look to serve.”

 

Neuren shows values of partnership

Neuren Pharmaceuticals (ASX:NEU) has demonstrated the potential value of a successful licensing partnership.

NEU’s rare disease drug trofinetide was licensed to US-based Acadia Pharmaceuticals in 2018 for exclusive North American development and commercialisation across Rett syndrome and other indications.

The original deal included US$10m upfront, with up to US$455m in potential milestones and tiered royalties.

Following FDA approval and the launch of trofinetide (marketed as DAYBUE) in 2023, Acadia paid NEU a further US$40m milestone.

The companies expanded the agreement later that year, with NEU receiving a further US$100m upfront for ex-North American rights to trofinetide, plus potential milestones and royalties from the drug’s commercialisation outside North America.

Under the expanded deal, Acadia also secured global rights to develop and commercialise NEU’s other drug candidate NNZ-2591 in Rett syndrome and Fragile X syndrome, with potential milestones and royalties attached.

NEU retained the global rights for NNZ-2591 in multiple other neurological indications for which it is being developed including Phelan-McDermid, Pitt-Hopkins, Angelman and Prader-Willi syndromes.

“Neuren’s partnership with Acadia has been excellent for all stakeholders, resulting in the first ever approved treatment for Rett syndrome in the US and Europe,” CEO Jon Pilcher told Stockhead.

“It has also given Neuren the financial strength and independence to pursue multiple indications for NNZ-2591, with a phase III trial ongoing for Phelan-McDermid syndrome.”

 

‘Provide external validation’

Petra Capital senior healthcare analyst Tanushree Jain said partnerships are important as they provide companies with non-dilutive funding and de-risk the commercial pathway.

“More importantly, they provide external validation which helps to de-risk the company from the point of view of an investor,” she said.

Jain said partnership and licensing deals help a company to stand out among other biotechs.

“Having a more experienced and commercial partner having done their due diligence and signing on the dotted line makes the science more credible for investors,” she said.

Jain said in most cases it is a re-rating event for the company, helping it to attract more investors and also access dilutive funding if required. She provides coverage of both DXB and NEU.

“In Neuren’s case their partner took the asset completely off-their hand and they could fully devote their resources in developing their second asset NNZ-2591, while having no further burn or responsibility on Daybue asset.”

“Acadia with its regulatory expertise and commercial infrastructure have in our view done an excellent job in maximising the commercial potential of the asset, which has become its biggest growth driver. So win-win-for both companies.”

“For Dimerix, they have used the upfront and milestones to continue funding the late stage FSGS trial for their DMX-200, which is a costly undertaking, minimising their need for additional capital.

“The fact that they have been able to convince five companies to sign the dotted line and put upfront cash on the table having done their due diligence without seeing data from their blinded trial is a huge vote of confidence in both the asset but also the commercial opportunity.”

Jain said for larger pharmaceutical companies meanwhile, there was a growing need to replenish drug pipelines with promising clinical-stage assets.

“For big pharma they are cashed-up, their internal R&D productivity is decreasing and their key drugs are facing patent expiry which will wipe billions of dollars of revenue.

“If they get to license a phase II or phase III asset which is relatively de-risked clinically for a modest amount of upfront cash with more material payments tied to future success that can fill their pipeline gap in the medium term and has strategic value, it’s a no-brainer.”

 

Prescient highlights partnering potential

With the appetite for clinical-stage assets growing, several ASX healthcare companies are developing drugs that could attract the attention of larger pharmaceutical players.

Prescient Therapeutics (ASX:PTX) is advancing its cancer drug PTX-100 through phase II clinical development in cutaneous T-cell lymphoma (CTCL), a rare form of blood cancer with limited treatment options and poor survival in advanced disease.

The company has touted PTX-100 as the world’s first GGTase-1 inhibitor to enter clinical development.

The drug candidate works by blocking GGTase-1, an enzyme involved in the RAS signalling pathway.

RAS is one of the pathways most commonly implicated in cancer biology and is estimated to play a role in around 22% of cancers, helping cells grow and survive.

PTX-100 has secured FDA fast track designation for refractory and relapsed mycosis fungoides, the most common form of CTCL.

It has also been granted orphan drug designation by the FDA and European Medicines Agency (EMA).

The company is now progressing PTX-100 through a phase 2a study after a promising phase 1b study, with 28 patients recruited towards a target of 40.

The next major milestone is a Dose Optimisation Committee (DOC) meeting expected later this year after the 2a study hit a target of 10 evaluable patients in each of the two dosing arms.

The DOC will assess the emerging data and provide guidance on the optimal dose for the next stage of development.

CEO James McDonnell told Stockhead the data could help shape the design of a potential phase 2b study and also represent an important partnering inflection point.

McDonnell leads a management team with experience in senior drug development and commercial roles at major pharmaceutical companies including Bristol Myers Squibb, GSK, Novartis and Amgen.

“We continue to see partner potential and are reliant on milestones coming through from clinical trials,” he told Stockhead.

“The further we get to finding the optimal dose and progressing to a type B meeting with the FDA the more substance comes to the partnering discussions.”

 

Talks underway as deal highlights opportunity

McDonnell has held potential partnership meetings with various global pharmaceutical companies including in Europe and the US.

“We’re preparing the partnership landscape for PTX-100 and its reliant on milestones but also you need to be out there talking to people,” he said.

A recent deal worth up to US$580m between French-headquartered, Nasdaq-listed Innate Pharma and Swedish Orphan Biovitrum AB (Sobi) for late-stage drug candidate lacutamab highlights the value being placed on assets in the CTCL space.

The deal includes US$75m upfront, before Innate Pharma starts a pivotal phase III study of lacutamab in Sézary syndrome, another subtype of CTCL.

PTX estimates the US CTCL market will reach US$1.2bn by 2034, while PTX-100 could also have potential applications in other cancers providing a sizeable market opportunity.

“We are working hard to ensure we’re connecting with all potential partners and make sure we can extract value or even create competition,” he said.

 

 

 

At Stockhead, we tell it like it is. While Dimerix and Prescient Therapeutics are Stockhead advertisers, the companies did not sponsor this article.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.