Lilly Will Initiate Divestiture of Remaining Stake in Elanco Animal Health

Eli Lilly and Company (NYSE: LLY) announced it will initiate an exchange offer today to divest its remaining interest in Elanco Animal Health(NYSE: ELAN).

Elanco completed its initial public offering (IPO) in September 2018, with Lilly retaining an 80.2 percent ownership interest in Elanco.

In the exchange offer, Lilly shareholders can exchange all, some or none of their shares of Lilly common stock for shares of Elanco common stock owned by Lilly, subject to possible proration as described below. The exchange offer is anticipated to be tax-free for participating Lilly shareholders in the United States, except with respect to cash received in lieu of fractional shares. To permit the exchange offer to occur, Lilly has received a waiver of the 180-day lock-up from the joint lead book-running managers of the IPO.

“We were encouraged by the demand for the IPO and have been pleased with Elanco’s performance,” said David A. Ricks, Lilly’s chairman and chief executive officer. “It’s the right time to finalize the separation, let Elanco chart its future as a standalone company, and focus Lilly on our core mission to create human medicines that make life better for people around the world.”

“I want to thank the entire Lilly organization for their support of Elanco throughout our 64-year history, and particularly in the last decade as they supported Elanco’s growth into a diversified, global company with the size and scope to successfully operate independently,” said Jeff Simmons, president and chief executive officer of Elanco. “We will take the Lilly values, heritage and goal to better lives through innovation with us into our next chapter.”

The exchange offer is designed to permit Lilly shareholders to exchange their shares of Lilly common stock for shares of Elanco common stock at a 7 percent discount, subject to an upper limit of 4.5262 shares of Elanco common stock per share of Lilly common stock. If the upper limit is not in effect, for each $100 of shares of Lilly common stock accepted in the exchange offer, tendering shareholders would receive approximately $107.53 of Elanco common stock. These values will be determined by reference to the simple arithmetic average of the daily volume-weighted average prices of Lilly common stock and Elanco common stock on the New York Stock Exchange during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which would be March 4, March 5, and March 6, 2019, if the exchange offer is not extended or terminated.

The final exchange ratio, reflecting the number of shares of Elanco common stock that tendering shareholders will receive for each share of Lilly common stock accepted in the exchange offer, will be announced by press release by 9 a.m. on the trading day immediately preceding the expiration date of the exchange offer. The final exchange ratio, when announced, and a daily indicative exchange ratio beginning at the end of the third trading day of the exchange offer period, also will be available at www.lillyexchangeoffer.com.

The completion of the exchange offer is subject to certain conditions, including: at least 146.645 million shares of Elanco common stock being distributed in exchange for shares of Lilly common stock validly tendered in the exchange offer; and the receipt of an opinion of counsel that the exchange offer will qualify for tax-free treatment to Lilly and its participating shareholders.

Lilly owns 293.29 million shares of Elanco common stock, which represents approximately 80.2 percent of the outstanding common stock of Elanco. The largest possible number of shares of Lilly common stock that will be accepted in the exchange offer equals 293.29 million divided by the final exchange ratio. Because the exchange offer is subject to proration if it is oversubscribed, the number of shares of Lilly common stock that Lilly accepts in the exchange offer may be less than the number of shares tendered. If the exchange offer is undersubscribed, Lilly would exchange less than 293.29 million shares of Elanco common stock. In that case, Lilly would continue to own an interest in Elanco and, depending on the number of shares of Elanco common stock distributed in the exchange offer, Lilly could retain voting control of Elanco with respect to, among other things, the election of directors. If Lilly continues to own an interest in Elanco after the exchange offer, Lilly intends to conduct additional exchange offers or declare and pay a special dividend of shares of Elanco common stock to all Lilly shareholders to complete the disposition of its Elanco shares.

The exchange offer is voluntary for Lilly shareholders. Investors considering the exchange should consult a licensed investment advisor. No action is necessary for Lilly shareholders that choose not to participate, who retain their existing Lilly shares.

The terms and conditions of the exchange offer will be more fully described in a Registration Statement on Form S-4 (Registration Statement) that Elanco intends to file with the U.S. Securities and Exchange Commission (SEC) and a tender offer statement on Schedule TO to be filed by Lilly with the SEC today.

Goldman Sachs & Co. LLC, J.P. Morgan and Morgan Stanley will serve as dealer managers for the exchange offer.

https://www.biospace.com/article/releases/lilly-will-initiate-divestiture-of-its-remaining-interest-in-elanco-animal-health/

After Gene Therapy Collapse, uniQure’s Hemophilia B Therapy Showing Promise

Based in Lexington, Mass. and Amsterdam, The Netherlands, uniQure updated its Phase IIb trial of AMT-061 in hemophilia B. AMT-061 is an AAV5-based gene therapy that contains a FIX-Padua variant, meaning a patent-protected form of Factor IX, the missing or insufficient protein that results in the disease.

In this segment of the trial, three patients with severe hemophilia, whose FIX activity was less than 1 percent, were enrolled. They received a single intravenous dose of the therapy. Before receiving AMT-061, all three patients were tested and found to have low levels of pre-existing antibodies to AAV5, but that did not exclude them from the trial.

Earlier data showed that all three patients had increasing and sustained levels of FIX after the one-time administration. Mean FIX activity at 12 weeks increased to 38 percent of normal, which exceeds threshold FIX levels clinical considered sufficient to prevent or at least significantly decrease the risk of bleeding events.

At 16 weeks, the first patient had 48 percent of normal levels. FIX activity in the second patient was 25 percent at Week 14, and the third patient had 51 percent of normal at 12 weeks. The second and third patients were excluded from another gene therapy earlier because of pre-existing neutralizing antibodies to a different AAV vector.

“We are extremely pleased with these updated data,” stated Robert Gut, chief medical officer of uniQure. “The study demonstrates AMT-061 has the potential to increase FIX activity into the normal range and continues to be very well tolerated, with no serious adverse events reported and no patients requiring any immunosuppression therapy. We look forward to providing further updates on these patients later in the year at other academic conferences.”

The Phase III HOPE-B trial has about 50 adult hemophilia B patients diagnosed as either severely or moderately severe. They were enrolled in a six-month observational period where they will continue to use their current standard of care to set a baseline control. After the six-month lead-in period, they receive a single IV dose of AMT-061.

The primary endpoint is based on the FIX activity level observed after the AMT-061 dose. Secondary endpoints measure annualized FIX replacement therapy usage, annualized bleed rates and safety.

This is all very good news for uniQure. As one of the leaders in the quite new field of gene therapy, it is also the owner of one of the more dramatic gene therapy failures. The company was marketing a gene therapy for a rare inherited disorder, lipoprotein lipase deficiency (LPLD), called Glybera (alipogene tiparvovec). It was approved in the European Union in 2012. LPLD is very rare, with no more than 350 to 700 patients in Europe.

The therapy was the first gene therapy approved for use in Europe. It was rejected twice, with the European Medicines Agency requesting additional trials. It was granted conditional market authorization with a requirement to include 12 more patients by 2017 in a post-marketing trial. Meanwhile, the U.S. Food and Drug Administration (FDA) turned the therapy down, requesting two more pivotal trials. As a result, uniQure dropped plans to market the drug in the U.S.

But the reason for the failure isn’t safety or efficacy. It was cost. Glybera was developed by a predecessor of uniQure, Amsterdam Molecular Therapeutics (AMT). AMT was formally liquidated in 2012, having lost millions of dollars trying to get the therapy approved. The assets were acquired by uniQure.

UniQure partnered with an Italian drug company, Chiesi Farmaceutici. Chiesi acquired the rights to sell Glybera in Europe for 31 million euros and uniQure retained the rights to the Canadian and U.S. markets.

When the therapy finally went on sale in Europe in 2015, it cost about $1 million (U.S.) for a single dose. Although at that time it was dubbed the most expensive drug in the world, since a cure was expected to last at least 10 years, it was viewed as a reasonable price. But being the first at anything brings its own set of challenges, and the company had problems convincing European governments and private insurers to pay for Glybera.

It only had one customer in Europe, a German woman with LPLD who had been hospitalized in intensive care more than 40 times. Her doctor told CBS News that it was worth it. She was cured.

In April 2017, Chiesi announced it was abandoning Glybera. Three remaining doses were given away to a patient in Italy for 1 euro and two German patients for 1 euro each. The treatment worked for all the patients who received it. The drug was administered to only 31 people in the world, most of whom received it free in clinical trials.

UniQure hopes, should its hemophilia B gene therapy be approved, have a more effective approach to the market.

https://www.biospace.com/article/uniqure-s-gene-therapy-shows-promise-in-hemophilia-b-phase-ii-trial/

NuVasive downgraded to Hold from Buy at Needham

https://thefly.com/landingPageNews.php?id=2861549

RA Pharmaceuticals initiated at Stifel

RA Pharmaceuticals initiated with a Buy at Stifel. Stifel analyst Stephen Willey started RA Pharmaceuticals with a Buy rating and $55 price target. The positive Phase 2 proof-of-concept zilucoplan data generated in generalized myasthenia gravis and paroxysmal nocturnal hemoglobinuria “cement the validity of the zilucoplan value proposition and significantly de-risk” future Phase 3 development plans, Willey tells investors in a research note. He believes RA shares at current levels remain “significantly underappreciated by investors.”

https://thefly.com/landingPageNews.php?id=2861563

ImmunoGen sees FY19 revenue $40M-$45M, consensus $64.43M

Sees FY19 operating expenses $265M-$270M. Sees cash and cash equivalents at December 31 $135M-$140M.

https://thefly.com/landingPageNews.php?id=2861587

Catalyst Biosciences presents interim FVIIa data at EAHAD

Catalyst Biosciences presented updated interim data from the Phase 2/3 trial of subcutaneous prophylactic Factor VIIa, or FVIIa, variant marzeptacog alfa currently being developed for the treatment of hemophilia A or B with inhibitors. The data were delivered in an oral presentation at the annual congress of the European Association for Haemophilia and Allied Disorders, or EAHAD. The company presented the updated results which include data from a total of 11 subjects. Seven subjects have completed dosing in the trial, two are currently dosing, others are completing screening and enrollment is now complete. To date, for all enrolled patients, the mean annualized bleed rate, or ABR, prior to the trial was 19 bleeds per year. All subjects who have completed dosing have had clinically significant reductions in ABR and five experienced no bleeds with individualized dosing of either 30 microg/kg MarzAA or 60 microg/kg MarzAA for 50 days. Six subjects had no spontaneous bleeds at their final dose level. The median proportion of days with bleeding for the seven subjects during the pre-study period was 11% and this was significantly reduced to a median of 1% during the treatment period. A total of more than 450 days of subcutaneous dosing of MarzAA have been completed with only six localized skin reactions in two subjects, and no anti-drug antibodies to MarzAA have been detected to date. An additional aim of the study is to examine the quality of life, or QOL, of individuals who have inhibitors. Results of the analysis have shown that QOL is measurably worse in those with inhibitors compared with those without inhibitors. Interim results after treatment for 50 days with subcutaneous MarzAA showed an improvement in the QOL of individuals, as measured using the Haemophilia quality of life questionnaire and the Haemophilia activity list.
https://thefly.com/landingPageNews.php?id=2861723

Citi upgrades Solid Biosciences to Neutral after Sell thesis played out

Citi analyst Joel Beatty upgraded Solid to Neutral from Sell while lowering his price target for the shares to $8 from $31. The analyst says that with the initial clinical data for SGT-001 announced yesterday, his Sell thesis has played out. He moves to a Neutral rating because he believes that the next dosing cohort is “unlikely to generate strong enough data to support a commercially competitive profile.”

https://thefly.com/landingPageNews.php?id=2861748