Roche's metabolic drug strategy is available at $89BIO acquisition for extended to liver disease pounding

There are two FDA-approved drugs for metabolizing diseases, called MASH. Roche paid $2.4 billion to buy 89BIO and its later mashed potato drugs, giving Swiss pharmaceutical giants the opportunity to bring a third drug and a different mechanism of action to this prevalent fatty liver disease.

Roche will pay $14.50 for all outstanding 89BIO shares, a premium of nearly 80% of the stock's closing price, according to the terms of the deal announced Thursday. Prices at 89bio are $2.4 billion, but if its drugs reach certain milestones, the company's shareholders have a chance to get more.

The main asset of San Francisco-based 89bio is Pegozafermin, an experimental treatment for steatohepatitis or MASH associated with metabolic dysfunction. In this chronic metabolic disorder, fat accumulation in the liver can cause inflammation and liver scars called fibrosis. The disease has four stages; the most serious is stage 4 or F4, which is cirrhosis. The FDA estimates that 14.9 million Americans have mashed potatoes, which in severe cases may require patients to undergo an organ transplant.

PEGOZAFERMIN is an engineered protein designed for FGF21, a metabolic hormone secreted by the liver that regulates energy consumption and fat metabolism. The long-term lifespan of the drug can be administered every two weeks by injection. A phase 3 study that evaluates the effect of the drug on F2 or F3 fibrosis is expected to have preliminary data in the first half of 2027. Another phase 3 test that evaluates the effect of PEGOZAFERMIN on liver cirrhosis is the recruitment of patients with F4 MASH; data are expected to be in the first half of 2028.

Oncology is Roche’s top therapeutic area through revenue, but the Swiss pharmaceutical giant has turned to deals to diversify. Last year, Roche paid $2.3 billion to buy Carmot Therapeutics and its pipeline of obesity and diabetes candidates targeting GLP-1 and GIP receptors. Earlier this year, Roche paid $1.65 billion in advance Kealand Pharma to start targeting anti-emulsion drugs for biotechnology. Roche Group CEO Thomas Schinecker said in an announcement of the 89BIO acquisition that the deal strengthens the pharmaceutical giant's portfolio in cardiovascular, kidney and metabolic diseases. He added that 89BIO drugs could be combined with Roche's existing assets, a point the company proposed when the Carmot and Kealand deals were announced.

“We are strongly encouraged to be a transformative therapeutic option for MASH, one of the most common comorbidities of obesity and meet the diverse patient needs associated with this complex disease,” Schinecker said. “With its anti-fibrotic and anti-inflammatory mechanisms, Pegozafermin has the potential to provide the best disease efficacy for all patients with moderate to severe Mash.”

The closest drug to PEGOZAFERMIN is Efruxifermin from Akero Therapeutics, which is also a protein designed protein that is an analog of FGF21. This weekly injection of the drug is currently being evaluated in a three-stage study. GSK won a candidate for FGF21 MASH drug in May, paying $1.2 billion for Boston Drugs’ small interfermin Alfa. This 3-stage preparation drug can provide less doses as a one-time injection.

The first MASH drug is Madrigal Pharmaceutical's Rezdiffra, a small molecule designed to activate Thr-beta, a receptor that mediates liver metabolic activity. This once-daily accelerated FDA approval last year covered treatment for patients with moderate to disease, consistent with F2 or F3 fibrosis. Last month, Novo Nordisk's GLP-1 obesity drug Wegovy expanded its tag to include moderate to heated Mash. Novo is developing an FGF21 analog for fatty liver disease, but recently stopped the program.

Thomas Smith, a Leerink partner analyst, said in a notice to investors that the company believes Mash Market will consist of many of my medications in multiple treatment categories. The acquisition of 89BIO provides additional validation for the FGF21 class, which Leerink believes is based on strong 2B data for MASH patients with strong fibrosis and F4-compensated cirrhosis, with the most compelling mechanism of action.

Leerink expects the 89BIO drug’s global peak revenue to be $4.7 billion by 2035, including $2.6 billion in advanced fibrotic mud and $1.6 billion in Cirrhotic Mash. These predictions are well suited for the prospect of paying additional expenses to 89Bio shareholders. The acquisition agreement includes a non-tradable conservative right of value that would pay up to $6 per share if 89bio's drug reaches a milestone, which could put the transaction value up to $3.5 billion. The first milestone paid $2 per share, triggering the first commercial sale of Pegozafermin in F4 Mash Cirrhotic patients. This milestone must be achieved before the end of the first quarter of 2030. If by the end of 2033, 89BIO Drugs achieve annual global net sales of at least $3 billion in any calendar year, at additional additional expenses per share. By the end of 2035, net sales reach $4 billion, which will trigger a final payment of $2.50 per share.

Roche's 89BIO acquisition is expected to close in the fourth quarter of this year. According to Biotech's regulatory filing, 2018's 89BIO license PEGOZAFERMIN received $6 million in 2018 for $6 million, with another $67.5 million related to achieving milestones. If the drug reaches the market, Teva is eligible for royalties from the sale.

Photo: Giuseppe Aresu/Bloomberg, by Getty Images