Idorsia has survived a high-wire financing act. Weeks from the end of its cash runway, the biotech has secured $350 million upfront from Viatris in exchange for the global rights to two phase 3 candidates.
Switzerland-based Idorsia has burnt through cash in recent years, racking up losses of 375 million Swiss francs ($426 million) in the first half of last year alone, as it advanced a broad pipeline. Idorsia gained the assets in the spin out of Actelion as part of Johnson & Johnson’s $30 billion buyout in 2017. At that time, Idorsia had $1 billion and quickly added a further $230 million when J&J picked up an asset.
Yet, the broad pipeline became as much of a burden as a boon as Idorsia’s share price fell and access to capital dried up, culminating in the biotech warning investors that it would run out of money in April. A deal to avert that apocalyptic scenario has arrived with weeks to spare.
Viatris, the drugmaker created through the merger of Mylan and Pfizer’s Upjohn, took the other side of the deal. The company has a vast portfolio of generic and over-the-counter products but has been on the hunt for innovative molecules since Scott Smith, the former chief operating officer of Celgene, took over as CEO last year and began to make his mark on the business.
The search for licensing opportunities led Viatris to selatogrel and cenerimod. Idorsia is developing the P2Y12 inhibitor selatogrel to improve outcomes in patients who suffer a second heart attack. By giving people a selatogrel autoinjector to use if they feel the onset of a second heart attack, Idorsia believes it can improve outcomes by starting platelet inhibition sooner than under the current care pathway.
Cenerimod is a S1P1 receptor modulator that Idorsia is developing in systemic lupus erythematosus. The molecule is designed to prevent the migration of overactive T cells and B cells into target organs, while also reducing the transport of autoantigens to the lymph nodes and suppressing inflammation.
Idorsia began a phase 3 trial of selatogrel in 2021 and started pivotal studies of cenerimod in 2022 and 2023. However, the primary completion dates of the clinical trials are all in 2025 and 2026, well beyond the end of Idorsia’s pre-deal cash runway. Idorsia expects the deal to close by the end of March and is still working on business development opportunities and equity pacts to further extend its cash runway.
Handing the global rights to Viatris will give Idorsia a cash injection and help with the development costs, albeit while still leaving a sizable bill. The Swiss biotech will contribute up to $200 million to the cost of the programs over the next three years. Idorsia will move dedicated personnel to both programs to Viatris at closing, and has given its partner the right to first refusal and negotiation on other assets.
At Viatris, the deal marks the start of the next phase of Smith’s plan for the business. Last year, Viatris struck deals to sell three businesses for $3.6 billion. Progress on plans to divest assets allowed Viatris to be “more aggressive in looking at opportunities,” Smith said at this year’s J.P. Morgan Healthcare Conference. Smith only needed to open his inbox to find potential ways to spend the money.
“The vast majority of the business development activity that's coming in is inbound to me based on my past at Celgene, my past in biotech and other things. It's been a little bit of a capital-starved world in the biotech world, so there's been very significant outreach coming to me,” Smith said.
Smith identified ophthalmology, dermatology and gastrointestinal disease as Viatris’ core areas but also expressed a willingness to be “opportunistic” about assets outside of those three spaces. With Idorsia weeks away from a cash catastrophe, Viatris spied and seized on an opportunity.