Hyperion bets up to $570M on diabetes biotech Andromeda

Orphan drug outfit Hyperion Therapeutics ($HPTX) has struck up a deal to acquire Israel's Andromeda Biotech, handing over as much as $570 million in cash and stock with eyes on a Phase III diabetes treatment.

Andromeda, a subsidiary of Clal Biotechnology, is due $12.5 million in cash and about $7.9 million in Hyperion stock up front, with $120 million tied to regulatory milestones and $430 million earmarked for commercial success. Once the deal closes this quarter, Hyperion will have sole rights to DiaPep277, an immune intervention treatment for the orphan indication of new-onset Type 1 diabetes.

The drug has already completed a Phase III study, beating out placebo in reducing the pancreatic beta cell loss that results from diabetic autoimmune attacks, Hyperion said. DiaPep277 is now in the midst of a second, confirmatory Phase III trial with results expected in the first quarter of 2015, according to the biotech, at which point Hyperion could be sitting on a valuable treatment for an indication with which about 35,000 people in the U.S. and Europe are diagnosed each year.

In February, Clal paid $72 million to get DiaPep277 back from ex-partner Teva ($TEVA), saying it was in talks with an unnamed U.S. drugmaker to get the drug and Andromeda off its hands.

The mystery bidder turned out to be Hyperion, and the deal is a "transformative event" for the Brisbane, CA-based biotech, CEO Donald Santel said in a statement. The orphan-focused company picked up its first FDA approval last year for Ravicti, a treatment for rare genetic conditions called urea cycle disorders, and bringing Andromeda into the fold is its first step toward building a diversified pipeline, Santel said.

"We believe DiaPep277 has the potential to become a highly differentiated, first-in-class medicine for an orphan indication with a significant unmet need," he said. "With the successful commercialization of Ravicti well underway, DiaPep277 adds an attractive late-stage asset to our portfolio, while we continue development of glycerol phenylbutyrate for hepatic encephalopathy."

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