Acquisitive Allergan buys micro-cap NASH biotech Tobira months after trial miss

On the back of a number of deals in recent months, mainly in dermatology and after dodging its own $100 billion-plus consumption by Pfizer ($PFE) this year, Allergan ($AGN) has snapped up tiny Tobira ($TBRA) and its struggling fatty liver disease candidate, along with the rest of its pipeline, for potentially $1.7 billion.

Back in July, Tobira Therapeutics fell by about half in premarket trading on news that its Phase IIb trial to treat nonalcoholic steatohepatitis (NASH) using its cenicriviroc (CVC) candidate failed to meet the primary endpoint.

The South San Francisco, CA-based company said it would push on, however, by shifting a secondary endpoint that it did meet in Phase IIb into the new primary endpoint for Phase III--with a trial start slated for next year.

This lowered its market cap to below $100 million but at the end of play yesterday, this had dropped by nearly half, to just $52 million.

But Allergan still paid top dollar for the biotech despite its sliding share price, with Allergan stumping an upfront payment of $28.35 per share, in cash, and up to $49.84 per share in Contingent Value Rights (CVRs). All in, this could be worth $1.69 billion. The biotech was worth $4.74 last night, but jumped by more than 600% premarket to $33 a share.

What does it get for its money? Well, it gets the immunomodulator CVC as well as the Phase I oral DPP-4 evogliptin, both of which are trying to hit the potential blockbuster NASH market, as well as gunning for other indications including inflammation, metabolic syndromes and fibrosis. Allergan said these would complement its own GI R&D pipeline.

NASH is a liver-scarring disease that affects millions of people and is growing alongside the high rates of obesity and diabetes, but has no approved therapies, with its commercial prospects spurring a frenzy of activity in R&D around the industry.

Despite the recent trial setbacks, Allergan and Tobira are both confident of moving forward with late-stage testing for CVC in NASH, adding Allergan to a growing list of pharmas and biotechs looking to get in on a disease that could yield $4 billion in peak annuals for the more successful meds.

“We are delighted that cenicriviroc will be rapidly advancing into Phase III studies under the stewardship of Allergan, an industry leader with world class capabilities in advancing novel treatment options to patients across the globe, and I look forward to the future success of this partnership," said Dennis Podlesak, chairman of Tobira.

Intercept Pharmaceuticals ($ICPT) is one of the leaders in hoping to be the first to market in NASH, while Gilead Sciences ($GILD) splashed into the space with a $470 million deal for a Phase II NASH treatment and more recently struck the potentially $1.2 billion deal with Nimbus and its early-stage NASH drug--with hepatitis C experts at Enanta Pharmaceuticals ($ENTA) and Genfit also entering the field.

Back in April, Tobira signed a licensing deal with Korea’s Dong-A ST to help turn its recently approved DPP-4 diabetes drug into a new fatty liver combo treatment in a deal worth around $80 million.

Dong-A ST and Tobira inked two licensing deals that saw Tobira acquire exclusive rights to develop and market the diabetes treatment evogliptin in combination with CVC, while also seeing the company develop the drug as a single agent in North America, Europe and Australia in all of its indications.

Evogliptin is currently approved in Korea (but not in the U.S.), where it is known as Suganon. The drug is licensed for type II diabetes patients to help lower their sugar levels and was launched just this year.

Tobira had been seeking an IPO but dropped its plans last year as many companies began to struggle to get their IPOS off as headwinds abounded. It did however pull off a reverse merger with Regado Biosciences, raising $70 million for its R&D war chest.