Insmed licenses AstraZeneca’s early-stage lung med in $150M-plus deal

After handing over development of its experimental GI treatment MEDI2070 to Allergan ($AGN) this week, AstraZeneca ($AZN) has struck another licensing deal, this time with biotech Insmed and its respiratory candidate AZD7986.

Under the pact, NJ-based Insmed ($INSM) will pay $30 million up front with another $120 million in biobucks coming down the line, with Astra also set for tiered royalties ranging from high single digits to mid-teens, should the drug gain approval.

For this, Insmed gets its hands on AZD7986, an oral inhibitor of dipeptidyl peptidase I (DPP1, also known as cathepsin C). DPP1 is an enzyme that catalyzes the beginning of neutrophil serine proteases (NSPs), which play a key role in pulmonary diseases such as non-cystic fibrosis bronchiectasis (non-CF bronchiectasis).

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Under the deal, AstraZeneca also holds the cards to negotiate a future agreement with Insmed to sell AZD7986 in chronic obstructive pulmonary disease or asthma.

Insmed has now renamed the compound INS1007 and says it will push on with studies toward an indication of non-CF bronchiectasis--a rare, progressive, neutrophil-driven lung disorder, which the company says hits 2 million across the world, with around 110,000 cases estimated to be in the U.S. Insmed is eyeing 2017 as the year it will start a new Phase II dose-ranging study in non-CF bronchiectasis.

In a Phase I test, AZD7986 showed it could “inhibit activity of the NSP neutrophil elastase in a dose and concentration dependent manner,” Insmed said.

"With this transaction we have added a highly complementary therapy that aligns perfectly with our established expertise in rare pulmonary diseases," said Will Lewis, president and chief executive officer of Insmed. "Because NTM lung disease and bronchiectasis often co-exist, we can readily leverage our existing relationships with physician experts around the world who are eagerly awaiting new treatment options. We continue to expect patient enrollment in our Phase III study of Arikayce [its oft-troubled investigational lung infection drug using the antibiotic amikacin] to conclude later this year and to report top line data in 2017. We expect that when approved, Arikayce and INS1007 will allow us to provide great value to the patients who are living with NTM lung disease and bronchiectasis, as well as the physicians who treat them.”

Insmed, which had a market cap of just under $1 billion at close yesterday, added that it recently wrapped a $55 million debt agreement with Hercules Capital, which lumped $30 million of new debt--the money used to fund the upfront payment.

Given this, and the $120 million-plus to come, Insmed added: “The company confirms its cash operating expense guidance for the second half of 2016 of $62 to $72 million. Going forward the company remains committed to maintaining a disciplined use of capital that ensures key corporate activities pertaining to its priority Arikayce and INS1007 programs are fully resourced.”

On Monday, AstraZeneca said it was handing over R&D rights to Allergan for its potential Crohn’s and ulcerative colitis med MEDI2070, as this wasn’t a part of its core research focus. Respiratory drugs are however part of this focus, along with cancer, CV and metabolic disease, although AZ could still play a hand in INS1007 with its asthma/COPD option.

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