LEO Pharma inks $760M rare skin disease R&D deal with PellePharm

LEO Pharma has signed a research collaboration deal with PellePharm that commits up to $760 million for late-stage trials and includes an option for LEO to acquire the small rare disease company outright at some point in the future.

The deal begins with $70 million in equity financing and R&D support to fund a global phase 3 trial for PellePharm’s patidegib—a hedgehog pathway-inhibiting topical gel for the prevention of Gorlin syndrome, a rare genetic disease that makes people more prone to develop basal-cell carcinomas.

In return for a minority stake in the company, PellePharm could receive up to $690 million upon completion of certain regulatory and commercial milestones, in addition to double-digit royalty payments.

The agreement helps finance the San Francisco-based PellePharm’s planned phase 2b trial of patidegib in high-frequency basal-cell carcinoma, President and CEO Sanuj Ravindran told FierceBiotech. High-frequency BCC is a distinct form of the disease from Gorlin syndrome, which is also known as basal-cell nevus syndrome.

“This collaboration puts us on track to commence our pivotal phase 3 Gorlin Syndrome trial in early 2019,” Ravindran said, with data readouts expected in the second half of 2020. “Then after the potential merger, we look forward to working with LEO Pharma to address other rare skin diseases with unmet needs.”

The two companies will form a joint R&D committee—with PellePharm and its 12 employees being responsible for global development and LEO Pharma holding an advisory role—while both plan to work on commercialization activities.

“Supporting our ambitious 2025 strategy, it marks LEO Pharma’s entrance in rare skin diseases and it offers a unique opportunity to bring the first treatment forward to people suffering from a very severe skin disease for which there currently are no approved therapies,” said Thorsten Thormann, LEO Pharma’s VP of research.

RELATED: PellePharm readies hedgehog inhibitor for phase 3, plans series C after claiming success in small rare disease study

Going forward, PellePharm’s previously announced phase 3 trial aims to enroll 150 blinded participants, with patidegib 2% gel being applied to the face twice daily, compared to the gel vehicle alone. The companies hope to see it not only treat but prevent new basal-cell carcinomas.

Patidegib has been shown to work well in nodular lesions—with 80% of lesions being nodular in patients with Gorlin syndrome—whereas other topical gels generally only work on superficial tumors, Ravindran said. No changes were made to the study’s design as a result of the new LEO Pharma deal, and it has not yet begun recruiting patients.

Gorlin syndrome is linked to mutations in one allele of the tumor suppressor gene encoding PATCHED1, or PTCH1, which acts as the primary inhibitor of the hedgehog signaling pathway. Patients with high-frequency BCC, meanwhile, do not carry a germline PTCH1 mutation and do not suffer from other manifestations of Gorlin syndrome.

The current standard of care for both is surgery, with severe Gorlin syndrome patients undergoing as many as 30 procedures per year to remove carcinomas, often on the face.