Roche splashes $1.7B in cash for Ignyta and entrectinib

Swiss Big Pharma Roche has given Ignyta an early Christmas present in the form of a $1.7 billion buyout, worth $27 a share.

The all-cash deal represents a 74% premium on its stock yesterday, when it was deemed to have a market cap of $1 billion with shares at $15.55. For this, Roche gets its hands on entrectinib, the biotech’s selective CNS-active tyrosine-kinase inhibitor targeting tumors that harbor ROS1 or NTRK fusions.

The FDA "breakthrough"-tagged drug, which is in midstage studies, recently saw interim data from the so-called STARTRK-2 trial in patients with ROS1 fusion-positive advanced non-small cell lung cancer (NSCLC).

Here, entrectinib showed a 78% and 69% objective response rate (ORR), while also showing a median duration of response of 28.6 months, and median progression-free survival of 29.6 months in this population, with just over half of patients remaining on the study.

Analysts at Credit Suisse have previously predicted entrectinib could reach the market in 2019 for NSCLC caused by NTRK fusion mutations and colorectal cancer, pulling in more than $300 million in the following year.

Ignyta is also at work on cancer therapy taladegib, which focuses on the small-molecule Hedgehog pathway inhibitor and is in tests initially for a form of skin cancer called basal cell carcinoma. The company has a deal with Eli Lilly for the med, but a recent change-up on that pact could see it go back to Ignyta, and now, presumably, Roche. It's currently in phase 1, alongside another pipeline drug, RXDX-105, a VEGFR RETi. 

RELATED: Ignyta agrees new terms with Lilly for troubled cancer alliance

Early last year, Ignyta also dumped three potential cancer treatments, including two acquired from struggling generics giant Teva Pharmaceutical, in an effort to trim its pipeline and invest in projects management believes have the best shot at success. That today seems to have paid off, given that entrectinib became its focus. The biotech only got off its IPO three years ago, worth just $48 million. 

RELATED: Ignyta dumps some Teva cancer drugs to focus on its top prospects

Daniel O’Day, CEO at Roche Pharmaceuticals, said: “Cancer is a highly complex disease and many patients suffer from mutations which are difficult to detect and treat. The agreement with Ignyta builds on Roche’s strategy of fitting treatments to patients and will allow Roche to broaden and strengthen its oncology portfolio globally.”

Ignyta will continue its ops in San Diego and be responsible for the ongoing pivotal study of entrectinib, Roche said in a statement.

Ignyta’s chairman, CEO, and co-founder, Jonathan Lim, added: “Ignyta has been singularly focused on developing precisely targeted therapeutics guided by diagnostics for patients with rare cancers. We are excited that Roche, the global leader in both oncology and personalized healthcare, recognizes this powerful approach and shares our passion for advancing entrectinib for the benefit of patients.”

While not on the scale of its major Genentech buy all those moons ago, Ignyta will likely prove a bolt-on buy and comes as Roche is trying to stave off biosimilar competition to its range of aging cancer meds, including Herceptin and Avastin, two of the biggest-selling oncology therapies in the world.

Analysts at Jefferies said in a note to clients: "Long-term, Roche may be able to accelerate building out the TRK and ROS1 markets better than RXDX with their global footprint. The deal appears based on success in ROS1 NSCLC and TRK (tumor agnostic), and given that STARTRK-2 is open-label, we anticipate Roche has had access to at least some TRK data. Additionally, Roche has several targeted therapies in their portfolio including Alecensa (alectinib), which has distinct CNS activity that has demonstrated prolongation of PFS -- this is a characteristic we also viewed as important for entrectinib's profile/activity, and alectinib's success may have attracted Roche to RXDX."