Sanofi has taken a surgical approach to its latest piece of M&A, agreeing to pay $1.7 billion to buy Inhibrx for below the market price but then spin out all but one of its candidates to create a new publicly traded biotech.
The French pharma wants to get its hands on INBRX-101, a human recombinant protein that Inhibrx is testing in a registration-enabling alpha-1 antitrypsin deficiency (AATD) trial. Rather than swallow Inhibrx whole, Sanofi has decided to spin off the biotech's three anticancer molecules to create a new company that will start life with $200 million in cash and no debt.
Inhibrx has accepted an offer of $30 per share, below its $33.33 closing price yesterday. The below-market price reflects the fact Sanofi is only buying one molecule. Inhibrx shareholders will also gain stakes in the new biotech, plus the chance to receive a further $5 a share if a regulatory milestone is met.
The various components of the deal bring the total value up to $2.2 billion. Sanofi will have an 8% stake in the new biotech, which will continue to be called Inhibrx and be led by the current CEO Mark Lappe.
Once the deal closes in the second quarter, the new Inhibrx will look much like the old Inhibrx, minus its AATD candidate, and Sanofi will have sated its appetite for a rare disease candidate. That candidate, INBRX-101, is on course (PDF) to reach the initial readout from its registration trial around the end of the year.
Inhibrx designed the clinical trial to show the effect of INBRX-101 on levels of serum functional AAT, the protective protein that is found at low levels in people with the rare disease. Patients currently receive weekly augmentation with AAT derived from plasma donors to partly offset the deficiency. INBRX-101 is designed to end reliance on donations, reduce dosing frequency and normalize AAT levels.
The biotech believes improved diagnosis may quadruple the size of the AATD market in the coming years, creating a $4 billion opportunity that could overwhelm the availability of the plasma products sold by CSL Behring, Grifols and Takeda. Other companies could reduce the need for AAT protein by targeting the cause of the disease but multiple players have struggled to move the needle so far.
AATD causes liver and lung disease, with Inhibrx’s registration trial targeting the latter population. Mereo BioPharma has a lung disease candidate, alvelestat, that is on the cusp of phase 3. Vertex, which wants to address both the liver and the lung, gave up on a pair of AATD candidates but is trying again with a third asset, VX-634, that is in phase 1. Wave Life Sciences has a GSK-partnered RNA editing candidate.
BioMarin, Intellia Therapeutics and Peak Bio are in the hunt, too, but Sanofi's head of R&D Houman Ashrafian said he sees INBRX-101 as fitting the Big Pharma's focus on “differentiated and potential best-in-class products.”