Sanofi is making an initial $30 million investment in MeiraGTx to gain a first peek at data from the biotech’s riboswitch platform, all for a chance to someday brew up some new deals.
MeiraGTx sold 4 million ordinary shares for $7.50 apiece, providing access to a first look at data from programs in immunology and inflammation, central nervous disorders and GLP-1 and other gut peptides for metabolic diseases. The deal also includes the xerostomia program, which is in phase 2 development, according to the Monday announcement.
“This really allows them to have first look at any data or technologies that may be of interest around which they will then craft deals,” MeiraGTx CEO Alexandria Forbes, Ph.D., said in an interview. “So there's a lot here that they're interested in, and we are happy to have them as investors with a first look at the data.”
Why not a straight licensing deal? Forbes said that Sanofi likes to take an initial stake in companies, keep an eye on the programs and then pounce. The deal structure will allow a close look at the programs as they emerge and holds the potential for major milestone-based deals later on.
“It was really a straightforward investment and they tend to do that. I think if you look back at the last couple of companies that they did deals with, and maybe even ended up buying, they started with these sorts of investments,” Forbes said.
Speaking of acquisitions, stuck at the bottom of the Sanofi announcement was a carefully lawyered statement: “As a result of the breadth of interest over the past several months from multiple parties around mutually beneficial strategic transactions involving certain assets of the company, we have engaged Evercore and Wachtell Lipton to work with management and our board of directors to execute one or more of these additional potential strategic transactions and maximize value for our shareholders.”
Forbes said the Sanofi transaction was “a really good-sized investment at a good premium” as MeiraGTx eyes other possible transactions. The vertically integrated biotech, which has operations from drug discovery to manufacturing, is considering all kinds of potential transactions, from licensing deals, to manufacturing deals and more.
“Over the last year, we have said that we have interest in non-dilutive monetizing of a number of our assets,” Forbes said. This includes three candidates developed through a partnership with Johnson & Johnson. One of those, AAV-RPGR, is already in phase 3 testing for X-linked retinitis pigmentosa.
Forbes was tight-lipped about what kind of transactions MeiraGTx might consider but said licensing deals, partial acquisitions of programs or manufacturing capabilities and others are on the table.
“We have been approached about all of the above,” she said, adding that “we’re not selling off the company bit-by-bit.”
But MeiraGTx was built to have different layers and revenue streams to mitigate risk and diversify.
“In an environment such as the one today, we find ourselves in a position where we do have multiple ways of monetizing, in a non-dilutive fashion, aspects of our business,” Forbes said. “It's quite unusual to have this flexible, scalable approach.”
One highlight of the pipeline for Forbes is AAV-AQP1, which is in phase 1 development for xerostomia, a dry mouth condition that occurs with radiation treatment for head and neck cancer. While MeiraGTx would have preferred to keep this one in-house, Forbes said it’s all a part of the dealmaking process to let Sanofi have a peek at the next data cut. That doesn’t mean Sanofi will ultimately opt in on a licensing deal.
Other pieces of the Sanofi deal—like the GLP-1, obesity or inflammation and immunology work—make sense to partner out, as that’s not MeiraGTx’s area of expertise. The biotech has the ability to support a pipeline much bigger than its own, which Forbes said is helpful to, in turn, fund the internal work. While the Sanofi deal is quite broad, she says the biotech’s riboswitch program has churned out many candidates for internal or external development.
“We have so many riboswitch drugs sitting in our refrigerator. There are many, many, many of them that have not even begun to come under the umbrella of the Sanofi deal today, which is actually quite broad, and we're happy it is, frankly,” Forbes said.
The Sanofi investment adds yet another Big Pharma partner for the New York biotech, which started out with J&J. Forbes said that transaction, with J&J paying most of the upfront development costs, is a good model for what MeiraGTx hopes to see in its next partnerships, too. The 2019 deal included $100 million upfront, with Janssen covering all development and commercialization costs as well as royalties and a potential $340 million in milestones down the line.
“That is a different model than maybe in a year or two, where maybe there's tons of money coming into the market again, where you may decide to take a bit more of your own risk. But right now, we like what we did with J&J,” Forbes said. “We gained—not only financially—huge amounts of experience, particularly in the regulatory arena, and the decrease in burn and the increase in cash from the upfront and investment are very welcome in this environment.”