Today Allergan announced a transformative deal with Lysosomal Therapeutics (LTI), an emerging biotech focused on Parkinson’s Disease through an understanding of human genetics and sphingolipid biology (here). This deal brings a new chapter for LTI as we move our lead program into the clinic in 2017.
As described in the press release, this transaction involves a creative option-based deal structure: Allergan purchased an option directly from LTI shareholders for the right to acquire LTI after Phase 1b, as well as provided an upfront R&D payment to the company to support the advancement of LTI’s programs.
This partnership fits squarely into Allergan’s “Open Science” model of external R&D. As Allergan CEO Brent Saunders described in late 2015: “Open Science defines our position in this new ecosystem – as a magnet for game-changing ideas and innovation. We bring these programs into our best-in-class product development and commercialization platform to build a sustainable R&D portfolio”. Through this strategy, Allergan has shown a significant commitment to be a leader in the neurosciences with partnerships or acquisitions with numerous companies over the past 18 months: Naurex in major depressive disorder, Chase Pharmaceuticals’ cholinergic program in Alzheimer’s, Heptares’ muscarinic agonists in Alzheimer’s, and Merck’s migraine drugs, to name a few. LTI is Allergan’s first move into Parkinson’s Disease (PD).
As part of sharing the details of the LTI story, here are four of the most salient aspects of where we are today:
Exploiting Insights From Nature’s Experiments. Elegant human genetics underpin LTI’s scientific thesis. Gaucher’s Disease (GD) is a lysosomal storage disorder caused by homozygous loss-of-function (LoF) mutations in the GBA1 gene, which encodes an enzyme called glucocerebrosidase (GCase). Complete loss or reduced levels of GCase lead to accumulation of toxic lysosomal glycosphingolipids in GD patients. Compelling clinical evidence has emerged over the past decade linking reduced GCase activity to elevated Parkinson’s risk: for example, GD patients have a 20-40x higher rate of PD, and heterozygous carriers of these GBA1 LoF mutations have a 5-8x higher rate of PD (reviewed here). These genetic data strongly validate the target and pathway in some forms of PD.
Beyond supporting GCase as a target for intervention, these genetics also confer insights into differential disease progression: PD patients with GBA mutations and reduced GCase activity exhibit faster Parkinson’s decline, more dementia, and reduced survival (here, here, here). This unfortunate differential for patients has helpful implications for clinical development (i.e., possibility of shorter, smaller studies to prove the therapy works). Very few neurology targets have both this level of validation and the ability to help select/stratify patients with accelerated disease progress. Based on these insights, LTI’s founding thesis was to make activators of the GCase enzyme as a therapeutic approach for a targetable subset of PD patients.
Inspired Drug Discovery Around Sphingolipid Biology. Making activators of enzymes is very challenging; as evidence, there are very few examples in therapeutic pharmacopeia. The complexity of GCase – its subcellular location, protein cofactors, substrate differences, required brain penetrance – further add to the drug discovery challenge. These obstacles led the LTI team to build deep know-how around a nuanced sphingolipid platform. Led by Peter Lansbury and Renato Skerlj, the R&D team identified multiple proprietary series and characterized a range of important structure-activity-relationships. After 2.5 years and nearly 2000 compounds, the team advanced LTI-291 as a potent and brain penetrant activator of GCase as a Development Candidate. LTI-291 is expected to enter the clinic later in 2017.
In addition to the chemistry effort, LTI developed an expansive platform for evaluating the flux of substrates through the sphingolipid pathway, enabling an improved understanding of the pharmacodynamics of our approach as well as potential patient selection biomarkers. The Michael J. Fox Foundation has been an important partner on this platform. The combination of this novel biology and a very attractive lead program is what makes LTI a compelling partner for larger neuroscience players.
Strategic Optionality Preserved Multiple Paths. Great science begets lots of options, and the key for any management team is preserving them until the optimal scenario emerges. In 2016, as our discovery program and platform were advancing, LTI was parallel processing a number of strategic options: discussions with a broad set of Series B investors about powering up the story with a large financing; several Pharma partners were interested in licensing-type collaborations; outright M&A deals were explored with several parties; and, obviously, option-to-acquire deal structures were considered. LTI co-founder and CEO Kees Been and LTI’s head of BD, Darren Braccia, led this thoughtful parallel process to its completion by the end of 2016. Although the terms of this deal have not been disclosed, it’s fair to say that in light of the other options we had, and the high relative value of a compelling genetically-validated program in neurodegeneration, Allergan put forward a proposal we couldn’t refuse.
The Right Partner Reveals Themselves Through Their Conviction. Allergan distinguished itself from other partners through its steady commitment to pursuing a partnership with LTI; this creative deal was pushed collaboratively by both LTI and Allergan deal teams since the summer and, as noted above, is a nice fit with their Open Science model. It’s worth noting, though, that Allergan was very effective at conveying their conviction about working with LTI, and this was catalytic in getting the deal done: as an example, at a critical juncture in the dialogues, Allergan CEO Brent Saunders engaged directly with Kees and myself about how to find a win-win structure for both Allergan and LTI shareholders. It’s unusual for CEOs of companies as large as Allergan to engage directly in deal discussions around early stage assets – but Brent’s engagement and his team’s commitment around LTI was certainly a key deal enabler. This isn’t new to Allergan: Brent’s direct engagement was noted around the Tobira transaction as well (covered here). It’s unsurprising in light of this approach that they’ve become one of the most active biotech deal-makers. By cutting through the layers of decision-making and governance, direct engagement from senior Pharma executives can definitely get deals done and this LTI agreement is no exception.
Thanks to the teams – on both sides – for bringing to closure the deal process and launching an exciting partnership.
Before closing out this blog, it may be of general interest to describe how investments like this come together from a venture creation perspective. Atlas was introduced to the scientific concept by Henri Termeer and Peter Wirth back in 2011. These two, and a few others, including Kees and LTI’s Chairman Bob Carpenter, were working with MGH researcher Dimitri Krainc (now at Northwestern) on starting a new company based on the science in his lab. Earlier in 2011, the Krainc lab published findings in Cell that helped reveal the possible mechanistic basis for the Gaucher’s/Parkinson’s disease correlation (here, here). As the story came together, so did the team. Later in 2013, the startup team expanded to include CSO Peter Lansbury and head of drug discovery Renato Skerlj, both adding significantly to the scientific strength and R&D experience of the story. Atlas EIR Nessan Bermingham, before he focused exclusively on the gene editing space, was instrumental in helping us drive our diligence forward. In early 2014, with an agreed path for early de-risking of the story, we committed to lead a modest $5M seed round. This closed nearly 2.5 years after we began our initial dialogue with the founding team – highlighting the lengthy time it can and often takes for venture creation around novel science. After steady progress at the company, we also led the $20M Series A round in early 2015, with a second tranche in early 2016. Our LTI co-investors included Hatteras Ventures, Lilly Ventures, Roche Ventures, Sanofi Genzyme BioVentures, and Partners Innovation Fund; while not unusual to have multiple VCs involved over the life of a deal, the size of this syndicate – especially early in the seed – was very atypical. Despite its size, the board of LTI has been highly functional and a pleasure to work with.
To conclude, the LTI story doesn’t end here – it’s just a new chapter with Allergan as our partner. We’re focused on the seamless execution of our program into the clinic – as patients are waiting!
