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Monday, May 23, 2022

Arrowhead, Xencor Ink Licensing Deals Potentially Worth $1.5 Billion

Within the space of 24 hours last week, two local pharmaceutical companies inked licensing deals for drugs in development that could reap them up to a combined $1.5 billion if the drugs prove successful.

Pasadena-based Arrowhead Pharmaceuticals Inc. on Nov. 22 announced it has signed a licensing deal with London-based pharma giant GlaxoSmithKline to develop and bring to market Arrowhead’s RNA-based drug candidate to treat liver disease. Arrowhead will receive an up-front payment of $120 million and — if GlaxoSmithKline achieves a series of milestones in the drug development process — milestone payments that could bring the total deal value up to approximately $1 billion.


Just hours earlier, on Nov. 21, Monrovia-based Xencor Inc. reached a licensing deal with Zenas BioPharma — a joint Chinese-U.S. pharmaceuticals company with dual headquarters in Waltham, Mass., and Shanghai — in which Zenas will develop and attempt to bring to market an investigational antibody therapy Xencor initially developed. That deal could net Xencor up to $480 million in milestone payments; it also ups the company’s existing equity stake in Zenas.


The Arrowhead-GlaxoSmithKline deal is for one of a suite of drug candidates that Arrowhead has been developing from its RNA-based drug platform. RNA is a genetic molecule that controls the expression of genes; Arrowhead’s RNA platform “turns off” the expression of genes that lead to various genetic-based diseases. This drug, known for now as ARO-HSD, attempts to tamp down the expression of genes for a form of liver disease called nonalcoholic steatohepatitis.


Under the terms of the deal, GlaxoSmithKline will pay Arrowhead $120 million up front and then additional payments of $30 million at the start of a Phase 2 clinical trial and $100 million for progressing to dosing of patients in a Phase 3 clinical trial.

 
If the drug achieves regulatory approvals in the United States and other markets, the deal will provide payments to Arrowhead of up to $190 million for the first commercial sale and up to $590 million upon achievement of additional sales milestones. Arrowhead is further eligible to receive tiered royalties on net product sales.


Meanwhile, the Xencor-Zenas deal is for an antibody drug known as obexelimab that Xencor has begun to develop. This antibody treatment inhibits the function of a certain class of immune cells known as B-cells; these cells can, in certain cases, run unchecked, leading to autoimmune reactions and eventually autoimmune diseases such as lupus and rheumatoid arthritis.


Under terms of this deal, Zenas will issue to Xencor a warrant giving Xencor an additional equity stake in Zenas, supplementing a stake acquired through a previous licensing deal.


Zenas will also pay Xencor up to $480 million based on the achievement of certain clinical development, regulatory and commercialization milestones.
Zenas will pay Xencor royalties of up to “mid-teen” percentages upon commercialization of the drug.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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