By Joseph Harvey and Sian Lazell
April 13, 2017
Zoetis is set to further add to its pipeline of monoclonal antibodies (mAbs) for companion animals by acquiring Nexvet Biopharma for around $85 million.
The two firms have reached an agreement that will see Zoetis purchase Nexvet through a wholly-owned subsidiary for $6.72 per share. This purchase price represents a 66% premium over Nexvet's closing price on April 12, 2017.
Nexvet's board has unanimously approved the acquisition, which is expected to close during the second half of 2017.
Share price boost
Following the announcement of the acquisition, Nexvet's stock price was up by nearly 64% to $6.60 per share as Animal Pharm went to press. This represents Nexvet's highest share value in nearly two years.
Zoetis' stock price on the other hand remained stable at around $53.1 per share.
Not only does the deal add credence to Zoetis' recent work with mABs but it also strengthens the firm's pipeline of products for chronic pain management in dogs and cats. Zoetis said therapies to treat chronic pain in companion animals represent a global opportunity valued at around $400m a year.
The acquisition gives Zoetis ownership of ranevetmab, a mAb targeting nerve-growth factor (NGF) for treatment of chronic pain associated with osteoarthritis in dogs. This candidate would, upon approval, be the first monoclonal antibody therapy administered monthly by injection for chronic pain in pets.
Nexvet is also developing frunevetmab, a mAb targeting NGF to treat chronic pain associated with osteoarthritis in cats. In December last year, Nexvet initiated a pivotal field efficacy for frunevetmab. Nexvet expects to report data from both the latest study and a currently ongoing pivotal target animal safety study of frunevetmab in the fourth quarter of 2017.
Interestingly, Nexvet recently signed a license agreement with Zoetis' ex-parent Pfizer relating to anti-NGF antibodies. During Q1 2017, Nexvet also began pharmacokinetic, immunogenicity and preliminary safety proof-of-concept studies for its anti-PD-1 program. The program aims to develop therapies which may have efficacy in treating various cancers in dogs.
Two companies at either end of the spectrum
The addition of Nexvet will add to Zoetis' existing pain management portfolio, which features Rimadyl (carprofen) – the first non-steroidal anti-inflammatory drug (NSAID) product approved for use in dogs –and Trocoxil (mavacoxib), a NSAID COX-2 inhibitor approved in the EU and other international markets to treat arthritis pain and inflammation in dogs.
The coming together of Zoetis and Nexvet marks the joining of two mAb innovators from different ends of the spectrum. Such is the attractiveness of developing mAbs for pets, smaller firms like Nexvet have been working in this space alongside an industry leader such as Zoetis.
Zoetis' mAb therapy Cytopoint was licensed in the US at the end of 2016 to control clinical signs such as itching associated with atopic dermatitis in dogs. European approval for Cytopoint is slated for 2017.
In the second quarter of fiscal 2017, Nexvet saw its net loss shrink. Dr Mark Heffernan, co-founder and chief executive of Nexvet, commented at the time: "This was an important period of progress for the company as we initiated pivotal clinical studies for frunevetmab, continued to advance our chemistry, manufacturing and controls activities, and entered into a collaboration with Genentech, our first such agreement with a dedicated human biotech company utilizing our PETization platform."
As of December 31, 2016, Nexvet had cash of $20.5m – on the same date in 2015, the firm had cash of $43.1m. However, the company previously said its cash on hand of $31.5m at June 30, 2016 would only be sufficient to fund its operations through to the end of fiscal 2017.
Nexvet was set to present at the VetHealth Global investment forum in Canada later this year, which suggests the company was still on the look-out for funding before it begins working towards commercialization of its product candidates.
Acquisition route mirrors Genentech
Nexvet is the first of animal health's young biotech companies to be acquired – a significant moment in the brief history of this new portion of the veterinary medicines market.
Last year, Dr Heffernan told Animal Pharm: "I see no reason why Nexvet can't be a significant multi-national company with an abundance of products. In 2011, we had two people and this year we have more than 40 professionals on the team who all want to see real innovation make a difference in this sector. With a clinically-proven platform and multiple products in development, we see a number of differentiated opportunities on the horizon."
While Nexvet may have wanted to go it alone, Dr Heffernan did not rule out a takeover from a bigger player. In fact, the human biotechnology model has seen innovative firms snapped up by multinationals – albeit on a much bigger scale.
Nexvet has had current and former senior Genentech executives on its board. Genentech is a major success story, pioneering the biotherapeutics space in human medicine. It was sold to Roche in 2009 after it had conducted its own acquisitions and had products commercially available.
Nexvet was founded during 2010 in Australia but moved headquarters to Tullamore, Ireland, where it also has manufacturing facilities. The company retains R&D operations in Melbourne, Australia, and also has a US office in San Francisco.
The company has used its PETization platform to develop its pipeline of pet biologics. Nexvet's history has a lot in common with fellow pet treatment start-up Aratana Therapeutics, which brought its first products to market last year.
While Nexvet's innovation's will find their way to market through Zoetis' infrastructure, Aratana has stayed independent and put together its own commercial structure.
Dr George Gunn, chairman of Nexvet, said: "We are certain that Zoetis, with its leadership in R&D, high quality manufacturing, marketing excellence, global scale and strong customer relationships, is the ideal company to guide our monoclonal antibody candidates through development into commercialization. We see the integration with Zoetis as the logical next step to realize our ambition to bring ground-breaking antibody therapeutics to market." Reprinted with permission of Animal Pharm News