On Monday, Ventrus reported that it entered a merger agreement with Assembly Pharmaceuticals, a private company, in an all-stock transaction. The assets gained in the transaction are intriguing at first blush, with Assembly in leadoptimization for a series of core protein assembly modulators.
Analysts expect a lead product to enter the clinic by the end of 2015, with proof-of-concept data likely following in 2016. The management team at Assembly will join the combined entity; the CEO, Derek Small, will assume the role of chief operating officer. Uri Lopatin, M.D., a co-founder of Assembly who has held significant leadership roles in the Hepatitis B groups at Gilead (GILD $82.05; Outperform) and Roche (RHHBY $37.74), will join as chief medical officer of the combined company. Russell Ellison, M.D., with previous experience at Roche and Sanofi-Synthelabo, will remain chairman and CEO of the company.
Following a discussion with the new management, the allosteric inhibitors, represent a potentially transformational class of agents for the treatment of Hepatitis B infection. Current agents such as tenofovir, which is marketed by Gilead, and entecavir, which is marketed by Bristol-Myers (BMY $49.34; Outperform), target HBV viral replication, although development of resistance strains and renal damage that has been associated with long-term use still suggest a significant unmet medical need. Therapies that target the core assembly protein in HBV have the potential to target the pool of HBV cccDNA (covalently close circular DNA) within the nucleus of infected hepatocytes, where current therapies have no efficacy. This inability to target the cccDNA leads to life-long therapy of the current HBV agents, while an agent that targets the core assembly proteins could lead to a curative treatment.
This potential to move therapies with significant side effects, for long treatment periods, to a potentially shorter course of therapy with the goal of curing the HBV infection reminds us of the shift now occurring in the HCV treatment landscape, which has led to significant value creation for the developers of those therapies. The market for HBV therapies is significant, with more than 350 million people worldwide chronically infected with HBV who are at high risk for the development of chronic liver diseases. While Asia holds a significant number of those infected persons, more than 1.5 million chronic patients are in the United States, while there are about 14 million patients in Europe. More than 600,000 people die every year from complications related to HBV infection.
For the transaction, Ventrus will issue about 20.3 million shares to Assembly stockholders, with these shares representing roughly 49% of the company’s outstanding shares. While the dilution for Ventrus is obvious, the combined company following the deal closure represents an intriguing opportunity given the potential for development of the company’s transformative HBV pipeline. The transaction is expected to close on July 10 pending shareholder approval. The combined company will trade on the Nasdaq under the ticker ASMB.
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