Akcea Therapeutics Is Returning to Parent Ionis Pharma in $500M Buyout

[Updated 9/1/2020, 7:58 a.m. See below.] Akcea Therapeutics is returning to its parent company, Ionis Pharmaceuticals, in a $500 million deal that brings an end to a tumultuous three years as a standalone company.

The definitive agreement announced Monday calls for Carlsbad, CA-based Ionis (NASDAQ: [[ticker:IONS]]) to pay $18.15 for each share of Akcea (NASDAQ: [[ticker:AKCA]]) that it does not already own. That price is a 60 percent premium to the Boston-based company’s closing stock price on Friday.

Akcea develops drugs for rare diseases. The company currently has two commercialized products, along with others in its pipeline, some of which are in development with large pharmaceutical partners. But what was once Akcea’s lead therapeutic candidate was stung by an FDA rejection in 2018, a surprise decision that set the company off on a series of moves and strategy changes leading up to Monday’s acquisition announcement.

Shares of Akcea opened at $18.27 apiece Monday, a more than 60 percent increase from Friday’s closing price.

Initially formed in 2014 as an Ionis subsidiary, Akcea developed drugs using technology from its parent. As the lead Akcea drug candidate neared a regulatory submission in 2017, Ionis announced plans to spin the subsidiary out as a separate, publicly traded company. The lead drug, volanesorsen (Waylivra), was developed as a treatment for familial chylomicronemia syndrome (FCS), an inherited disorder that impedes the body’s ability to break down fats. The fat buildup in the blood can lead to inflammation of the pancreas, enlargement of the liver and spleen, and skin lesions. Akcea did pull off an IPO to support development and commercialization of volanesorsen, but only after slashing its target price.

Despite securing a vote of confidence from an FDA advisory committee, volaneseorsen was rejected by the regulator in 2018. According to the company, the FDA’s letter cited concerns about the drug’s dosing schedule and the management of thrombocytopenia, a deficiency of platelets in the blood. In the wake of the rejection, Akcea laid off 10 percent of its staff, mostly workers that had been hired for the anticipated commercialization of volanesorsen. The Akcea drug also failed to win the regulatory nod in Canada, though the European Medicines Agency approved it last year.

A second Akcea drug, inotersen (Tegsedi) won US and European approvals in 2018 as a treatment for the peripheral nerve damage caused by hereditary transthyretin amyloidosis. Those decisions put the Akcea drug in competition with patisiran (Onpattro), an RNA interference therapy developed by Alnylam Pharmaceuticals (NASDAQ: [[ticker:ALNY]]). Competition has only increased. Tafamidis, a drug developed by Pfizer (NYSE: [[ticker:PFE]]) is approved in Europe as a treatment for neuropathy in transthyretin amyloidosis patients. Though the FDA rejected tafamidis for that indication, it approved the drug last year as a treatment for cardiomyopathies that these patients can develop.

Akcea’s rocky transition to a commercial-stage company led to corporate shakeup nearly a year ago in which three top executives left the company. Weeks later, Akcea struck a deal to outlicense a mid-stage drug candidate to Pfizer for $250 million up front. The RNA-based drug, AKCEA-ANGPTL3-Lrx, is being tested in patients with type 2 diabetes, high triglycerides, or nonalcoholic steatohepatitis. It could earn milestone payments tied to the progress of the drug.

Another drug from the Akcea pipeline, AKCEA-APO-(a)-Lrx, has been licensed by Novartis (NYSE: [[ticker:NVS]]), which is testing the drug as a treatment for cardiovascular disease in patients with elevated lipoprotein(a). The Swiss pharma giant paid a $150 million license fee and is now responsible for development, and if approved, commercialization of the compound.

Though Akcea’s IPO made it a standalone company, it was never completely separate from its parent, which retained an ownership stake representing about 76 percent. Following last year’s management shakeup, the Akcea board appointed former Ionis chief business officer, Damien McDevitt, to lead the biotech as CEO.

[Paragraph added with analyst comment.] Akcea and Ionis also evenly split the costs and profits of the approved products and pipeline drugs from Akcea’s pipeline. By acquiring Akcea, Ionis gains all of the revenue and future royalties from those products, SVB Leerink analyst Mani Foroohar wrote in a Tuesday research note. Ionis will also gain the approximately $390 million in cash on Akcea’s balance sheet, offsetting Ionis’s capital needs, he added.

Akcea’s acquisition by Ionis has been approved by the boards of directors of both companies. The Akcea board has recommended that the company’s shareholders tender their shares for the deal. Ionis says it expects to finance the acquisition with cash on hand. The companies expect to complete the transaction in the fourth quarter of this year. In the event that Akcea receives a better offer, the acquisition agreement requires it to pay Ionis a $15 million termination fee.

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