Zogenix Announces Acquisition of Modis Therapeutics, Inc.

Zogenix, Inc. announced that it has entered into a definitive agreement to acquire Modis Therapeutics, Inc., a privately held biopharmaceutical company focused on developing novel therapies for rare genetic diseases with high unmet medical need. Modis’s lead product candidate, MT1621, an investigational deoxynucleoside substrate enhancement therapy, is in late-stage development for the treatment of Thymidine Kinase 2 deficiency (TK2d), an inherited mitochondrial DNA depletion disorder that predominantly affects children and is often fatal.

“This transaction advances Zogenix’s mission to become a leading rare disease pharmaceutical company by adding MT1621 to our pipeline of late-stage FINTEPLA® programs,” said Stephen J. Farr, Ph.D., President and CEO of Zogenix. “Based on the compelling clinical data generated to date, we believe that MT1621 has the potential to significantly alter the course of the disease and improve outcomes in patients with TK2d. With Breakthrough Therapy and PRIME designations, MT1621 may be eligible for an accelerated regulatory path in both the U.S. and Europe, and we look forward to meeting and working with regulatory authorities to discuss next steps for the program.”

A pivotal Phase 2 retrospective treatment study (called RETRO) of MT1621 substrate enhancement therapy in patients with TK2d was recently completed, with results demonstrating a substantial treatment benefit for patients. Thirty-eight patients from eight clinical sites in three countries (U.S., Spain and Israel) were enrolled in RETRO and received MT1621 treatment for up to seven years. Outcomes from patients enrolled in RETRO were compared to outcomes from a comprehensive, global TK2d natural history dataset of 68 patients. The difference in survival probability between MT1621-treated RETRO patients and untreated natural history control patients was statistically significant (p<0.004); all patients treated with MT1621 remain alive. In addition, patients treated with MT1621 demonstrated marked improvements in functional abilities, in some cases re-acquiring previously lost motor milestones. Safety data from RETRO indicated that MT1621 was generally safe and well-tolerated, with mild or moderate diarrhea being the most common treatment-related adverse event, occurring in 63% of patients. Treatment-related serious adverse events (SAEs) were reported in four patients. Two adult-onset patients stopped treatment due to asymptomatic increases in aminotransferases, without increases in bilirubin, which resolved upon discontinuation of treatment.

Under the terms of the transaction, Modis will receive an upfront payment of $250 million, comprised of $175 million in cash and $75 million in Zogenix common stock. Modis is also eligible to receive additional milestone payments consisting of $100 million upon receipt of U.S. Food and Drug Administration approval of MT1621in the U.S. and $50 million upon European Medicines Agency approval in Europe. Zogenix will also pay a 5% royalty on any future net sales of MT1621.

“Zogenix shares our deep commitment to improving treatment options for patients with rare diseases,” said Joshua Grass, CEO of Modis Therapeutics. “This transaction reflects the strategic value of Modis and the results we have achieved with MT1621 to date, and we are confident that Zogenix is ideally positioned to complete development and bring MT1621 to patients in need as expeditiously as possible.”

Zogenix’s acquisition of Modis is subject to the satisfaction of customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976 and approval of Modis’s stockholders. Pending satisfaction of the conditions to closing, the transaction is expected to close in September 2019.

SVB Leerink acted as financial advisor to Zogenix. Latham & Watkins is acting as legal advisor to Zogenix, and Fenwick & West is acting as legal advisor to Modis.