Takeda strikes $1B RNAi deal with Arrowhead Pharmaceuticals

The companies will partner on development and commercialization of ARO-AAT, Arrowhead’s Phase II RNA-interference drug for alpha-1 antitrypsin-associated liver disease, a rare genetic disorder. An analyst wrote that the deal makes sense given Takeda’s position in the AAT-augmentation therapy market.

A major drugmaker in Japan has become the latest to make a significant bet on drugs that treat disease by using RNA to block gene expression.

Osaka-based Takeda Pharmaceutical and Pasadena, California-based Arrowhead Pharmaceuticals said Thursday that they would partner on Arrowhead’s ARO-AAT, an RNA-interference, or RNAi drug in development for alpha-1 antitrypsin-associated liver disease, also known as AATLD.

Under the terms of the deal, Arrowhead is eligible for up to $1.04 billion, which includes an upfront payment of $300 million, as well as regulatory and milestone payments of up to $740 million. The two companies will develop and commercialize the drug under a 50-50 profit-sharing structure in the U.S., while Takeda will in-license exclusive commercialization rights outside the U.S. Arrowhead will also be eligible for tiered royalties on net sales of 20-25%.

Shares of Arrowhead (Nasdaq: ARWR) were up 1.5% on the Nasdaq in Thursday afternoon trading, while shares of Takeda (TYO: 4502) were also up 1.5% on the New York Stock Exchange, where they trade in the U.S. market (NYSE: TAK).

“[Antitrypsin-associated] liver disease is a devastating condition for which there are no approved thearpies,” said Asit Parikh, head of Takeda’s gastroenterology therapeutic unit, in a statement. “With its RNAi-based mechanism of action, ARO-AAT has the potential to treat the underlying cause of AATLD.”

According to research, alpha-1 antitrypsin deficiency, the underlying cause of AATLD, is estimated to affect 180,000 people worldwide. The companies note that the underlying deficiency affects 1-in-3,000 to 5,000 people in the U.S. and 1-in-2,500 people in Europe.

In a note to investors Thursday, RBC Capital Markets analyst Luca Issi wrote that the deal makes strategic sense and validates data for the drug ahead of a liver disease meeting that is happening next month. He wrote that the deal makes sense given that Takeda is already a market leader in AAT-augmentation therapy, with sales infrastructure in place to reach patients and physicians, and because the upfront cash removes any potential overhang related to dilution.

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