Eli Lilly hasn’t been a major player in genetic medicines but a new acquisition gives the pharmaceutical giant the opportunity to develop the first gene therapy for hearing loss. Lilly has agreed to acquire Akouos in a $487 million deal that comes a month after the FDA cleared the biotech’s application to begin a clinical trial for a therapy that corrects a mutation leading to an inherited hearing loss disorder.
According to financial terms announced Tuesday, Indianapolis-based Lilly will acquire all outstanding shares of Akouos for $12.50 each, which is a 121% premium to the stock’s average trading price for the past 30 days. The purchase price is still shy of the $17 per share that Akouos was able to fetch when it priced its 2020 IPO. However, Akouos shareholders could receive more. The deal includes payments tied to the achievement of clinical trial enrollment goals. These contingent value rights could pay out up to $3 more per Akouos share, which amounts to another $123 million.
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The boards of directors of both Lilly and Akouos have approved the transaction, which is expected to close later this quarter. After the deal was announced, shares of Boston-based Akouos opened Tuesday at $13.11 apiece, an 87% increase over Monday’s closing stock price.
Akouos’s lead program addresses patients whose hearing loss stems from mutations to the OTOF gene, which encodes a protein that enables the ear’s sensory cells to release tiny neurotransmitter vesicles that activate auditory neurons. People who have OTOF mutations are typically born with severe-to-profound hearing loss. There are no FDA-approved therapies for this form of hearing loss, which Akouos said affects an estimated 20,000 people in the U.S. and Europe.
The Akouos gene therapy, AK-OTOF, employs an adeno-associated virus (AAV) to deliver a functioning version of the OTOF gene that encodes otoferlin. AAV has limited capacity for a genetic payload. Akouos employs a dual AAV comprised of two engineered viruses, each one carrying a fragment of the OTOF gene. Injected into the ear, the Akouos gene therapy is intended to enable the ear’s cells to produce functioning otoferlin. The underlying technology was developed in the lab of Luk Vandenbergh, Akouos’s scientific co-founder. Vandenbergh is also the director of the Grossbeck Gene Therapy Center, a professor at Harvard Medical School, and an associate member of the Broad Institute of Harvard and MIT.
“The physiologic defect resulting from OTOF mutations is localized, and only synaptic transmission between the hair cell and the auditory nerve is impaired,” Akouos said in its 2021 annual report. “In young individuals, the rest of the cochlea appears to be functional as determined by [otoacoustic emission] testing, suggesting that restoration of otoferlin has the potential to restore hearing.”
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Akouos said it expects that the first two trial participants in the dose-escalation portion of the planned Phase 1/2 study will be as young as 7. As the trial continues, the company expects to enroll children as young as 2. Patient enrollment is key to the contingent value rights tied to the acquisition. The first $1 per share payment will be triggered upon the fifth patient dosed prior to Dec. 31, 2024. Additional payments are tied to clinical trial enrollments for other forms of hearing loss. Akouos’s pipeline also includes AK-CLRN1 for Usher syndrome type 3A, an inherited disorder that leads to hearing and vision loss in a person’s teen years; GJB2 for a common form of inherited deafness and hearing loss; and AK-antiVEGF for vestibular schwannoma.
Akouos’s main competition in OTOF mutations is Decibel Therapeutics. Similar to Akouos’s therapeutic candidate, the Decibel gene therapy, DB-OTO, is delivered by a dual-AAV vector. Decibel is developing this gene therapy under a partnership with Regeneron Pharmaceuticals. On Monday, the FDA cleared the Boston-based biotech’s application to begin a Phase 1/2 study in children born with hearing loss due to otoferlin deficiency.
Akouos marks Lilly’s second gene therapy acquisition. In 2021, the pharma giant completed its $880 million buyout of Prevail Therapeutics, a biotech whose most advanced gene therapy program is in early-stage clinical development for Parkinson’s disease.
Public domain photo by Flickr user Internet Archive Book Images
