Ono Pharmaceutical is expanding its scope in oncology with a $2.4 billion deal to buy Deciphera Pharmaceutical, a company that has one commercialized cancer therapy and a drug pipeline that includes a late-stage candidate on track for an FDA submission.
According to deal terms announced Monday, Japan-based Ono has agreed to pay $25.60 in cash for each share of Deciphera. That price represents a 74.7% premium to Deciphera’s closing stock price on Friday and a 68.8% premium to the stock’s average price over the past month. Shares of Deciphera opened Monday at $25.18 each.
Deciphera’s cancer drugs are kinase inhibitors, small molecules that block enzymes key to driving cancer cell growth. The Waltham, Massachusetts-based company designs its drugs to target the region of the enzyme that activates it or inactivates it like an on-off switch. Deciphera contends its approach of directly targeting the switch pocket or other regions that control switch regulation and activation can lead to drugs that are broadly active against the target enzyme, covering the enzyme as it is found in nature as well as its mutant or amplified forms.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Qinlock’s 2020 FDA approval made it the first Deciphera drug to enter the market. The regulatory decision covered use of the therapy as a fourth-line treatment of gastrointestinal stromal tumor (GIST). An effort to expand the drug’s use to include earlier lines of treatment resulted in a Phase 3 failure in 2021. An exploratory analysis of the Phase 3 data found “substantial clinical benefit” in the second-line setting for GIST patients whose cancer carried KIT exon 11 and 17/18 mutations. Those results were published in January in the journal Nature Medicine. A new Phase 3 study enrolling this patient population is underway. Qinlock generated $159 million in revenue in 2023, a 26.7% increase over sales in the prior year, according to Deciphera’s annual report. The vast majority of those sales came from the U.S.
The most advanced drug candidate in Deciphera’s pipeline is vimseltinib, which is a potential treatment for tenosynovial giant cell tumor (TGCT), a group of rare, usually benign tumors, that affect soft tissue around the joints. This drug is designed to selectively bind to the CSF1R switch pocket. Last October, Deciphera reported preliminary data showing this drug met the main goal of a pivotal study. In its annual report, the company said it expects to submit an applicatoin seeking FDA approval in the second quarter of this year, followed by a regulatory submission to the Europeans Medicines Agency in the following quarter. Four other Deciphera programs are in early clinical or preclinical development.
Ono’s main presence in cancer is Opdivo, the blockbuster immunotherapy it developed in partnership with Bristol Myers Squibb. The Japanese company’s oncology pipeline currently spans 17 internal and partnered programs, some of which are being evaluated in combination with Opdivo. The only kinase inhibitor listed in the pipeline is the internally developed ONO-4059, a Bruton’s tyrosine kinase inhibitor in mid-stage clinical development. Ono’s growth strategy includes a fiscal 2031 goal of becoming a global specialty pharma company that invests 200 billion yen (about $1.28 billion) annually in R&D.
“We expect that this acquisition of Deciphera will not only expand Ono’s target oncology portfolio, but also accelerate Ono’s business development in the United States and Europe, and strengthen kinase drug discovery research,” Gyo Sagara, representative director, chairman of the board and CEO of Ono, said in a prepared statement.
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Oncology is one of four priority areas for Ono, along with immunology, neurology, and specialty drugs addressing high unmet patient need regardless of therapeutic indication. The company has been an active dealmaker as it picks up pieces to execute on its growth strategy. In February, it began a collaboration with Austin, Texas-based Shattuck Labs focused on developing bifunctional proteins for autoimmune and inflammatory diseases. Soon after, Ono announced a collaboration with InveniAI, an artificial intelligence drug discovery company based in Guilford, Connecticut.
The boards of directors of both Ono and Deciphera have unanimously approved the acquisition. It still needs clearance from antitrust regulators and for the majority of Deciphera shareholders to tender their shares. Deciphera said certain shareholders owning about 28% of outstanding shares have already agreed to tender their shares. The deal is expected to close in the third quarter of this year. After it does, Deciphera will remain in Waltham, operating as a standalone business of Ono Group.
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