Destiny Pharma (DEST ), a clinical stage biotechnology company, announced a collaboration and co-development agreement with Sebela Pharmaceuticals, a US pharma company specialising in gastroenterology, for the North American rights of NTCD-M3.
NTCD-M3 is Destiny Pharma's flagship asset for the for the prevention of Clostridioides difficile infection (CDI) recurrence.
Under the terms of the agreement, Sebela will lead and finance the future clinical development and commercialisation of NTCD-M3 in North America. Destiny will retain majority rights for Europe and the rest of the world, excluding China. Sebela will have a minority interest in any income generated outside of North America.
Destiny remains responsible for the ongoing manufacture of all clinical trial supplies needed to undertake the required Phase 3 clinical studies for NTCD-M3. The Phase 3 studies are expected in 2024.
Destiny said the agreement could be worth up to US$570m in milestones alone, including an initial payment of US$1m, success-based development milestones of US$19m, sales-based milestone payments up to US$550m, and tiered double-digit royalties.
Separately, Destiny announced a fundraising of up to £8m (before expenses) via a placing, subscription, and open offer at 35p/share, a 27% discount to DEST's closing price on February 23. The proceeds will be used to fund Phase 3 clinical trial preparation for NTCD-M3; XF-73 Nasal CMC manufacturing and Phase 3 preparation; preclinical projects; and general working capital to strengthen the company's balance sheet.
£5m of the fundraise is a condition to the agreement with Sebela. Assuming full take-up of the open offer, the new shares will represent 24% of the share capital of Destiny.
Neil Clark CEO of Destiny Pharma, commented:
"We are very pleased to have reached this agreement with Sebela, a high quality, GI specialist company which has the necessary clinical development and commercialisation expertise to take NTCD-M3 through to launch. Such partnering deals are in line with our stated strategy of finding pharma partners to undertake the required Phase 3 clinical studies of our lead assets thus reducing the funding requirements of the Company."
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The collaboration and co-development agreement with Sebela, an established GI specialist, represents a milestone and value inflection point for Destiny Pharma and its flagship NTCD-M3 candidate. The agreement significantly derisks the development and commercialisation of NTCD-M3 while removing the need for Destiny to further invest in the asset.
Moreover, the agreement will yield Destiny milestone payments worth up to US$570m plus significant royalties. Any outcome will represent a material ROI in the 2 years since acquisition of NTCD-M3.
Destiny will retain majority rights to NTCD-M3 outside the US, though it has expressed interest in further partnering arrangements for Europe, the UK, and the rest of the world. In China, regional rights of NTCD-M3 are already held by China Medical Systems.
Partnering deals are in line with Destiny's strategy of offloading Phase 3 trials to large pharma partners in order to keep its funding requirements low. Nevertheless, the company retains significant value through full or partial ownership of its assets, notably its XF-73 programme.
The related £8m capital raise will see that Destiny complete its remaining obligations for the preparation of NTCD-M3 Phase 3 clinical trials. The Phase 3 trials are expected in 2024. The fundraising will also provide capital for the development of Destiny's other lead asset, XF-73 Nasal, which has already completed a positive Phase 2b clinical trial and is moving toward final Phase 3 studies.
The fundraising should keep Destiny funded through late 2024.
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