Ironwood wagers $1bn on VectivBio’s phase 3 readout

Gastrointestinal disease specialist Ironwood Pharma has agreed a $1 billion deal to buy VectivBio and its drug candidate for short bowel syndrome (SBS), betting on positive results in a phase 3 trial due to report later this year.

The $17-per-share deal revolves around apraglutide, a GLP-2 analogue designed to promote healing and regeneration of the gut that is Basel, Switzerland-based VectivBio’s only clinical-stage candidate.

The lead indication is SBS with intestinal failure, which has a population of around 18,000 people in the US, with testing also underway in acute graft versus host disease (GVHD) and studies in inflammatory bowel disease also planned.

Apraglutide has been billed by its developer as a potential best-in-class therapy that offers improvements over other GLP-2 drugs like Takeda’s Gattex/Revestive (tedaglutide) – approved for SBS since 2012 in the US – and experimental-stage rivals like Zealand Pharma’s glepaglutide, which reported phase 3 results in SBS last year.

SBS is a rare condition in which patients are unable to absorb enough nutrients from the foods they eat because their small intestine isn’t long enough or working properly.

It can be caused by surgery, damage to the intestines – for example, caused by cancer treatment – or conditions that lead to poor motility in the gastrointestinal tract. Some children, however, are born with an abnormally short small intestine.

Ironwood said apraglutide’s potency, pharmacological properties and weekly dosing gives it the potential to reach sales of $1 billion a year if it reaches the market.

Investors seemed to be convinced by the merits of the deal, trading Ironwood’s shares up almost 9% after the announcement.

If approved, apraglutide will slot into the pharma company’s portfolio alongside Linzess (linaclotide) for irritable bowel syndrome and chronic idiopathic constipation, and draw on the same commercial infrastructure.

Tom McCourt, Ironwood’s chief executive, called apraglutide an “ideal strategic fit” for the company, saying that it has the ability to get the drug into the hands of patients as quickly as possible, generating “significant and sustainable value for shareholders.”

The transaction will be funded with cash on hand and a $500 million loan facility and is expected to close in the second half of this year.

If all goes well, Ironwood may have a narrow window of opportunity to make the most of apraglutide, as other SBS candidates are coming through late-stage development.

Along with Zealand’s candidate, which was dosed twice a week in the phase 3 EASE 1 trial, another late-stage candidate is 9 Meters Biopharma’s vurolenatide, which started phase 3 earlier this year and has the potential to offer once-monthly dosing.