Lilly nabs another gene therapy firm, buying hearing loss player Akouos

Eli Lilly has agreed to buy hearing loss gene therapy developer Akouos in a deal that could value the company at around $610 million – if its lead candidate progresses as hoped in the clinic.

The buyout – for $12.50 per share – values Akouos at $487 million and includes another $3 per share in contingent value right (CVR) tied to the enrolment of patients into the gene therapy company's clinical trials.

Akouos has a portfolio of experimental gene therapies led by AK-OTOF, which uses an adeno-associated virus (AAV) vector to a functional copy of the otoferlin (OTOF) gene and was recently approved for clinical testing by the FDA.

OTOF is mutated in a small percentage of cases of sensorineural hearing loss (SNHL), the most common form of deafness affecting up to two per 1,000 newborns.

Mutations in the gene – which codes for a protein in the inner hair cells of the ear – are seen in around 1% to 5% of deafness cases, depending on the population studied, with an estimated 200,000 people affected worldwide. There are no approved drug treatments for this type of hearing loss.

Boston-based Akouos is planning a phase 1/2 trial of escalating doses of AK-OTOF in patients with OTOF-mediated hearing loss, administered into a single ear to allow a direct comparison with the untreated one. The hope is that the treatment could halt progression of hearing loss, and potentially reverse it.

For its investment, Lilly will get a pipeline of hearing loss gene therapies behind AK-OTOF, including AK-CLRN1 for Usher type 3A deafness, AK-antiVEGF for vestibular schwannoma, and a therapy for GJB2 mutations – the most common cause of congenital deafness in developed countries.

The pharma group has been steadily building a position in gene therapies, kickstarted by its $1 billion takeover of Prevail Therapeutics in 2020 that in turn led to the creation of the Lilly Institute for Genetic Medicine, also based in Boston, which is due to be fully operational in 2024.

The Prevail deal brought with it candidate gene therapies for Parkinson's disease caused by GBA1 mutations and a form of Gaucher disease, and Lilly subsequently added to its genetic medicines portfolio via licensing deals with MiNA Therapeutics and ProQR Therapeutics.

For Akouos shareholders, Lilly's offer comes with a CVR split into three, valued at $1 apiece. The first will be payable when a fifth patient has been given AK-OTOF in a phase I or phase 1/2 trial, as long as that happens before the end of 2024.

The second becomes due when a fifth participant is dosed with a gene therapy for a second single-gene form of SNHL – not including AK-antiVEGF – while the third will come on FDA approval of an Akouos gene therapy before the end of 2026.

Lilly said there's no guarantee the CVRs will be paid, and that the payments will shrink by $0.42 per month if conditions are not met, until the end of 2028 when they will all expire.

"Gene therapy offers tremendous opportunity to provide durable treatments for patients with genetically defined disease," said Lilly's chief medical officer, Daniel Skovronsky. "With Akouos, we are optimistic that we can make a difference for people with hearing loss and other inner ear conditions."

Lilly said that the deal is expected to close in the final quarter of 2022.

Image by Victoria_rt from Pixabay