Three Blockbuster Deals in One Year: Chronic Disease 'Cash Cow' Ignites IBD Investment Frenzy

On the evening of July 8, Eli Lilly and Company announced the acquisition of Morphic Therapeutic, Inc. for approximately $3.2 billion, a premium of 79% over Morphic's closing price on July 5.

Morphic Therapeutic's core pipeline, MORF-057, is an oral small-molecule α4β7 integrin inhibitor currently undergoing three Phase II clinical trials, including two for ulcerative colitis (UC) and one for Crohn's disease (CD).

Market Analysis: Eli Lilly and Company aims to solidify its inflammatory bowel disease (IBD) product portfolio through this acquisition. The company already has Omvoh, the world's first UC treatment drug targeting IL-23. The acquisition of Morphic Therapeutic, Inc. will further enhance its oral therapy offerings in the IBD field.

This is not the first time that Eli Lilly has acquired an IBD-related pipeline.

In June 2023, Eli Lilly and Company spent approximately $2.4 billion to acquire DICE Therapeutics. In addition to its core pipeline IL-17 oral inhibitor DC-806, the company also has an oral integrin α4β7 small molecule inhibitor for inflammatory bowel disease, which shows Eli Lilly's emphasis on the oral small molecule integrin inhibitor track.

It is not only Eli Lilly but also other multinational corporations (MNCs) that are investing heavily in the inflammatory bowel disease (IBD) sector, which is clearly a therapeutic area with significant potential for breakthrough drugs.

By the end of October 2023, Roche completed the acquisition of Telavant for $71 billion, obtaining the rights to RVT-3101 in the United States and Japan; RVT-3101 is a fully human monoclonal antibody targeting TL1A (Tumor Necrosis Factor-like Ligand 1A), which treats diseases such as IBD by inhibiting TL1A to target inflammatory and fibrotic pathways.

In April 2023, Merck acquired Prometheus Biosciences for approximately $10.8 billion. Its core pipeline product, PRA023, is also a TL1A monoclonal antibody, with its initial indication being ulcerative colitis (UC), a type of IBD.

In addition to the aforementioned giants, MNCs such as AbbVie and Sanofi have also entered the field...

01

Why Are Giants Flocking to IBD?

Inflammatory Bowel Disease (IBD) is a chronic recurrent intestinal inflammatory condition that can be divided into Crohn's Disease (CD) and Ulcerative Colitis (UC). These diseases are characterized by persistent inflammation, where patients not only experience digestive system symptoms such as abdominal pain, diarrhea, and bloody stools, but also develop extraintestinal manifestations (affecting bone joints, eyes, skin, liver, gallbladder, and other areas), significantly impacting the patient’s quality of life.

IBD is characterized by being incurable, lifelong recurrent, and potentially disabling, once called "the cancer that doesn't kill." Patients require long-term medication and regular follow-up visits. For instance, former Japanese Prime Minister Shinzo Abe suffered from ulcerative colitis (UC) and had to resign from his position as Japanese Prime Minister due to a relapse of the disease.

Precisely because of IBD's characteristics as a "chronic disease, incurable, highly recurrent, and requiring long-term medication," the market potential for related drugs is exceptionally vast.

According to epidemiological data, there are currently approximately 6 to 8 million IBD patients globally, mainly concentrated in Europe and the United States. Among them, there are over 3 million IBD patients in Europe and more than 2 million IBD patients in the United States. Additionally, it is estimated that by 2025, the number of inflammatory bowel disease patients in China will reach 1.5 million.

Currently, the market is approximately $18 billion globally and is expected to grow to about $49 billion globally by 2030.At the same time, the IBD treatment market is highly concentrated, with four treatment products, including adalimumab, accounting for 75% of global revenue. Notably, regarding RVT-3101, which Roche previously acquired for $7.1 billion, SVB Securities analysts have stated that it has the potential to capture nearly $15 billion in commercial opportunities in the United States.

Despite the rise of targeted therapies and the introduction of more biologics, the treatment methods for IBD continue to evolve, but significant limitations and unmet clinical needs still remain with current therapies.

Currently, 5-aminosalicylic acid (5-ASA) is used to treat mild to moderate IBD. Glucocorticoids can be used for patients who are unresponsive to 5-ASA or have disease progression. For later-line moderate to severe cases, immunomodulators, biologics, or surgery may be considered.

The core issue with existing biologics therapies isResponse RateCurrently, as many as 30% of patients do not respond to the initial treatment, and up to 50% of patients lose their response over time.

Secondly, it is about IBD patientsRecurrenceIssue. 80% of IBD patients experience chronic relapses, and 20-30% of IBD patients have to undergo surgery to remove part of the intestine after multiple relapses, significantly affecting patient prognosis.

The market is looking forward to better drugs to address the current treatment bottleneck for IBD.

02

The Contest Between Small Molecule α4β7 and TL1A Antibodies

The global IBD treatment track features a multitude of research targets, including a range of cytokines (such as IL-23, IL-6, IL-36, etc.), TNF, the JAK family (pan-JAK, TYK2, etc.), integrins (α2β2, α4β1, and α4β7, etc.), PDE, TNF-like ligand 1A (TL1A), and more.

Among numerous targets, the two most active and promising directions for BD deals are centered around TL1A and integrin α4β7.

From a mechanistic perspective, the clustering of TL1A by industry giants is traceable. As the ligand for the DR3 protein, the binding of TL1A and DR3 controls the TL1A/DR3 signaling pathway, which can induce the production of inflammatory factors, thereby promoting the occurrence of inflammatory responses. Additionally, TL1A can activate the TH1 and TH17 pathways, which are associated with the location and severity of intestinal inflammation and fibrosis.

Taking the design of the latest Phase II study TUSCANY-2 of Roche's TL1A antibody RVT-3101, which is touted as a potential Best in class, as an example, patients with moderate to severe Crohn's disease receive subcutaneous injections once a month, and the trial lasts for 56 weeks (a 14-week induction period + a 42-week maintenance treatment period).

TUSCANY-2 Study Results Show: All patients treated with RVT-3101 achieved excellent clinical remission rates (36% at 56 weeks vs 29% at 14 weeks), endoscopic improvement rates (50% at 56 weeks vs 36% at 14 weeks), and endoscopic remission rates (21% at 56 weeks vs 11% at 14 weeks); additionally, in biomarker-positive patients, the data was equally impressive, with clinical remission rates (43% at 56 weeks vs 33% at 14 weeks), endoscopic improvement rates (64% at 56 weeks vs 47% at 14 weeks), and endoscopic remission rates (36% at 56 weeks vs 13% at 14 weeks).

From the efficacy data, RVT-3101 not only demonstrates a high remission rate in patients with moderate to severe CD, but this also represents the world's *IBD indication with long-term clinical data, indicating that RVT-3101 can provide patients with sustained relief and improvement.

In another clinical study for ulcerative colitis (UC) conducted simultaneously, RVT-3101 demonstrated consistently high response rates and sustained improvement in efficacy. In terms of safety, all doses of RVT-3101 were well tolerated.

On the other hand, the integrin α4β7 target has been proven by multiple drugs to be a viable IBD development strategy, the most renowned of which is Takeda's vedolizumab (which outperformed adalimumab in head-to-head trials for UC).

α4β1 and α4β7 integrins interact with adhesion molecules on the surface of endothelial cells, inducing the migration of inflammatory cells from the bloodstream to the gastrointestinal tract, which is one of the key mechanisms in the initiation and persistence of chronic intestinal inflammation in IBD patients. α4β7 inhibitors have become an important approach in treating IBD by blocking this mechanism and suppressing lymphocyte trafficking.

Currently, integrin α4β7-related marketed drugs are mainly antibodies. Due to the manufacturing costs of antibodies and adverse reactions of some products, oral small-molecule α4β7 inhibitor therapies have become a popular direction in the market.

The latest Phase 2a data of MORF-057, acquired by Eli Lilly, shows that in patients with moderate to severe ulcerative colitis, MORF-057 significantly reduced the RHI score (a histological remission index used to predict recurrence rates, with lower scores generally being better) by 6.4 points from baseline at week 12 (p=0.002). The clinical remission rate, measured by the modified Mayo Clinical Score (mMCS), was 25.7%. Additionally, the treatment group showed good tolerability and no safety signals were observed.

Based on the 12-week short-term data, MORF-057 did not demonstrate superior potential compared to vedolizumab. However, the advantage of oral small-molecule drugs does not need to surpass antibody drugs; matching efficacy and good safety are sufficient to capture the relevant drug market. Morphic Therapeutic disclosed the above data as early as Q2 2023, and Eli Lilly likely saw subsequent long-term excellent data before deciding to invest. Meanwhile, MORF-057 ranks among the top in global research and development of small-molecule integrin α4β7 drugs.

This shows that drugs targeting TL1A and integrin α4β7 for IBD have a promising future. For instance, vedolizumab, primarily indicated for IBD, achieved sales of up to $5.414 billion in 2023, maintaining its leading position in the U.S. IBD market.

03

Are there opportunities in China?

Globally, there are not many drug pipelines targeting TL1A in development, among which Roche's RVT-3101 and Merck's PRA023 are significantly ahead in clinical progress.

In China, IBD has long been considered a disease that predominantly affects Western countries. Additionally, autoimmune drugs have always been a "challenge" to commercialize domestically, which may result in few Biotech companies or Chinese pharmaceutical enterprises developing drugs targeting related pathways.

Mingji Biologics' FG-M701 is one of the few TL1A drugs produced in China. It has reached a licensing agreement with AbbVie for "a $150 million upfront payment + $1.56 billion in milestones + sales royalties." Compared to *-generation TL1A antibodies, FG-M701 has undergone unique engineering modifications to achieve higher efficacy and less frequent dosing.

Molecules related to the α4β7 integrin target are even rarer in China around the clinical stage, whereas progress has been made in the development of tumor drugs targeting other integrin family targets. For instance, Seagen's αvβ6 ADC has been approved for clinical trials in China, and the radiopharmaceutical 99mTc-3PRGD2 co-developed by Baiyang Medicine and Radioduo is an RDC drug targeting integrins.

Currently, the mainstream drug development strategies of domestic pharmaceutical companies in the IBD field mainly focus on several directions: large-molecule drugs targeting the cytokine IL-23 for antibody development, small-molecule drugs concentrating on the JAK family, and a few developing S1P1 and PDE4 oral medications.

(Source: PharmaBlock)

Conclusion:The tradition and trend of big deals in the IBD field will continue, with the excitement still happening overseas. As for domestic drug licensing in China, it may need to wait for the emergence of a new generation of Biotech players, similar to舶望 (Bo Wang), 明济 (Mingji), or 圣因 (Shengyin).

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