MNCs Return with Billions: Dual $2B CNS Deals Signal a Booming $100B+ Therapeutic Frontier Beyond Oncology and Autoimmunity

May 15, 2024 20:57 CST Updated 20:57

Gilgamesh

Developer of Psychiatric Treatment Drugs

AbbVie

Innovative Drug Developer

Takeda

Biopharmaceutical Manufacturer

AC Immune

Biopharmaceutical Manufacturer

Is the wind blowing again in the CNS field? Perhaps, the wind has never stopped.

Writing | Kathy

Editor | Don River

The wave of M&A in the central nervous system (CNS) field continues.

On May 13, AbbVie and Takeda, two MNCs, separately announced collaboration projects exceeding $2 billion in the CNS field on the same day.

The acquisition whirlwind that occurred in the CNS field in 2023 is still fresh in memory.In the global biopharmaceutical industry's TOP10 M&A deals of the year, acquisitions in the neuroscience field accounted for three spots, second only to oncology and even surpassing autoimmune.BMS Acquires Karuna, AbbVie Acquires Cerevel, and Biogen Acquires Reata Pharmaceuticals for $14 Billion, $8.7 Billion, and $7.3 Billion Respectively. Notably, BMS’s Acquisition of Karuna is the Second-Largest M&A Deal of the Year, only after Pfizer's Acquisition of Seagen.

As of 2024, the story between MNC and CNS becomes even more intriguing as AbbVie has once again targeted a company in this field. The $8.7 billion acquisition deal has yet to be finalized, but just six months later, AbbVie has set its sights on a new target, entering into a collaboration with Gilgamesh worth over $2 billion.

In just half a year, AbbVie has invested over tens of billions of US dollars into CNS.

However, the CNS has always been regarded as a research and development black hole. For instance, the blood-brain barrier prevents drugs from entering the central nervous system; the lack of clear pathogenic mechanisms; the difficulty in designing clinical trials, with a lack of quantifiable and evaluable disease markers; toxic side effects… The development of such drugs faces层层obstacles, and data shows that,The success rate of CNS drug development is only 6%, less than half the success rate of other drug developments.

Despite重重阻碍, the investment enthusiasm in the CNS field has been rekindled. Statistics show thatIn 2023 global biopharmaceutical M&A events, M&A activities related to nervous system indications accounted for 13%, and the financial investment reached 16%, equal to that in the autoimmune field.What "calculations" are BMS, AbbVie, and Takeda making?

Six Months, a Hundred Billion Dollars: What Is AbbVie Thinking?

In Half a Year, Over 10 Billion US Dollars, AbbVie Strikes Again.

AbbVie Announces Over $2 Billion Collaboration and License Option Agreement with Gilgamesh to Develop Next-Generation Psychiatric TherapiesRecently, AbbVie announced a collaboration and license option agreement exceeding $2 billion with Gilgamesh to develop next-generation psychiatric therapies. According to the agreement, AbbVie and Gilgamesh will jointly research and develop a portfolio of next-generation psychiatric therapies. Upon exercising the option, AbbVie will lead development and commercialization activities. Gilgamesh will receive a $65 million upfront payment from AbbVie and is eligible for up to $1.95 billion in option fees and milestone payments, as well as tiered royalties ranging from mid-single-digit to low-double-digit percentages of net sales.

This is already AbbVie's second move in the CNS field within the past six months.

In December last year, AbbVie acquired Cerevel and its neuroscience pipeline for $8.7 billion to strengthen its presence in the neuroscience field, ranking among the top 5 global biopharmaceutical M&A deals in 2023.

What's interesting about this deal is that Cervel Therapeutics originated from Pfizer. Pfizer once suspended its R&D in the CNS field and collaborated with Bain Capital to launch Cerevel Therapeutics, a company focused on developing therapies for central nervous system disorders. Pfizer provided it with a series of compounds at various stages of clinical research and several compounds in the preclinical development stage, covering treatment areas for diseases such as Parkinson’s disease, Alzheimer’s disease, epilepsy, schizophrenia, and addiction disorders. After all these twists and turns, it has now landed in AbbVie's "pocket."

Cerevel's pipeline consists of multiple clinical-stage and preclinical candidate drugs, which are being developed to treat diseases such as schizophrenia, Parkinson's disease, and mood disorders. Parkinson's disease and Alzheimer's disease are two key focus areas within AbbVie’s neuroscience portfolio. The high-quality neuroscience assets under Cerevel will complement AbbVie's strengths in the neuroscience field, further expanding AbbVie's influence in neuroscience.

Specifically, the fastest advancing project in Cervel Therapeutics' pipeline is Tavapadon, indicated for Parkinson’s disease. Its mechanism involves being a D1/D5 selective agonist and it is currently in Phase III clinical trials as either a monotherapy or adjunctive therapy. Clinical data is expected to be released in the first and second halves of 2024 respectively. Emraclidine, an M4 selective positive allosteric modulator for schizophrenia and Alzheimer’s disease, represents a potential "best-in-class" next-generation antipsychotic drug. It is undergoing Phase II clinical trials, with data planned for release in the second half of 2024. Additionally, Darigabat, an α2/3/5 selective GABAA receptor positive allosteric modulator for focal epilepsy, is also in Cervel Therapeutics’ pipeline, with Phase II clinical results expected to be announced by mid-2024.

AbbVie, which rarely engaged in acquisitions in the past, has completed several massive deals since last year.To outsiders, under the impact of the sales decline of the "King of Drugs" Humira, AbbVie is accelerating its search for new growth points.

It's not only AbbVie that is "gambling big" on CNS; Bristol Myers Squibb (BMS), which is also severely threatened by the patent cliff, has made a significant investment. In December last year, BMS acquired Karuna at a 53.35% premium per share, with a total transaction value of approximately $14 billion, gaining access to KarXT, an antipsychotic drug developed by Karuna for schizophrenia. This is an oral M1/M4 muscarinic acetylcholine receptor agonist composed of the muscarinic agonist Xanomeline and the muscarinic antagonist Trospium, the latter being an already approved inhibitor (used to suppress overactive bladder). This combination preferentially activates muscarinic receptors in the central nervous system associated with psychiatric symptoms while avoiding activation of peripheral tissues, thereby reducing side effects. It holds promise as a new treatment for schizophrenia and dementia-related psychotic disorders.

The New Drug Application (NDA) for KarXT for the treatment of adult schizophrenia has been accepted by the FDA, with a PDUFA date of September 26, 2024.An institution previously predicted that the potential peak sales of KarXT could reach $6 billion. This acquisition will effectively enhance BMS's CNS pipeline layout.

Although the development of new drugs in the CNS field is extremely challenging, from another perspective, it also represents high barriers in drug research and development as well as significant unmet clinical needs. Therefore, if a new drug can be successfully developed, it could have a longer lifecycle.In other words, the returns can be extremely high once a CNS drug is successfully developed.

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From Escaping the "Deadly Pit" to Embracing the Blue Ocean

Unclear mechanisms, low success rates in drug development, and other issues have caused many multinational corporations (MNCs) to hesitate in entering this field after repeated setbacks. Especially between 2018 and 2019, major pharmaceutical companies such as BMS, GSK, and AstraZeneca chose to cut their CNS drug investment plans, while Pfizer directly announced its withdrawal from the field.

Although large pharmaceutical companies are pulling out, the CNS market continues to expand due to changes in the global population structure and the intensification of aging.

According to Frost & Sullivan's forecast, the global neuroscience drug market size will grow from USD 160 billion in 2022 to USD 220 billion in 2028. On one hand, it is a continuously emerging blue ocean worth hundreds of billions; on the other hand, the fields of oncology and autoimmune have become almost "overcrowded." As a result, major pharmaceutical companies are once again turning their "gold-digging" focus back to the neuroscience field, where mechanisms remain unclear and disease pathogenesis is complex.

Biotech companies that possess new technologies and focus on this track have become the preferred partners for collaboration and acquisition by large pharmaceutical companies. Pfizer, which once announced its withdrawal from the CNS field, made a high-profile return in May 2022 with an acquisition agreement worth $11.6 billion to purchase Biohaven, marking the first major CNS acquisition in recent years.

Another protagonist of the story, Takeda Pharmaceutical Company Limited, has once again made efforts in the AD field after halting the clinical development of the Alzheimer's disease candidate drug DNL-919 in 2023.

On May 13, Takeda Pharmaceutical Company Limited partnered with AC Immune SA, a Swiss biopharmaceutical startup focused on precision medicine for neurodegenerative diseases, to collaborate on AC Immune's Alzheimer's vaccine, ACI-24.060.

According to the official document released by AC Immune, the agreement signed by both parties will lead to a contract worth up to 2.2 billion US dollars. According to the terms of the agreement, AC Immune will receive an upfront payment of 100 million US dollars. If all milestones are achieved during this process, AC Immune will be eligible to receive option exercise fees and additional potential development, commercial, and sales milestone payments, amounting to approximately 2.1 billion US dollars. After commercialization, AC Immune will also be entitled to receive tiered royalties in the double-digit percentage range on global net sales.

Drug development in the field of neuroscience is one of the four core therapeutic areas that Takeda Pharmaceutical Company Limited, the only Japanese pharmaceutical company to have entered the global top 10 pharmaceutical enterprises, is currently focusing on.It can be seen that the top ten pharmaceutical companies in Japan, such as Otsuka, Eisai, Sumitomo, and Tanabe Mitsubishi, are all deeply engaged in the CNS field.

The most renowned is undoubtedly Eisai. AD is the hottest therapeutic area in CNS, and Eisai has gained prominence due to its remarkable achievements in the Alzheimer's disease field in recent years. In 2021, Aduhelm, an Alzheimer’s disease drug co-developed with Biogen, received accelerated approval from the FDA.Although Aduhelm has had a difficult journey since its market launch, it cannot be denied that this is the first new Alzheimer's disease (AD) drug to be approved in 17 years.

Following this, Eisai built on its success. In January of last year, Leqembi, also co-developed by Biogen and Eisai, received accelerated approval from the FDA and obtained full approval in mid-2023. This is the first drug to clearly demonstrate that reducing amyloid protein can bring clinical benefits to patients, and it has been regarded as a new milestone in AD treatment.

Eisai's success in the AD field is not an overnight achievement. In this area, Eisai has been conducting research and development for many years. The original research company of Donepezil Hydrochloride, a first-line medication for AD, is also Eisai. It is reported that after Leqembi was approved for marketing, there are still three AD treatment drugs in Eisai's research pipeline.

Coincidentally, another new drug for AD, Rexulti (brexpiprazole), used to treat agitation symptoms caused by dementia due to Alzheimer's disease, was approved by the FDA in May 2023. This is also the first treatment option approved by the FDA for this indication. The drug was jointly developed by another Japanese pharmaceutical company, Otsuka Pharmaceutical, and Danish company Lundbeck.

CNS is Otsuka Pharmaceutical's traditional area of expertise.Since 1970, Otsuka Pharmaceutical has already started its layout in the CNS field., and has launched重磅 products such as REXULTI/RXULTI for the treatment of schizophrenia and Nuedexta for pseudobulbar affect. Publicly disclosed information shows that CNS remains one of Otsuka Pharmaceutical's key pipeline focuses, with布局 in common CNS diseases such as epilepsy, schizophrenia, and attention deficit hyperactivity disorder.

In addition to Eisai and Otsuka, Sumitomo Pharma and Mitsubishi Tanabe are also indispensable forces in the history of CNS development.The blockbuster drug Lurasidone Hydrochloride, developed by Sumitomo Pharma for the treatment of schizophrenia, is the best-selling psychiatric medication globally. Mitsubishi Tanabe Pharma, on the other hand, developed Edaravone, the first therapeutic drug in the ALS field, in 2017.

Although the development of CNS drugs has been fraught with difficulties over the past few decades, multinational corporations (MNCs) "escaping" the fiercely competitive fields of oncology and autoimmune treatments, along with biotech companies rising through new technologies, are choosing to enter the challenging CNS drug development space. This shift is continuously injecting new momentum into a pharmaceutical market with significant unmet diagnostic and therapeutic needs.

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