Otsuka Completes $1.125 Billion Acquisition of Jnana Therapeutics to Advance Autoimmune and Rare Disease Pipeline

On September 24, Otsuka Pharmaceutical Co., Ltd. (“Otsuka”) announced that it had completed the previously disclosed acquisition of Jnana Therapeutics (“Jnana”). Jnana has become a wholly owned subsidiary of Otsuka America, Inc. (OAI), a subsidiary of Otsuka.

According to the terms of the agreement announced on August 1 this year, Otsuka Pharmaceutical Co., Ltd. will pay $800 million to Jnana Therapeutics’ shareholders as consideration for acquiring all of the company’s outstanding shares. In addition, Otsuka Pharmaceutical may pay up to $325 million in development and regulatory milestone payments to Jnana Therapeutics’ shareholders, contingent on the progress of future product development. The total value of the transaction could reach up to $1.125 billion.

Through this acquisition, Otsuka Pharmaceutical Co., Ltd. has acquired JNT-517, a potential “first-in-class” small-molecule inhibitor, and expanded its autoimmune portfolio and drug discovery technologies.

Founded in 2017, Jnana is a clinical-stage biotechnology company that leverages its next-generation chemoproteomics platform, RAPID, to address targets proven difficult to drug, including metabolite transporters of the solute carrier (SLC) family. The company focuses on developing potential first-in-class and best-in-class therapies for various diseases, including rare diseases, immune-mediated disorders, neurological conditions, and metabolism-dependent diseases.

Leveraging its robust technology platform and team strengths, Jnana Therapeutics completed three rounds of financing totaling $207 million within five years, with investors including renowned companies and institutions such as AbbVie, Pfizer, and RA Capital.

Jnana Therapeutics’ next-generation chemoproteomics platform, RAPID, is designed to develop innovative drugs for highly validated yet pharmacologically challenging targets. Leveraging high-throughput, binding-based screening methods, the platform enables flexible identification of binding sites on target protein surfaces and discovers small molecules that elicit distinct pharmacological effects, such as allosteric inhibitors, protein localization modulators, or molecular glues.

Leveraging the RAPID platform, the company successfully identified first-in-class compounds and addressed a series of historically challenging drug target classes, including solute carriers, transcription factors, and signaling scaffold proteins. Notably, the RAPID platform is not limited to any specific therapeutic area. However, Jnana Therapeutics has established a unique competitive position by focusing on phenylketonuria (PKU) and autoimmune diseases.

Phenylketonuria (PKU) is a rare inherited metabolic disorder primarily caused by a deficiency of phenylalanine hydroxylase (PAH). Phenylalanine (Phe) is an amino acid found in many dietary proteins. Under normal circumstances, PAH converts Phe into tyrosine, which is then further metabolized. However, in patients with PKU, Phe cannot be effectively converted and accumulates in the blood to abnormally high, toxic levels. If left untreated, elevated blood Phe levels can lead to progressive and severe neurological impairment and neuropsychological complications.

JNT-517, developed by Jnana Therapeutics, is an allosteric inhibitor of SLC6A19, a transporter responsible for the renal reabsorption of phenylalanine (Phe), facilitating its return to the bloodstream. JNT-517 has the potential to become a first-in-class oral therapy for phenylketonuria (PKU) and has demonstrated efficacy, good tolerability, and safety in Phase 1/2 clinical studies.

On September 4, Jnana Therapeutics announced results from the second dose cohort (150 mg BID [twice daily]) of its Phase 1/2 clinical trial of JNT-517 in adults with phenylketonuria (PKU). Both the 75 mg and 150 mg cohorts demonstrated clinically meaningful and statistically significant effects. These findings were presented at the 2024 Annual Symposium of the Society for the Study of Inborn Errors of Metabolism (SSIEM) held in Porto, Portugal.

Data for the 150 mg BID dose group presented at SSIEM were based on 18 participants, of whom 11 received JNT-517 and 7 received placebo, with a treatment duration of 28 days. The results are as follows:

• JNT-517 at a dose of 150 mg BID resulted in a 60% reduction from baseline in mean blood Phe levels on Days 14, 21, and 28, with a 58% reduction from baseline by Day 28, which was statistically significant (p<0.0001 vs. placebo). This outcome is more favorable compared to the previously studied 75 mg BID dose, which led to a 44% reduction from baseline in mean blood Phe levels on Days 14, 21, and 28, and a 51% reduction from baseline by Day 28.

• A rapid onset of pharmacological effect was observed, with a statistically significant reduction in blood phenylalanine (Phe) levels achieved within seven days of dosing, and this reduction was sustained throughout the entire 28-day treatment period.

• Among the 11 participants, 9 had mean plasma Phe levels (on Days 14, 21, and 28) <600 μM, 5 had levels <360 μM, and 2 had levels <120 μM.

• A robust response was observed in all participants, regardless of baseline blood Phe levels and prior PKU treatment history.[1] The mean baseline blood Phe was 920 μM, and PAH genotyping indicated that the majority of subjects had classic (severe) disease.[2] Eight of the 11 participants had previously tried sapropterin, with one showing a response to sapropterin. Seven of the 11 participants had previously tried pegvaliase and were non-responsive to pegvaliase.

• JNT-517 was well tolerated, with no serious adverse events and no clinically significant changes in laboratory parameters. No clinically significant changes in plasma amino acids were observed except for Phe. These findings are consistent with the safety profile demonstrated in the 75 mg BID dose group and the Phase 1a study in healthy volunteers.

Dr. Nicola Longo, Professor and Vice Chair of Human Genetics at the David Geffen School of Medicine at UCLA, stated, “These clinical results demonstrate that JNT-517 can significantly reduce plasma Phe levels in patients who have had an inadequate response to currently approved therapies or for whom such therapies are ineffective, particularly those with high baseline Phe levels. JNT-517 has the potential to become an important new treatment option for PKU, especially for patients with severe disease who currently lack effective therapeutic options.”

Based on these positive results and recent regulatory designations obtained from the FDA, EC, and EMA, Jnana plans to hold discussions with U.S. and European regulators in the second half of 2024, with the goal of directly advancing JNT-517 into pivotal Phase 3 studies by early 2025.

Otsuka Pharmaceutical is a global healthcare company, with its primary businesses focused on pharmaceuticals and nutraceuticals. Its four core global products are: the antipsychotic drug Abilify Maintena, the antipsychotic drug Rexulti, Samsca (the first drug for treating autosomal dominant polycystic kidney disease [ADPKD]), and Lonsurf (for colorectal cancer and gastric adenocarcinoma).

According to the 2023 annual report released by Otsuka Pharmaceutical Co., Ltd., these four products contributed to a double-digit sales growth, with sales increasing by 17.4% to reach JPY 726.9 billion.

According to the ranking data of Japanese pharmaceutical companies released by AnswersNews in May 2024, Otsuka Holdings (HD) ranked second with revenue of JPY 2.0186 trillion. Among this, the company’s overseas sales amounted to JPY 1.3477 trillion, representing a year-on-year increase of 24.4%. This figure indirectly reflects the growth of its four global products, underscoring the expansion of these key offerings.

In the highly competitive Japanese market, the gap among the top pharmaceutical companies by market share is minimal. Otsuka Pharmaceutical faces strong competition from several powerful domestic rivals, including Takeda Pharmaceutical, Astellas Pharma, Taisho Pharmaceutical, and Ono Pharmaceutical. As market competition intensifies, Otsuka Pharmaceutical is accelerating its international expansion and continuously pursuing strategies such as acquisitions and mergers to grow its business.

The acquisition of Jnana Therapeutics serves a dual purpose for Otsuka Pharmaceutical Co., Ltd. First, Jnana’s technological platform aligns with Otsuka’s strategic objective to expand its portfolio of rare disease and specialty medicines, while offering synergies with its subsidiary, Astex Pharmaceuticals. Second, the integration of Jnana Therapeutics is expected to further facilitate the advancement of Otsuka’s collaboration with Visterra.

Visterra is an innovative company advancing antibody drug technology in the field of autoimmunity. In 2018, Otsuka Pharmaceutical acquired Boston-based Visterra for approximately $430 million, thereby gaining a pipeline of investigational products targeting indications such as IgA nephropathy and other kidney diseases, including sibeprenlimab. The integration of Jnana Therapeutics’ technology with Visterra’s will further drive Otsuka Pharmaceutical’s new drug development in the field of autoimmune diseases.

Amid global market cycles, mergers and acquisitions (M&A) and out-licensing have become key strategic initiatives for multinational pharmaceutical companies, serving as vital approaches to drive sustainable development and identify new growth engines.

Looking at this trend, we find that mergers and acquisitions related to the autoimmune field are common. According to incomplete statistics from VCBeat New Medicine, as of now, a total of 29 biotech companies have been acquired by MNCs in 2024, with 12 of them mainly focusing on the autoimmune field. It is clear that autoimmunity has become a key focus for MNCs' strategic layout.

In January this year, Novartis acquired Calypso Biotech for $250 million. The company’s lead candidate, CALY-002, targets IL-15 and is being developed for the treatment of celiac disease and eosinophilic esophagitis. Novartis plans to leverage this asset to develop treatments for multiple autoimmune indications with high unmet medical needs.

May saw multiple M&A deals in the autoimmune sector, including Johnson & Johnson’s acquisition of Numab’s subsidiary, Yellow Jersey Therapeutics, for approximately $1.25 billion in cash, securing global rights to its bispecific antibody NM26 for the treatment of atopic dermatitis; and Asahi Kasei, a Japanese chemical company, announcing its $1.06 billion acquisition of Swedish biotech firm Calliditas Therapeutics to expand its portfolio in kidney diseases and autoimmune disorders, among others.

On September 18, global healthcare company Organon announced that it would acquire Dermavant Sciences, an immuno-dermatology therapeutics company under Roivant Sciences, for a total consideration of approximately $1.2 billion, thereby securing global (excluding China) commercial rights to VTAMA® (tapinarof) Cream, 1%.

Many of the major acquisition deals in 2023 were also related to the autoimmune field. For instance, in October 2023, Roche acquired Telavant for a total consideration of up to $7.25 billion ($7.1 billion upfront payment + $150 million in near-term milestone payments), securing the core asset RVT-3101, a novel TL1A antibody for the treatment of inflammatory bowel disease (including ulcerative colitis and Crohn’s disease). In April 2023, Merck & Co. acquired Prometheus Biosciences, a clinical-stage biotech company, for $10.8 billion; its lead product candidate, PRA023, is being developed for autoimmune diseases, including Crohn’s disease, ulcerative colitis, and scleroderma.

Frequent M&A Transactions in Autoimmune Diseases: MNCs Aggressively Acquire Assets, with Underlying Reasons Easy to Understand.

The autoimmune disease landscape encompasses a wide variety of conditions, affecting a vast patient population and leaving significant unmet clinical needs. This sector continues to drive new growth potential for the pharmaceutical industry, fostering the development of new blockbuster drugs and even future “blockbuster champions.” For multinational corporations (MNCs) facing patent cliffs and growth crises, the autoimmune field is undoubtedly a fertile ground worth cultivating in depth.

Meanwhile, the lengthy clinical trial cycles and high investment costs associated with autoimmune diseases have heightened anxiety among biotechs navigating a capital winter. For these companies, the most definitive path to stability may be acquisition by multinational corporations (MNCs).

This wave of M&A can be described as a mutually beneficial endeavor. More importantly, however, lies the post-merger integration: clarifying the goals and positioning of both parties to achieve stronger commercial performance for their products. The ultimate effectiveness of this integration remains to be seen through continued follow-up.