Entasis Therapeutics steered its lead antibiotic candidate through late-stage clinical development with help from Innoviva, which has steadily invested in the company over the past two years and now owns a controlling stake. With the biotech’s candidate for addressing certain drug-resistant strains now on the cusp of an FDA submission, Innoviva is acquiring Entasis in a deal that values the company at $113 million.
According to financial terms announced Monday, Innoviva will pay $2.20 cash for each share of Entasis that it does not already own. That price is a 22.2% premium to Entasis’s closing stock price on Friday and a 50% premium to the closing stock price on Jan. 31, the last day before Innoviva’s initial bid for the biotech became public.
The lead antibiotic candidate of Waltham, Massachusetts-based Entasis is called SUL-DUR. The drug pairs sulbactam, an older antibiotic, with durlobactam, a new antibiotic from Entasis. The biotech aims to treat infections caused by Acinetobacter baumannii, opportunistic bacteria that mainly infect critically ill patients who are already immunocompromised. Compared to other bacteria, A. baumannii have the ability to more quickly develop resistance to drugs, which makes them particularly problematic in hospital settings. Infections caused by drug-resistant A. baumannii can become fatal. Entasis developed its drug to address strains that have developed resistance to carbapenem, a broad-spectrum antibiotic.
Last October, Entasis reported that SUL-DUR met the main goal of a Phase 3 clinical trial, reducing death rates compared to treatment with currently available antibiotics. The results also showed more patients in the SUL-DUR group achieved a clinical cure, which is a resolution of all signs and symptoms of infection. Entasis detailed the results from the Phase 3 study in poster presentation last week at the annual conference of the American Thoracic Society.
Entasis was the anti-infectives unit of AstraZeneca. The subsidiary spun out from the parent in 2015, then went public three years later. Burlingame, California-based Innoviva is a holding company that manages a portfolio of royalties from three GSK respiratory products. Innoviva has also been expanding its scope by taking equity stakes in drug developers. Besides Entassis, the company has also invested in Armata Pharmaceuticals, a biotech developing bacteriophage therapeutics for drug-resistant and difficult-to-treat bacterial infections.
Innoviva first invested in Entassis in 2020. A third private placement investment last May boosted Innoviva’s stake in the company to 59.9%. The acquisition agreement comes just in time for Entasis. In its report of first quarter 2022 financial results, the company said its cash position was $33.5 million—enough to last only through the third quarter of this year. That’s when Entassis expects to submit a new drug application to the FDA. The acquisition means that Innoviva’s cash will support SUL-DUR as it goes through regulatory review and then potentially commercialization.
“This transaction represents the next phase in our efforts to diversify our operations beyond our valuable royalty portfolio and will create significant value for patients, health systems and shareholders,” Innoviva CEO Pavel Raifeld said in a prepared statement. “Carbapenem-resistant Acinetobacter infections are an area of significant unmet medical need and, if approved by regulators, SUL-DUR could become the leading treatment for this disease.”
The acquisition has been unanimously approved by the boards of directors of both Entasis and Innoviva. The companies expect to complete the transaction in the third quarter of this year.
Public domain image by the CDC