Carmel biotech firm scores major deal with pharmaceutical giant

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A small Carmel-based biotech firm has signed a deal with pharmaceutical giant Allergan Plc that is worth at least $50 million and could grow to more than $2 billion under the best-case scenario.

The research, development, collaboration and license agreement covers preclinical compounds for up to six gastrointestinal conditions.

Assembly Biosciences Inc., based at 11711 N. Meridian St., said the deal will help it develop four preclinical compounds that target ulcerative colitis, Crohn’s disease, irritable bowel syndrome and related conditions that affect millions of people.

Terms of the deal were laid out in a regulatory filing Tuesday.

Under the agreement, Assembly will get an upfront payment of $50 million from Allergan in return for exclusive rights to the compounds. In addition, Assembly could receive up to $630 million in development milestone payments and up to a $2.15 billion in commercial milestone payments based on net sales, if the compounds make it successfully through clinical trials, get government approval and are commercially successful.

Assembly is eligible to received tiered royalties at percentages ranging from mid-single digits to the mid-teens based on net sales.

The company, founded in 2005, has yet to launch a product, and the upfront payment from Allergan will provide a much-needed financial shot in the arm. In 2015, Assembly racked up an operating loss of $26.9 million after spending $18.4 million for research and $11.3 million for administrative and overhead costs.

The company, formerly known as Ventrus Biosciences, has about 100 employees and consultants, with research facilities in Bloomington and San Francisco. According to its annual report, it focuses on two main research areas: hepatitis B virus and microbiome therapeutics, chiefly in the gastrointestinal tract.

Inflammatory conditions of the gastrointestinal tract are debilitating conditions. Crohn’s disease most commonly affects the end of the small bowel and the colon. Ulcerative colitis is limited to the colon. The two companies estimate that 1.6 million Americans and 2.2 million Europeans suffer from the two diseases.

Assembly’s microbiome program consists of a identifying and selecting “a robust strain” of microbes, methods for isolating and growing the strains, and a system that allows for “targeted oral delivery” to the gastrointestinal tract.

“Our fully integrated microbiome platform reflects Assembly’s commitment as one of the leaders in the exciting new field of microbiome therapeutics, which has the potential to address a range of diseases in entirely new ways,” said Derek Small, Assembly’s CEO, in a written statement.

Allergan is based in Dublin, with U.S. headquarters in New Jersey. It sells a wide range of products for dermatology, eye care, urology and the central nervous system. Key brands including Botox, Linzess and Juvederm. It rang up revenue of $15.1 billion in 2015.

The two companies have agreed to share development costs through proof-of-concept studies, and Allergan has agreed to assume all development costs afterward. The deal is expected to close in the first quarter.

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