Eli Lilly & Co.’s Zepbound is helping to solve one of the most intractable health challenges of our time: Obesity. Now, the drugmaker hopes to crack another significant public health problem: Sleep disorders.
In a deal worth up to $7.8 billion – just shy of Lilly’s largest acquisition ever – the American drugmaker is buying Centessa Pharmaceuticals Plc, a biotech that’s developing medicines to treat narcolepsy and a variety of disorders where people have trouble staying fully alert and awake during the daytime.
Research on narcoleptic dogs in the 1990s ultimately led to the discovery that many patients with the condition characterized by uncontrollable daytime sleepiness were missing a neuropeptide called orexin in their brains. It’s taken more than 25 years, but scientists now have devised drugs called orexin receptor agonists that mimic the neuropeptide, essentially creating a class of therapies that has the potential to vastly reduce most symptoms of the condition.
In human trials in patients whose narcolepsy is due to a deficit of orexin, the experimental medicines have shown powerful effects treating a range of symptoms, so far with relatively few side effects. “It is akin to giving insulin to people with type 1 diabetes: You are giving back what is missing,” said Thomas Scammell, a neurologist who treats sleep disorders at Beth Israel Deaconess Medical Center in Boston.
The efficacy of these drugs has created excitement that they may one day be helpful far beyond the relatively narrow confines of narcolepsy to a broad range of wakefulness disorders, he said.
If the deal goes through, Lilly will be competing with other companies including Takeda Pharmaceutical Co. and Alkermes Plc to bring the new medicines to the market.
Takeda is the farthest along for now. In February, its experimental drug oveporexton was accepted for priority review by the US Food and Drug Administration for type 1 narcolepsy, with a decision expected later this year. Takeda has said that the drug could generate $2 billion to $3 billion in worldwide sales for the disorder. Scammell has been a consultant for the company.
As with obesity drugs, Lilly might not be first to gain approval, but the American drugmaker is willing to bet almost $8 billion for a chance to tap into what’s been pegged as a multi-billion-dollar market for narcolepsy and idiopathic hypersomnia, another sleep disorder for which Centessa’s drug is being tested. The medicines might even someday help with sleep apnea, a much more common disorder that affects millions of people, researchers said.
There’s also a potentially even bigger prize. Research indicates orexin drugs could be helpful for patients with a variety of other neurological and psychiatric disorders. Biotech Alkermes, for example, is testing orexin receptor agonists in disorders as varied as ADHD and fatigue associated with Parkinson's disease and multiple sclerosis.
Companies are showing that not only do these drugs “induce wakefulness, both in healthy individuals and in narcoleptic patients, but also we're starting to get information about the cognitive benefits,” which might be particularly helpful for neurodegenerative diseases, said Giovanni Mariggi, cofounder of Medicxi. The investment fund founded Centessa by merging multiple biotech companies.
A Lilly spokesperson said executives were not available for interviews prior to the deal’s close.
“The fact that Lilly is willing to pay so much for a small company with early molecules tells you a lot about the excitement and the potential of this space,” Andrew Plump, Takeda’s president for research and development, said in a phone interview. In a study published in December in Jama Neurology, Takeda reported that, in addition to its main effects on wakefulness, oveporexton also improved attention, memory and executive function in narcolepsy patients over eight weeks.
Centessa’s lead drug is in mid-stage trials and the most common side effects are the frequent need to urinate, insomnia and dizziness. It works in a similar way to Takeda’s medicines.
Lilly’s move into next-generation sleep treatments fills a key portfolio gap for the company, RBC Capital Markets analyst Trung Huynh said in a note. The drugmaker has been working to expand in central nervous-system conditions but it “lacked a credible insomnia position — a high-unmet-need category,” Huynh said.
And if clinical trials bear out the idea that these new drugs could go beyond treating sleep disorders, “it represents a tremendous market opportunity,” said Jim Tananbaum, founder and CEO of Foresite Capital, an investor in Centessa.
One of the scientists credited with uncovering the cause of narcolepsy from studying dogs with the condition, Emmanuel Mignot, expressed confidence about the medicines' potential. The orexin agonists “are likely to have applications in many other areas of medicine where sleepiness or sedation is an issue," said Mignot, a professor of sleep medicine at Stanford University.
It’s not Lilly’s first foray into the field. The company’s obesity blockbuster Zepbound is the only medication approved for obstructive sleep apnea, a nighttime breathing condition that affects more than 23 million US adults. In 2004, the company also bought an insomnia drug from Merck KGaA and a few years later acquired a small biotech company called Hypnion, which was developing drugs for insomnia and other sleep disorders.
The companies working in this space are currently focused on building franchises around rare diseases, Medicxi’s Mariggi said. Now, the push is to start exploring whether these drugs can benefit more people.
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