Ono Pharmaceutical is expanding its oncology offerings with a $2.4 billion deal to acquire Deciphera Pharmaceutical, a company that has a commercialized cancer therapy and a drug pipeline that includes a late-stage candidate based on the Path to submission to the FDA is.
Under terms of the deal announced Monday, Japan-based Ono has agreed to pay $25.60 in cash for each Deciphera share. This price represents a 74.7% premium to Deciphera’s closing price on Friday and a 68.8% premium to the stock’s average price over the past month. Shares of Deciphera opened on Monday at $25.18 per Piece.
Deciphera’s cancer medicines are kinase inhibitors, small molecules that block enzymes critical to the growth of cancer cells. The Waltham, Massachusetts-based company designs its drugs to target the region of the enzyme that activates or inactivates it, like an on-off switch. Deciphera claims that its approach of directly targeting the switch pocket or other regions that control switch regulation and activation can lead to drugs that are broadly active against the target enzyme and both the enzyme as it occurs in nature covering its mutated or amplified forms.
Qinlock’s FDA approval in 2020 made it the first Deciphera drug to hit the market. The regulatory decision concerned the use of the therapy as a fourth-line treatment for gastrointestinal stromal tumors (GIST). An attempt to expand the drug’s use to earlier lines of treatment resulted in Phase 3 failure in 2021. An exploratory analysis of Phase 3 data found a “significant clinical benefit” in second-line therapy for GIST patients whose cancer carried KIT exon 11 and 17/18 mutations. These results were published in January in the journal Nature Medicine. A new phase 3 study to enroll this patient group is underway. According to Deciphera’s annual report, Qinlock generated $159 million in revenue in 2023, an increase of 26.7% over the previous year’s revenue. The majority of these sales came from the USA
The most advanced drug candidate in Deciphera’s pipeline is vimseltinib, a potential treatment for tenosynovial giant cell tumors (TGCT), a group of rare, mostly benign tumors that affect the soft tissue around the joints. This drug is designed to selectively bind to the CSF1R switch pocket. Last October, Deciphera released preliminary data showing that this drug met the main goal of a pivotal study. In its annual report, the company said it expected to submit an application for approval to the FDA in the second quarter of this year, followed by an application to the European Medicines Agency in the following quarter. Four additional Deciphera programs are in early clinical or preclinical development.
Ono’s main presence in cancer is Opdivo, the blockbuster immunotherapy the company developed in collaboration with Bristol Myers Squibb. The Japanese company’s oncology pipeline currently includes 17 internal and partner programs, some of which are being evaluated in combination with Opdivo. The only kinase inhibitor listed in the pipeline is internally developed ONO-4059, a Bruton tyrosine kinase inhibitor in mid-stage clinical development. Ono’s growth strategy includes a goal to become a global specialty pharmaceutical company by fiscal 2031, investing 200 billion yen (about $1.28 billion) annually in research and development.
“We expect this acquisition of Deciphera to not only expand ONO’s oncology target portfolio, but also accelerate ONO’s business development in the United States and Europe and strengthen kinase drug development research,” says Gyo Sagara, deputy director, chairman and CEO of ONO said in a prepared statement.
Oncology is one of four focus areas for Ono, along with immunology, neurology and specialty medicines, which meet high unmet patient needs regardless of therapeutic indication. The company has been an active dealmaker while gathering pieces to execute its growth strategy. In February, it began a collaboration with Austin, Texas-based Shattuck Labs focused on developing bifunctional proteins for autoimmune and inflammatory diseases. Shortly thereafter, Ono announced a collaboration with InveniAI, an artificial intelligence drug discovery company based in Guilford, Connecticut.
The boards of Ono and Deciphera unanimously approved the acquisition. The approval of the antitrust authorities and the majority of Deciphera shareholders is still required to tender their shares. Deciphera said certain shareholders, who own about 28% of the outstanding shares, have already agreed to tender their shares. The transaction is expected to close in the third quarter of this year. Thereafter, Deciphera will remain in Waltham and operate as an independent company within the Ono Group.
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