Kyowa Kirin is expanding its scope to genetic medicines by acquiring Orchard Therapeutics, a company whose gene therapy for a rare inherited metabolic disorder is commercialized in Europe and is on track for an FDA decision in the first quarter of 2024.
Tokyo-based Kyowa Kirin will pay $16 cash for each American depositary share of Orchard, amounting to $387.4 million. That price is a 144% premium to Orchard’s average share price over the 30 days before the deal was announced Thursday. When Orchard went public in 2018, it priced shares at $14 apiece.
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Orchard, which is based in London and has U.S. operations in Boston, develops gene therapies based on hematopoietic stem cells (HSCs). The company makes its gene therapies by harvesting HSCs from a patient, inserting a functional copy of the missing or defective gene, and then administering those modified cells back into the patient.
Orchard’s main asset is Libmeldy, an HSC gene therapy for early-onset metachromatic leukodystrophy (MLD), a rare and life-threatening metabolic disorder stemming from a genetic mutation that leads to the deficiency of a key enzyme. Lacking that enzyme leads to the buildup of lipids called sulfatides, which in turn damages myelin, the protective covering on nerve cells. The disease affects motor skills and can lead to the rapid loss of the ability to walk and talk. In 2020, the European Commission approved Libmeldy for treating early onset MLD in infants and children. In 2022, Orchard reported revenue of $18.8 million for Libmeldy; $7.1 million for the first half of this year. The gene therapy is under FDA review with a target decision date of March 18, 2024.
Kyowa Kirin’s top products are Crysvita, for the bone disorder X-linked hypophosphatemia; Poteligeo, which has FDA approvals for treating subtypes of cutaneous T-cell lymphoma; Regpara, a secondary hypoparathyroidism therapy; and the Parkinson’s disease drug Nourianz. When Kyowa Kirin reported its second quarter 2023 financial results in August, executives said the company was actively exploring acquisition opportunities.
In addition to a commercialized gene therapy, Orchard brings to Kyowa Kirin a pipeline of gene therapy candidates. Orchard’s HSC technology has produced two programs in earlier stages of clinical development for rare enzyme deficiencies. OTL-203 is a potential treatment for mucopolysaccharidosis type I; OTL-201 is in development for mucopolysaccharidosis type IIIA, also called Sanfilippo syndrome type A.
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“We are excited to announce that we have signed the transaction agreement to acquire Orchard Therapeutics, one of the leading providers of HSC gene therapy,” Takeyoshi Yamashita, director of the board, chief medical officer, senior managing executive officer of Kyowa Kirin, said in a prepared statement. “With this transaction, we anticipate being able to use a new modality that can have a profound impact on patients’ lives.”
After the acquisition, Orchard will operate as a Kyowa Kirin subsidiary. The deal still needs approvals from Orchard shareholders and regulators. The transaction is expected to close in the first quarter of 2024. By then, Kyowa Kirin could be responsible for paying out more. The acquisition agreement includes a contingent value right making Orchard shareholders eligible for an additional $1 per share if Libmeldy wins FDA approval. Those payments would add about $90 million to the total purchase price.
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