Eli Lilly has announced its latest strategic move in the gene therapy space with the acquisition of Akouos, a Boston-based biotechnology company specializing in genetic therapies for hearing loss. The deal, valued at up to $610 million, represents Lilly's continued expansion into genetic medicine and its commitment to addressing unmet needs in hearing disorders.
The transaction structure includes an upfront payment of $12.50 per share, totaling $487 million, with additional contingent value rights (CVRs) of up to $3 per share tied to specific clinical development milestones. These milestone payments are designed to reward progress in Akouos's clinical programs while managing investment risk.
Pioneering Gene Therapy for Hearing Loss
At the center of the acquisition is AK-OTOF, Akouos's leading therapeutic candidate that recently received FDA clearance for clinical testing. The therapy employs an adeno-associated virus (AAV) vector to deliver a functional copy of the otoferlin (OTOF) gene to treat sensorineural hearing loss (SNHL), the most prevalent form of deafness affecting up to two in 1,000 newborns.
The therapy targets a specific genetic mutation that accounts for approximately 1-5% of deafness cases globally, with an estimated 200,000 affected individuals worldwide. Currently, there are no approved pharmaceutical treatments for this type of hearing loss, highlighting the significant unmet medical need.
Clinical Development Strategy
Akouos has designed an innovative phase 1/2 trial approach for AK-OTOF, utilizing a single-ear administration protocol that will enable direct comparison with the untreated ear. This methodology aims to demonstrate both the potential to halt disease progression and the possibility of hearing restoration.
The company's pipeline extends beyond AK-OTOF, including several promising candidates:
- AK-CLRN1 for Usher type 3A deafness
- AK-antiVEGF for vestibular schwannoma
- A therapy targeting GJB2 mutations, the leading cause of congenital deafness in developed nations
Expanding Genetic Medicine Portfolio
This acquisition aligns with Lilly's broader strategy in genetic medicine, building upon its $1 billion acquisition of Prevail Therapeutics in 2020. The company has established the Lilly Institute for Genetic Medicine in Boston, scheduled to be fully operational by 2024, demonstrating its long-term commitment to this therapeutic approach.
Daniel Skovronsky, Lilly's chief medical officer, emphasized the potential impact of this acquisition: "Gene therapy offers tremendous opportunity to provide durable treatments for patients with genetically defined disease. With Akouos, we are optimistic that we can make a difference for people with hearing loss and other inner ear conditions."
Deal Structure and Milestone Payments
The CVR component of the deal is structured in three $1 payments, each tied to specific development milestones:
- Dosing of a fifth patient with AK-OTOF in phase 1 or 1/2 trials by end of 2024
- Fifth participant dosing with a second single-gene SNHL therapy
- FDA approval of an Akouos gene therapy by end of 2026
These payments include a declining value mechanism, reducing by $0.42 per month if conditions are not met, with final expiration in 2028. The acquisition is expected to conclude in Q4 2022, subject to customary closing conditions.
