Marathon, under heavy fire for Emflaza pricing, makes surprise deal to sell drug for $140M-plus

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Marathon Pharma sold its controversial Emflaza drug to PTC Therapeutics in a deal potentially worth more than $190 million.

Marathon Pharmaceuticals is in plenty of hot water after its brazen $89,000 pricing on the old-turned-new Duchenne muscular dystrophy drug Emflaza—a decades-old product available overseas for $1,000 per year. Now, it’s scored a quick payoff by selling the med to PTC Therapeutics in a deal potentially worth more than $190 million.

But if Marathon thinks it can pass off the controversy to PTC with the sale, it likely has another thing coming.

Indeed, news of the sale came less than 24 hours after Sen. Bernie Sanders and Rep. Elijah Cummings—who’ve already come out gunning for Marathon itself—challenged the FDA and the policies that allowed Marathon to quickly push Emflaza (deflazacort) through agency review and win seven years of orphan drug exclusivity at minimal effort compared with other rare disease drug development.

Now, PTC will take charge of the Emflaza rollout, which Marathon “paused” as the pricing backlash heated up. During a conference call about the deal, execs said they plan to “re-examine” the price Marathon had set.

Pricing pending, the company is stepping in without all the baggage surrounding Emflaza’s approval. Emflaza went to the agency armed with its own 29-patient trial, some technical studies and, as pointed out by Sanders and Cummings, 21-year-old clinical data from a 195-patient trial, performed by another company to boot. The FDA also granted the med priority review, which sped its path through the approval process.

The trade group PhRMA has its own problems with Marathon and its handling of Emflaza. As the pricing controversy heated up, and news of CEO Jeffrey Aronin’s past pricing moves surfaced, the association said it would review its membership. PhRMA has been fighting back against pricing criticism by emphasizing its members’ commitment to innovation, trying to draw a line between R&D-heavy drugmakers and those “outliers,” such as Valeant Pharmaceuticals, that have purchased older meds and jacked up their prices.

The fact that Marathon has already handed off the Emflaza baton—and for a not-too-shabby price—casts an even more mercenary light on the company’s tactics. The PTC sale includes a $140 million upfront payment in cash and stock, plus a potential sales-related milestone of $50 million and sales-based royalties down the line. In its conference-call presentation on the deal, PTC said it expects to pay royalties in the “low-to-mid ‘20s,” percentage-wise.

Marathon apparently will hold onto the priority review voucher it won with the Emflaza approval, too. That in itself could be worth even more than the sale; Sanofi shelled out $245 million for one of the vouchers in an effort to speed its combination diabetes drug Soliqua to market.

In selling Emflaza to PTC, Marathon put the drug in the hands of a company that’s developing its own DMD drug, Translarna. PTC said one of its motivations in buying Emflaza is laying the groundwork for its Translarna launch; rolling out Emflaza and its cash flow will help the company build out a commercial network and establish relationships with payers.

PTC emphasized Thursday in a conference call that Emflaza sales will also help fund its R&D efforts. The company says it has spent $500 million on DMD drug development to date. And it’ll be on the hook for the post-marketing study FDA required as part of the drug’s approval.

The FDA has defended itself in the Marathon case by saying that it has to follow laws governing orphan drug approval and expedited review. Sanders and Cummings may have an eye to changing those rules. Sen. Charles Grassley has also said he’s planning to look into possible “misuse” of the orphan drug program after a series of studies and reports highlighting potential problems with the program.