PTC Therapeutics Inc said on Thursday it would buy Marathon Pharmaceuticals LLC's recently-approved Duchenne muscular dystrophy (DMD) drug, Emflaza, and promised to re-examine the hefty U.S. price tag for the treatment.
PTC's shares were down about 13 percent in afternoon trading.
Duchenne's is a rare, genetic disorder affecting about 9,000 U.S. patients that causes progressive muscle deterioration and kills most by the age of 30.
Emflaza, known generically as deflazacort, belongs to a class of drugs called corticosteroids that are frequently used to treat DMD and other conditions.
Marathon did not invent deflazacort and patients in the United States had been able to import it for as little as $1,000, but lost that option after Emflaza's controversial U.S. approval in February.
Marathon slapped a $89,000-per-patient annual price tag on Emflaza, drawing intense criticism from U.S. lawmakers and forcing it halt the steroid's launch.
"We're re-examining the current price of Emflaza ... We believe a change needs to be had, but ... it's really too premature to speculate on the price level," PTC Chief Executive Stuart Peltz said on a conference call on Thursday.
Even at a lower price, one-fourth or one-fifth of the current price, PTC could still cover acquisition costs, Nomura Instinet analyst Christopher Marai said.
PTC said it would pay Marathon about $75 million in cash and about $65 million in stock, which could give Marathon up to a 20 percent stake in PTC.
The deal will help PTC expand its U.S. footprint ahead of the potential approval of its drug, Translarna, Peltz said.
Translarna, designed to treat a specific subset of DMD patients, is already available in Europe. The FDA rejected the drug last year, but is currently reviewing it and a decision is expected by October.
Emflaza, however, is approved to treat all DMD patients and works by reducing inflammation and lowering the immune system's activity. Although it is the first FDA-approved steroid for DMD, another steroid, prednisone, is also frequently used.
PTC said it considers Emflaza a "disease-modifying" treatment. However, two U.S. lawmakers have questioned the data the FDA used to evaluate the steroid and why Marathon was given market exclusivity even though it did no significant research.
The first and only other U.S.-approved DMD drug is Sarepta Therapeutics Inc's Exondys 51, which was cleared in September despite stiff resistance from researchers within and outside the FDA.
(Reporting by Natalie Grover in Bengaluru; Editing by Savio D'Souza and Shounak Dasgupta)