The rumor mill is working hard right now in the biotech space, and the latest word is that Retrophin Inc (NASDAQ:RTRX), the company founded by Martin Shkreli, is pitching to buy Raptor Pharmaceutical Corp. (NASDAQ:RPTP). The latter is up nearly 15% on the rumor. There’s no confirmation as yet, of course, but if the deal does come to fruition, what might it mean for Retrophin? Let’s take a look.

After parting ways with Shkreli, Retrophin restated its mission as going after devatstating diseases – specifically those that don’t have any (or have few effective) available treatment options. Its pipeline supports this mission, with its current lead focuses being primary biliary cholangitis (PBC), a degenerative liver disease for which there is no currently available cure, and focal segmental glomerulosclerosis (FSGS), a scar tissue related condition that causes nephrotic syndrome in kids.

Raptor’s product portfolio somewhat fits in to this mission statement. It’s two lead products are Procysbi, a nephropathic cystinosis drug, and Quinsair, a lung infection target. These two drugs account for the majority of Raptor’s revenues, which came in at a little over $32 million at last count (second quarter 2016).

We believe that this isn’t the driving force behind the rumored acquisition, however.

We think its rooted in Raptor’s pipeline, and specifically, its lead development candidate, the above mentioned Procysbi in a Huntington’s disease target indication. For development purposes it’s referred to as its non commercial name RP103, and ts currently in a phase 2/3 clinical trial investigating efficacy in just short of 100 adults.

Huntington’s disease is pretty rare, it has a prevalence of 5.70 per 100,000 people in North America, Europe, and Australia, but its currently incurable and almost totally debilitating. It’s a neurodegenerative, so patient’s start off with small symptoms but (over a period of about 15-20 years, in this instance) get worse. Symptoms include loss of motor function, chorea (which is a type of jerk action) and loss of brain function/dementia. It’s not a nice disease, it’s devastating at late stage, and there is no currently available cure. Patients have access to a variety of drugs that target symptoms, but these have variable efficacy across the patient population and don’t do much in the latter stages. In other words, the drug would fit perfectly into Retrophin’s development pipeline.

It works in three different ways to target Huntington’s. First, it increases the synthesis of an amino acid called cysteine. The science behind this is pretty hazy right now, but low levels of cysteine have been linked to Huntington’s as well as things like Alzheimer’s, cancer and a few other diseases. The theory is that by increasing cysteine, severity can halt or reverse. The second is the inhibition of what’s called transglutaminase, which translates to a reduction in a process called proteolysis. The proteolysis of mutant huntingtin (the protein created by the mutant gene that cases the condition) is believed to contribute to the progression of the disease. Reducing proteolysis should, theoretically, reduce progression rate. Finally, it promotes the expression of BDNF, which in turn promotes neuronal survival and synaptic plasticity.

Trials to date have been promising, and we believe Retrophin is looking to pick up this late stage asset ahead of the pivotal completion, with the goal of submitting an NDA itself. The 96 patient trial is ongoing, and is pitching RP103 against placebo across an eighteen-month study period. It’s double blind, so we’ve not got any real insight into how the drug is performing as yet, but Retrophin must believe it has a solid chance of success if it is considering taking over the development.

So that’s the primary target, what else will Retrophin pick up? Raptor’s secondary candidate is a cystic fibrosis target called MP-376. This one is an inhalable formulation of fluoroquinolones, designed to inhibit replication of bacterial DNA in CF patients. It’s essentially a reformulation based on an alternative administration (a nebulizer) designed to improve efficacy and increase time to action. While not as neatly as RP103 might, MP-376 also fits into Retrophin’s mission statement.

The deal is rumored to amount to somewhere in the region of $600 million, but chances are we will see a premium on that price given Raptor’s current buy-volume-driven market cap of $638 million.

We’ll keep an eye on this as it plays out.