Nick Vollers and Adrian Toutoungi sift through the stand-out August 2024 biopharma partnering deals. Deal announcements were more scarce than usual, reflecting the holiday period, but some interesting trends were still apparent: (i) significant activity on bispecific T-cell engagers and bispecific antibodies more generally; (ii) continued appetite to explore CD-19 targeting therapeutics in the autoimmune space, outside the original focus of blood cancers; (iii) a stream of innovative assets coming out of Chinese biopharma companies, which are attracting willing big pharma partners; and (iv) an interesting report from JP Morgan calling out a general reduction in upfront payments compared to back-ended milestones, by as much as 50% since 2020.
Deal of the month
- Merck & Co (MSD) has entered into an agreement with Curon Biopharmaceutical (Shanghai, Cayman-incorporated) to acquire full global rights to Curon's experimental CD3xCD19 bispecific T-cell engager (BiTE) CN201. CN201 targets B cells for depletion by T cells. B-Cells are responsible for producing protective antibodies but can also contribute to the development of cancers and autoimmune diseases. The deal is valued at up to $1.3 billion, comprising an upfront payment of $700 million and up to $600 million in potential regulatory and sales milestone payments.
- CN201 is currently being evaluated in phase 1 and phase 1b/2 clinical trials for the treatment of relapsed or refractory non-Hodgkin’s lymphoma and relapsed or refractory acute lymphocytic leukaemia, respectively. The preliminary data read-out is encouraging, showing a complete response.
- Merck’s acquisition of CN201 positions it against competitors like Amgen and AstraZeneca in the oncology sector. Amgen's pioneering T-cell engager Blincyto™ (blinatumomab) won FDA approval in 2014, so it has a long head start. It is another CD3xCD19 BiTE, also indicated for acute ALL. Meanwhile, AstraZeneca's 2022 acquisition of TeneoTwo brought the CD3xCD19 BiTE candidate AZD0486 into its portfolio for an upfront payment of $100 million and potential milestone payments of $1.15 billion. AZD0486 is in phase 2 in the clinic for non-Hodgkin lymphoma (and is also undergoing earlier-stage trials for other indications), and AZ announced in August a few days after the Merck/Curon deal that it would also take AXC0486 into a 1000+ patient Phase 3 trial for follicular lymphoma. The growing market enthusiasm for BiTE/bispecific antibodies as a modality is likely driven, at least in part, by their greater convenience of administration and manufacturing efficiency compared to CD19-targeting cell therapies.
- Recent studies indicate that B-cell depletion therapies could also be effective against autoimmune conditions. Researchers have published encouraging data on a CD19-targeting CAR-T candidate in lupus. And another investigator testing Blincyto™ in six patients with multiple drug-resistant rheumatoid arthritis has reported a complete response. Data like that is stimulating an industry trend in which CD-19-focused cancer companies are increasingly turning towards the autoimmune space. For example, Cullinan Oncology changed its name earlier this year to reflect a switch in the focus of its CD19xCD3 T-cell engager from oncology to systemic lupus erythematosus.
- As for the financial terms, the $700 million upfront payment is well above current reported median upfront payment for a phase 2 asset ($100 million in 2022, $300 million in 2023), and significantly higher than the $100 million which AstraZeneca paid just 2 years ago for its BiTE candidate. This presumably reflects a confidence in CN201’s clinical promise, based on early trial outcomes and the growing market enthusiasm for BiTE as a modality.
Other August biopharma deals which caught our eye included:
- Texas-based Instil Bio has partnered with ImmuneOnco Biopharmaceuticals (Shanghai) to develop a PD-L1xVEGF bispecific antibody, IMM2510, for multiple solid tumors, including non-small cell lung cancer (NSCLC) and triple-negative breast cancer (TNBC), as well as a second programme (a next-generation anti-CTLA-4 anitbody). The collaboration leverages the unique properties of IMM2510, which offers enhanced tumour penetration and killing. The development plan includes Phase 1b/2 studies in China starting late 2024 for NSCLC and early 2025 for TNBC, while a US IND submission is planned for late 2024. Instil gains global rights outside Greater China, while ImmuneOnco retains development and commercialization rights in Greater China (including Taiwan, Macau and Hong-Kong). Instil is paying $50 million in upfront payments and near-term milestones, with potential additional development, regulatory and commercial milestones reaching over $2 billion and single digit to low-double digit percentage royalties on ex-Greater China sales.
- Bayer has teamed up with Boston-based NextRNA Therapeutics in a $547 million collaboration to develop small molecule therapeutics targeting long non-coding RNAs (lncRNAs) for oncology. The partnership will focus on two programmes: one involves a lncRNA-targeting small molecule in early preclinical development at NextRNA, and the other will focus on a target to be selected by Bayer from options identified by NextRNA's platform. This deal includes upfront payments, milestone payments, research funding, and tiered royalties on net sales. Both companies aim to leverage this collaboration to address high unmet needs in cancer treatment through innovative biotechnological approaches. NextRNA was founded in 2021 as one of the ways to advance the work of the Dana-Farber Cancer Institute’s Carl Novina, M.D., Ph.D., whose lab made a number of discoveries related to the biology of noncoding RNAs and their dysregulation in cancers.
- Japan's Eisai and Pennsylvania-based SEED Therapeutics have entered a strategic research collaboration worth up to $1.5 billion to develop molecular glue degraders (MGDs) for undisclosed neurodegeneration and oncology targets. Molecular glue degraders are small molecules which recruit target disease-related proteins to ubiquitin ligase enzymes, which attach ubiquitins that hijack the cell’s disposal machinery to remove disease-related proteins. SEED will lead preclinical discovery activities, including E3 ligase selection (there are over 600 to choose from, currently poorly characterized) and identification of suitable MGDs, while Eisai will hold exclusive rights to further develop and commercialise the resulting compounds. The collaboration includes a series of milestone payments, along with tiered royalties on potential future sales. Additionally, Eisai has led a $24 million Series A-3 funding round for SEED to support the development of its proprietary programmes in oncology and neurodegeneration.
An interesting snippet from the latest JPM Quarterly Report (Q1 2024)
- J.P. Morgan's Q1 2024 biopharma licensing and venture report highlighted an interesting trend, which we think is worth calling out to the UK ecosystem. In 2019 and 2020, upfront payments accounted for about 13% and 12%, respectively, of the overall value of drug alliances struck those years. That number has fallen steadily since and hit 6% over the first half of 2024. This means that deals are – on average - becoming more heavily backloaded, with the bulk of the money biotechs are eligible to receive coming in the form of “bio-bucks” that may never materialise as they are tied to post-approval sales targets. Median upfront cash and equity payments from big pharma were down year-on-year for phase II and earlier-stage deals signed in Q1 2024 to $45 million for Phase II, $50 million for Phase I, $44 million for preclinical/IND, and $39 million for discovery platform programs. These are industry-wide averages and in our view do not give much guidance on any given partnering deal, which are typically highly asset-specific and, in some cases, driven by investment trends and competitive pressures. Phase 2 upfront payments in particular are highly variable, as can be seen from the $700 million upfront in the Merck/Curan deal and the $4.0 billion upfront payment in the Daiichi Sankyo/Merck ADC deal (the largest Phase II upfront in 2023). However, the broad trend is clear. Anecdotally, we see this as reflecting: (i) the current phase of the economic cycle, in which big pharma partners are displaying risk averse attitudes; (ii) a tough financing market, which limits the room for manoeuvre of the biotech partner; and (iii) increasing availability of high-quality innovative assets from Chinese biotechs, which are increasing the competition for big pharma partners. All in all, it’s currently a buyers' market.
