It's July and the temperature's rising -- and so are early stage deal values in oncology.
You want proof? The chart to the right, derived from our Strategic Transactions database, says it all. Average upfront deal values for Phase I oncology programs have soared from around $20 million in 2007 to more than $40 million this year, as big pharmas race to lock up first-in-class assets in what is now considered a core therapeutic area. Interestingly during this same period Phase III deal values for oncologics have declined from a 2008 high of $66 million to about $37 million.)
There are, of course, caveats to the analysis. In a given year, the individual number of oncology deals associated with a particular phase of development is small (on the order of 2 to 10); thus, any one deal can skew the average.
Despite the limitations of the data, there's no denying this week's deal between Bristol-Myers Squibb and Innate Pharma for worldwide rights to the biotech's Phase I immuno-oncology asset was a big one. Bristol, now the darling of analysts for its small is beautiful, double down on biopharma approach and the recent approval of Yervoy, paid $35 million upfront for Innate's novel humanized antibody, IPH2102.
In Phase I as a possible treatment for acute myelogenous leukemia, IPH2102 acts on innate immunity, a universal but so-far little explored biological process, in which natural killer (NK) cells are stimulated to attack cancer cells. When the antibody binds its target, it removes a block that inhibits the activity of NK cells; thus, this kind of therapy is expected to complement the more conventional adaptive immune response approach exploited by other immunotherapies. (And there's no doubt after this year's ASCO that combo therapies in oncology are becoming the path forward.)
In addition to the hefty upfront, BMS could pay up to $430 million more in milestones in addition to pre-specified double-digit sales royalties. Interestingly, Innate Pharma will continue to develop the molecule to the end of Phase II (at which point work transitions to the big pharma), with BMS picking up the development tab. A joint steering committee with representatives from both companies will oversee the development process, which will include exploring '2102's role in other cancer types, including solid tumors, and whether it should be used as a monotherapy or as part of a combo.
As noted in "The Pink Sheet" DAILY, one reason for the deal's size may stem from the fact that '2102 is a follow-on compound to a Phase II precusor molecule called '2101 that is being studied in multiple myeloma patients. Thus, while '2102 is a novel compound (its made by a different manufacturing process that is more amenable to regulatory approval than the earlier version), the existing data associated with '2101 likely provided BMS with additional comfort about the follow-on's mechanism of action and clinical utility.
What other therapy areas could also enjoy a torrid increase in deal value in the coming months? Deals for anti-infectives, especially medicines targeting pesky gram-negative microbes, seem poised for an uptick as certain big pharmas are cycling back into the space after ignoring it for years. Given the unmet medical need associated with Type II diabetes and obesity, it's tempting to think products in this arena should also command high values. (Zafgen and Catabasis are certainly hoping so.) But given the recent spate of regulatory failures associated with Contrave, lorcaserin, and Qnexa, expect pharma partners to be circumspect (er, wishy-washy) until there's significant data showing efficacy AND safety.
In the mean time, consider cooling off by diving into another edition of...
Roche/The Cancer Prevention and Research Institute of Texas: Dollar figures weren't announced in this week's alliance between Roche and CPRIT, but the deal is a reminder not just of the ongoing interest in oncology, but also the role academia can play as a source of that innovation. Under the terms of the agreement, CPRIT and Roche will jointly collaborate to identify new oncology-focused ventures and technologies originating from academic groups housed in Texas, with both organizations providing financial support to the nascent programs. The Swiss pharma will assess investment opportunities and offer support to selected ventures, including the ability to tap Roche personnel for help with drug development, and clinical and regulatory questions. As is typical of current pharma-academia collaborations these days, a joint committee will oversee research progress while the selected projects are in the accelerator program. It's the first large pharma partnership for CPRIT, which was formed in 2007 with support from the Long Horn state's citizenry to expedite the commercialization of cancer-related research originating from both public and private institutions within Texas.--EL
Johnson & Johnson/Pharmasset: Pharmasset Inc. and Johnson and Johnson's Janssen Therapeutics unit (the division formerly known as Tibotec) will study two investigational agents in combination for the treatment of hepatitis C without interferon, the current standard of care. The tie-up adds to the blizzard of ongoing studies to find a safe and effective interferon-free regimen and shows how companies must collaborate with potential competitors (is that collabetition or compellaboration?) in order to do so. As part of the clinical alliance announced July 6, Janssen will initiate a Phase II study evaluating the safety and efficacy of Pharmasset's key asset, the nucleotide polymerase inhibitor PSI-7977, in combination with its protease inhibitor TMC435. No money changed hands as a result of the collaboration. The study, which will enroll HCV genotype 1 patients who had a prior null response to peg-inteferon alfa and ribavirin, will evaluate the combination with and without ribavirin. With the announcement, PSI-7977 now is being studied in combination with three of the leading direct-acting antiviral classes: protease inhibitors, NS5A inhibitors, and nucleotide polymerase inhibitors. Earlier this year, Pharmasset and Bristol announced a clinical collaboration to study Bristol's NS5A replication complex inhibitor BMS-790052 with PSI-7977 and in May launched a Phase II trial in 84 previously untreated patients with HCV genotypes 1, 2, or 3.— Jessica Merrill
Rib-X/Sanofi: Ribosome-focused Rib-X Pharmaceuticals will receive $10 million upfront and could earn another $9 million in near-term research milestones under an agreement it signed with Sanofi July 6. The two companies will co-develop novel antibiotics to treat drug-resistant gram-negative and gram-positive hospital-acquired infections. Sanofi also gets the option to license molecules resulting from the research, with structured payouts going to Rib-X. The deal is structured as an exclusive worldwide research collaboration centered around Rib-X’s preclinical RX-04 program and initially pertains to four product profiles within an agreed-upon portion of the ribosome. But the deal essentially gives Sanofi “drilling rights” in that area, which is expected to yield potentially thousands of candidates, all of which Sanofi will have option rights to. Anything Sanofi does not option, however, will revert fully to Rib-X. Each molecule optioned and developed by Sanofi could yield up to $86 million in development and regulatory milestones as well as more than $100 million in commercial milestones, plus potential low double-digit royalties on sales. Privately held Rib-X also has the option to co-promote in the US one program of its choosing from the collaboration.—Joseph Haas
Merck KGaA/Idera: For every high profile oncology tie-up, there is also the inevitable no deal. This week came news that German pharma Merck KGAA would halt a key trial on a toll-like receptor 9 agonist that was a critical piece of its 2007 oncology partnership with Idera Pharmceuticals. Merck KGAA announced it would cease development of IMO-2055 as a potential treatment for first-line squamous cell carcinoma of the head and neck, based on results of a Phase I trial in combination with cisplatin/5-FU and Erbitux (cetuximab). The trial showed increased incidence of neutropenia and electrolyte imbalances. The stoppage doesn’t completely unravel the companies’ partnership, under which Merck KGaA paid Idera $41 million upfront and which included $381 million in potential milestone payments. The German company said it would continue a Phase II trial on IMO-2055 as a second-line treatment in combination with Erbitux in recurrent and/or metastatic SCCHN patients, and will continue to evaluate Idera’s other TLR9 agonists. It’s not the first failure for IMO-2055; the drug failed to meet its primary endpoint in a 2008 Phase II study of tumor response in advanced renal cell carcinoma patients, and Merck declined to initiate a dose-escalating component in a Phase Ib study of the drug in metastatic colorectal cancer. – Paul Bonanos
Image courtesy of flickrer cassandrajowett used with permission through a creative commons license.