How the pan­dem­ic helped se­cure a rare can­cer drug for Menar­i­ni

The lead­er­ship at Stem­line had been in ne­go­ti­a­tions with one com­pa­ny for over a year, when they got a sur­prise note out of Italy: Menar­i­ni, the cen­tu­ry-old, Flo­ren­tine phar­ma com­pa­ny want­ed to know if they’d be in­ter­est­ed in a part­ner­ship on their new drug.

They sat down, four of them at a ta­ble at the BIO In­ter­na­tion­al Con­fer­ence in Philadel­phia in June 2019, two busi­ness ex­ecs from Stem­line and two from Menar­i­ni. At the time, Stem­line’s rare can­cer drug had been ap­proved in the US for 6 months and the tiny New York biotech was fig­ur­ing out how to move from a re­search group to a com­mer­cial one. They had sold $5 mil­lion in the first quar­ter that year and would sell $13 mil­lion in the sec­ond.

A mar­ket­ing ap­pli­ca­tion was al­so sit­ting be­fore reg­u­la­tors in Eu­rope, where Stem­line had lit­tle ev­i­dent foot­print. And al­though, when asked by a Cowen in­vestor that May whether their plan was to go it alone on the con­ti­nent, CEO Ivan Berg­stein had giv­en a terse “yes,” Menar­i­ni’s grasp of those coun­tries was en­tic­ing.

So the road to Menar­i­ni’s $677 mil­lion ac­qui­si­tion of Stem­line last week be­gan as many do: A dis­cus­sion for a “re­gion­al part­ner­ship” be­tween a pair of com­ple­men­tary play­ers, a drug li­censed over to a com­pa­ny that could best sell it. Soon, though, Menar­i­ni would eclipse the com­pa­ny Stem­line had been talk­ing to for over a year — who wouldn’t even get a shot to bid — and, ac­cord­ing to an SEC doc­u­ment, buy the biotech in a deal sealed in part be­cause the pan­dem­ic had cast a pal­lor on the stock’s im­me­di­ate fu­ture.

Af­ter a Ju­ly email re­it­er­at­ing Menar­i­ni’s in­ter­est not on­ly in mar­ket­ing in Eu­rope but al­so Asia and Latin Amer­i­ca, con­ver­sa­tions picked up again in the fall, when Menar­i­ni CEO El­cin Bark­er Er­gun told rep­re­sen­ta­tives she was in­ter­est­ed in com­mer­cial-stage on­col­o­gy com­pa­nies. PJT said they had re­la­tion­ships with sev­er­al, in­clud­ing Stem­line. Al­though they had one oth­er drug still in test­ing, Stem­line was es­sen­tial­ly a one-drug com­pa­ny. De­spite brief con­tro­ver­sy over a tri­al death, the com­pa­ny man­aged to gain swift ap­proval for a ther­a­py called El­zon­ris af­ter show­ing com­plete re­sponse rates as high as 54% in small tri­als. A CD123-tar­get­ed cy­to­tox­in, the drug is ap­proved for a rare form of can­cer that af­fects nat­ur­al killer cells, with oth­er in­di­ca­tions such as AML po­ten­tial­ly com­ing.

Ex­ec­u­tives from the two com­pa­nies met again in No­vem­ber, at a BIO con­fer­ence in Ham­burg, Ger­many, to dis­cuss the com­pa­ny’s com­mer­cial progress in the US and plans for Eu­rope. With some aid from PJT, a meet­ing was set up for the two CEOs at the JP Mor­gan Health­care Sum­mit in San Fran­cis­co.

There, Bark­er Er­gun and Berg­stein dis­cussed not on­ly a part­ner­ship, but a po­ten­tial ac­qui­si­tion. The next month, they ex­e­cut­ed a con­fi­den­tial­i­ty agree­ment first dis­cussed over the sum­mer. Menar­i­ni hired Gold­man Sachs.

Bergman told the board they had two of­fers: A po­ten­tial buy­out from Menar­i­ni and a po­ten­tial stock-for-stock merg­er with an­oth­er com­pa­ny, list­ed in SEC doc­u­ments as Par­ty A. Stem­line set up a meet­ing with Par­ty A and gave Menar­i­ni ac­cess to lim­it­ed non-pub­lic in­for­ma­tion, but with­held more pri­vate in­for­ma­tion un­til an of­fer came they felt war­rant­ed ac­cess.

On March 30, af­ter a pair of Stem­line pre­sen­ta­tions on El­zon­ris, the Menar­i­ni of­fer came: $10 per share. Al­though that was ac­tu­al­ly 79 cents less than Stem­line’s stock on Jan­u­ary 2, the com­pa­ny’s stock had fall­en steadi­ly over the pre­vail­ing three months, be­cause of the pan­dem­ic and for oth­er rea­sons. By then there was a 127% pre­mi­um on the com­pa­ny’s $4.40 stock price that day.

Stem­line was sur­prised. The board ex­pect­ed more, be­liev­ing that the com­pa­ny’s shares were de­pressed by the pan­dem­ic. The of­fer, they agreed in­ter­nal­ly, wasn’t even good enough to grant Menar­i­ni ex­clu­siv­i­ty.

On April 5, a day af­ter Stem­line told Menar­i­ni they would need to up its of­fer, Par­ty A — who had been told at the end of March that they should sub­mit a writ­ten pro­pos­al — emailed Berg­stein to say they were still in­ter­est­ed and prepar­ing an of­fer.

Two days lat­er, Menar­i­ni coun­tered with $11.00 per share and a CVR for the first com­mer­cial sale of El­zon­ris in Eu­rope, should it come be­fore 2022. Stem­line coun­tered at $12.50 per share and a $1 CVR.

Menar­i­ni, through Gold­man Sachs, pro­posed $11.50 per share with a $1.00 CVR — at that point a 120% bump on the $5.23 Stock price.

On April 11, Stem­line’s board and man­age­ment dis­cussed the pro­pos­al. In 3 days, they al­so had a phone call sched­uled with Par­ty A, but the board doubt­ed whether that com­pa­ny was a cred­i­ble buy­er who could put up a cash of­fer. Gold­man Sachs had al­so added that, in their pro­fes­sion­al opin­ion, they did not be­lieve Menar­i­ni would go be­yond the $11.50 pro­pos­al, and Stem­line wor­ried that pro­longed ne­go­ti­a­tions could jeop­ar­dize the deal. The board told Berg­stein to tell Par­ty A they were mov­ing on. They au­tho­rized an ex­clu­siv­i­ty agree­ment with Menar­i­ni.

On May 4th — af­ter turn­ing down a last re­quest for time from Par­ty A — they agreed to the fi­nal deal. Giv­en the pan­dem­ic-dri­ven of­fer, at least one an­a­lyst be­lieved a bet­ter one could come through. In that event, there’s a $25.4 mil­lion ter­mi­na­tion fee to the deal.

“We mod­el EL­ZON­RIS peak sales of $250-$350MM. A 3x mul­ti­ple sug­gests $14-20/sh val­ue,” Cowen’s Boris Peak­er wrote. “Giv­en the val­u­a­tion, we be­lieve there is a pos­si­bil­i­ty of a bet­ter of­fer.”

BiTE® Plat­form and the Evo­lu­tion To­ward Off-The-Shelf Im­muno-On­col­o­gy Ap­proach­es

Despite rapid advances in the field of immuno-oncology that have transformed the cancer treatment landscape, many cancer patients are still left behind.1,2 Not every person has access to innovative therapies designed specifically to treat his or her disease. Many currently available immuno-oncology-based approaches and chemotherapies have brought long-term benefits to some patients — but many patients still need other therapeutic options.3

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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FDA de­lays de­ci­sion on No­var­tis’ po­ten­tial block­buster MS drug, wip­ing away pri­or­i­ty re­view

So much for a speedy review.

In February, Novartis announced that an application for their much-touted multiple sclerosis drug ofatumumab had been accepted and, with the drug company cashing in on one of their priority review vouchers, the agency was due for a decision by June.

But with June less than 48 hours old, Novartis announced the agency has extended their review, pushing back the timeline for approval or rejection to September. The Swiss pharma filed the application in December, meaning their new schedule will be nearly in line with the standard 10-month window period had they not used the priority voucher.

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José Basel­ga finds promise in new class of RNA-mod­i­fy­ing can­cer tar­gets, lock­ing in 3 pre­clin­i­cal pro­grams with $55M

Having dived early into some of the RNA breakthroughs of the last decades — betting on Moderna’s mRNA tech and teaming up with Silence on the siRNA front — AstraZeneca is jumping into a new arena: going after proteins that modify RNA.

Their partner of choice is Accent Therapeutics, which is receiving $55 million in upfront payment to steer a selected preclinical program through to the end of Phase I. After AstraZeneca takes over, the Lexington, MA-based startup has the option to co-develop and co-commercialize in the US — and collect up to $1.1 billion in milestones in the long run. The deal also covers two other potential drug candidates.

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Bris­tol-My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

Back during the lead up to the $74 billion buyout of Celgene, the big biotech’s leadership did a little housecleaning with a major pact it had forged with Jounce. Out went the $2.6 billion deal and a collaboration on ICOS and PD-1.

Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

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Leen Kawas, Athira CEO (Athira)

Can a small biotech suc­cess­ful­ly tack­le an Ever­est climb like Alzheimer’s? Athi­ra has $85M and some in­flu­en­tial back­ers ready to give it a shot

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.

GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Covid-19 roundup: Mod­er­na read­ies to en­ter PhI­II in Ju­ly, As­traZeneca not far be­hind; EU ready to ne­go­ti­ate vac­cine ac­cess with $2.7B fund

Moderna may soon add another first to the Covid-19 vaccine race.

In March, the mRNA biotech was the first company to put a Covid-19 vaccine into humans. Next month, they may become the first company to put their vaccine into the large, late-stage trials that are needed to prove whether the vaccine is effective.

In an interview with JAMA editor Howard Bauchner, NIAID chief Anthony Fauci said that a 30,000-person, Phase III trial for Moderna’s vaccine could start in July. The news comes a week after Moderna began a Phase II study that will enroll several hundred people.

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Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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