The I/O 2.0-com­bo tech race is on: Mer­ck bags on­colyt­ics play­er Vi­r­a­lyt­ics in $394M buy­out

Last spring the small Aus­tralian biotech Vi­r­a­lyt­ics made a big splash at the an­nu­al AACR meet­ing, turn­ing up in the show­case spot with an in­trigu­ing snap­shot of the pos­i­tive da­ta their on­colyt­ics ther­a­py Ca­vatak was reg­is­ter­ing in the clin­ic.

This morn­ing Mer­ck $MRK — al­ready loose­ly al­lied in a sup­ply deal with Vi­r­a­lyt­ics for their PD-1 star Keytru­da — fol­lowed up by gob­bling the whole com­pa­ny, bag­ging the biotech in a $394 mil­lion buy­out as the lead­ers in the check­point race branch out with new deals for com­bi­na­tion ap­proach­es.

Roy Baynes

Mer­ck is pay­ing a big pre­mi­um — 160% — for Vi­r­a­lyt­ics (ASX: VLA, OTC: VRA­CY), but their AUD 1.75 cash price per share rep­re­sents a mod­est cost in a block­buster busi­ness like the PD-1/L1 field which Mer­ck and Bris­tol-My­ers Squibb dom­i­nate.

It’s al­so no co­in­ci­dence that Mer­ck’s deal is com­ing just days af­ter Bris­tol-My­ers Squibb $BMY bought in­to Nek­tar’s on­col­o­gy pro­gram with a record up­front. With 5 PD-1/L1 drugs pro­lif­er­at­ing around the world, and more on the way, the fo­cus is on new com­bi­na­tions that work to­geth­er to de­feat can­cer bet­ter than the monother­a­pies. And the lead­ers clear­ly want a stake — or full own­er­ship — in the next big thing in the clin­ic.

Ever­core ISI an­a­lyst Umer Raf­fat was one of the first an­a­lysts out with a note Wednes­day, call­ing the deal a nice “tuck-in” and call­ing out one as­pect of the tech that like­ly helped trig­ger the deal:

Out­side of ear­ly ORR be­ing seen in this tri­al of  lung and blad­der can­cer pts, the most in­trigu­ing sig­nal pre­vi­ous­ly emerg­ing out of this tri­al was the up­reg­u­la­tion of PDL1 ex­pres­sion seen with­in a cou­ple of wks among pts with low PDL1 ex­pres­sion at base­line:

Roger Perl­mut­ter

Like the fast-grow­ing PD-1/L1 field, new re­search in­di­cates that a large ros­ter of on­colyt­ic com­pa­nies have been mul­ti­ply­ing, fol­low­ing new ap­proach­es that promise to sur­pass the pi­o­neer in the field: Am­gen’s T-Vec, which Mer­ck R&D chief Roger Perl­mut­ter bought back in 2011 in a deal that to­taled about a bil­lion dol­lars, when he was run­ning R&D at Am­gen.

The ba­sic ap­proach is the same. These on­colyt­ic virus­es are de­signed to in­fect can­cer cells and ex­plode them, cre­at­ing a tar­get rich en­vi­ron­ment for the im­mune sys­tem’s sen­tinel T cells. But new ap­proach­es promise to amp up the im­pact over Am­gen’s pi­o­neer. And there’s gen­er­al con­sen­sus that it’s a good match for a check­point like Keytru­da.

In Vi­r­a­lyt­ics’ case, re­searchers are work­ing with a for­mu­la­tion of the com­mon cold Cox­sack­ievirus Type A21.

Here’s what we found at the show­case round at AACR last April:

In­ject­ed di­rect­ly in­to le­sions, re­searchers tracked an over­all re­sponse rate of 50%, with 4 pa­tients reg­is­ter­ing a com­plete re­sponse and 7 pa­tients ex­pe­ri­enc­ing a par­tial re­sponse. The me­di­an du­ra­tion of re­sponse was not yet reached, “with a num­ber of re­spons­es greater than six months and sev­er­al still on­go­ing” — a sig­nal of po­ten­tial dura­bil­i­ty.

Among 11 pa­tients who had dis­ease pro­gres­sion fol­low­ing ear­li­er treat­ment with an im­mune check­point in­hibitor, 4 had a re­sponse. The oth­er 7 re­spon­ders had not been treat­ed ear­li­er with a check­point.

“The pre­lim­i­nary over­all re­sponse rate of 50% is very pos­i­tive be­cause pre­vi­ous re­ports in­di­cate an 11% over­all re­sponse rate for ip­il­i­mum­ab (Bris­tol-My­ers’ Yer­voy) alone and an ap­prox­i­mate­ly 28% over­all re­sponse rate for CVA21 alone,” not­ed pri­ma­ry in­ves­ti­ga­tor Bren­dan Cur­tis at the time.

The rel­a­tive­ly low cost for Vi­r­a­lyt­ics may un­der­score the sheer vol­ume of on­colyt­ic virus­es now in de­vel­op­ment. A re­cent study from the Can­cer Re­search In­sti­tute found 69 in clin­i­cal de­vel­op­ment and an­oth­er 95 in a pre­clin­i­cal pro­gram. The Aus­tralian biotech is now in Phase I and II stud­ies, but the field ap­pears poised to ex­plode with piv­otal da­ta in the com­ing year or two.

“Vi­r­a­lyt­ics’s ap­proach of en­gag­ing the in­nate im­mune sys­tem to tar­get and kill can­cer cells com­ple­ments our im­muno-on­col­o­gy strat­e­gy, which is fo­cused on the rapid ad­vance­ment of in­no­v­a­tive monother­a­py ap­proach­es and syn­er­gis­tic com­bi­na­tions to help the broad­est range of can­cer pa­tients,” said Roy Baynes, se­nior vice pres­i­dent and head of glob­al clin­i­cal de­vel­op­ment, chief med­ical of­fi­cer, Mer­ck Re­search Lab­o­ra­to­ries. “We are ea­ger to fur­ther build on Vi­r­a­lyt­ics’s sci­ence as we con­tin­ue our ef­forts to har­ness the im­mune sys­tem to im­prove long-term dis­ease con­trol and sur­vival out­comes for peo­ple with can­cer.”


Im­age: Mer­ck build­ing in Branch­burg, NJ. Shut­ter­stock

Covid-19 roundup: Eu­rope pur­chas­es 80M dos­es of Mod­er­na's vac­cine; CO­V­AXX se­cures $2.8B in emerg­ing mar­ket pre-or­ders

With the announcement of its vaccine efficacy data last week, Moderna is starting to line up customers for its Covid-19 mRNA jabs.

The Massachusetts-based biotech announced Wednesday it has agreed to sell an initial round of 80 million doses to the European Commission, with the option to double the amount to 160 million. Once the member states rubber stamp the approval, the deal will be finalized.

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Pascal Soriot (AP Images)

UP­DAT­ED: As­traZeneca, Ox­ford on the de­fen­sive as skep­tics dis­miss 70% av­er­age ef­fi­ca­cy for Covid-19 vac­cine

On the third straight Monday that the world wakes up to positive vaccine news, AstraZeneca and Oxford are declaring a new Phase III milestone in the fight against the pandemic. Not everyone is convinced they will play a big part, though.

With an average efficacy of 70%, the headline number struck analysts as less impressive than the 95% and 94.5% protection that Pfizer/BioNTech and Moderna have boasted in the past two weeks, respectively. But the British partners say they have several other bright spots going for their candidate. One of the two dosing regimens tested in Phase III showed a better profile, bringing efficacy up to 90%; the adenovirus vector-based vaccine requires minimal refrigeration, which may mean easier distribution; and AstraZeneca has pledged to sell it at a fraction of the price that the other two vaccine developers are charging.

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Jason Kelly, Ginkgo Bioworks CEO (Kyle Grillot/Bloomberg via Getty Images)

Af­ter Ko­dak de­ba­cle, US lends $1.1B to a syn­thet­ic bi­ol­o­gy com­pa­ny and their big Covid-19, mR­NA plans

In mid-August, as Kodak’s $765 million government-backed push into drug manufacturing slowly fell apart in national headlines, Ginkgo Bioworks CEO Jason Kelly got a message from his company’s government liaison: HHS wanted to know if they, too, might want a loan.

The government’s decision to lend Kodak three quarters of a billion dollars raised eyebrows because Kodak had never made drugs before. But Ginkgo, while not a manufacturing company, had spent the last decade refining new ways to produce materials inside cells and building automated facilities across Boston.

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In fi­nal days at Mer­ck, Roger Perl­mut­ter bets big on a lit­tle-known Covid-19 treat­ment

Roger Perlmutter is spending his last days at Merck, well, spending.

Two weeks after snapping up the antibody-drug conjugate biotech VelosBio for $2.75 billion, Merck announced today that it had purchased OncoImmune and its experimental Covid-19 drug for $425 million. The drug, known as CD24Fc, appeared to reduce the risk of respiratory failure or death in severe Covid-19 patients by 50% in a 203-person Phase III trial, OncoImmune said in September.

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FDA hands Liq­uidia and Re­vance a CRL and de­fer­ral, re­spec­tive­ly, as Covid-19 cre­ates in­spec­tion chal­lenge

Two biotechs said they got turned away by the FDA on Wednesday, in part due to pandemic-related travel restrictions.

North Carolina-based Liquidia Technologies was handed a CRL for its lead pulmonary arterial hypertension drug, citing the need for more CMC data and on-site pre-approval inspections, which the FDA hasn’t been able to conduct due to travel restrictions. The agency also deferred its decision on Revance Therapeutics’ BLA for its frown line treatment, because it needs to inspect the company’s northern California manufacturing facility. The action, Revance emphasized, was not a CRL.

News brief­ing: FDA re­quests new tri­al for Reata's Friedre­ich's atax­ia pro­gram; J&J's Trem­fya picks up ex­pand­ed la­bel in Eu­rope

Three months after Reata Pharmaceuticals suggested its Friedreich’s ataxia program omaveloxolone could be delayed, the company revealed that is indeed going to be the case.

Reata $RETA shares took a nosedive Wednesday after the biotech revealed that the FDA said supplemental data for its pivotal trial did not strengthen the case for approval. As a result, the drug is likely to need another study before the FDA takes up the case.

Jef­frey Hat­field takes over from Diego Mi­ralles as CEO of Vi­vid­ion; Drag­on­fly scores a new ex­ec with COO Alex Lu­gov­skoy

→ San Diego protein degradation startup Vividion Therapeutics has made a change at the top with Jeffrey Hatfield taking the helm as CEO, replacing Diego Miralles six months after Roche forked over $135 million to collaborate with Vividion on their small molecule degraders. Hatfield is chairman of the board at miRagen Therapeutics and previously held the CEO job at Zafgen and Vitae Pharmaceuticals. He also had a series of leadership roles at Bristol Myers Squibb from 1996-2004, including SVP, immunology and virology divisions.

Chi­na opens the door for biotech in­vestors in Hong Kong to buy Shang­hai stocks, and vice ver­sa

When Shanghai’s STAR board began opening its doors to biotech, it was considered not just a rival to Nasdaq but also the stock exchange in Hong Kong. Those perceptions may take an amicable turn as China expands a mutual access program with the city.

The changes mean investors in mainland China will be able to own Hong Kong biotech chapter stocks, while those in Hong Kong — a much more internationally connected group — would have access to those listed on STAR. In effect, it turns the Shanghai market into a globally accessible exchange overnight while also broadening a key source of revenue for HKEX.

Bax­ter con­tin­ues on-shoring push with $50M In­di­ana ex­pan­sion

It’s been a banner year for the once humdrum business of manufacturing drugs, particularly vaccines. Billions have been spent ramping up facilities for Covid-19 jabs, while individual CDMOs have expanded their facilities, apparently anticipating demand or responding to a government-led push to onshore drug manufacturing.

Now Baxter Biopharma Solutions, the CDMO wing of the many-armed healthcare giant Baxter, is getting in on the game. On Tuesday, they announced plans to spend $50 million to expand their flagship, 600,000 square-foot facility in Bloomington, IN.