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

Health­care Dis­par­i­ties and Sick­le Cell Dis­ease

In the complicated U.S. healthcare system, navigating a serious illness such as cancer or heart disease can be remarkably challenging for patients and caregivers. When that illness is classified as a rare disease, those challenges can become even more acute. And when that rare disease occurs in a population that experiences health disparities, such as people with sickle cell disease (SCD) who are primarily Black and Latino, challenges can become almost insurmountable.

Jacob Van Naarden (Eli Lilly)

Ex­clu­sives: Eli Lil­ly out to crash the megablock­buster PD-(L)1 par­ty with 'dis­rup­tive' pric­ing; re­veals can­cer biotech buy­out

It’s taken 7 years, but Eli Lilly is promising to finally start hammering the small and affluent PD-(L)1 club with a “disruptive” pricing strategy for their checkpoint therapy allied with China’s Innovent.

Lilly in-licensed global rights to sintilimab a year ago, building on the China alliance they have with Innovent. That cost the pharma giant $200 million in cash upfront, which they plan to capitalize on now with a long-awaited plan to bust up the high-price market in lung cancer and other cancers that have created a market worth tens of billions of dollars.

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So what hap­pened with No­var­tis' gene ther­a­py group? Here's your an­swer

Over the last couple of days it’s become clear that the gene therapy division at Novartis has quietly undergone a major reorganization. We learned on Monday that Dave Lennon, who had pursued a high-profile role as president of the unit with 1,500 people, had left the pharma giant to take over as CEO of a startup.

Like a lot of the majors, Novartis is an open highway for head hunters, or anyone looking to staff a startup. So that was news but not completely unexpected.

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Who are the women su­per­charg­ing bio­phar­ma R&D? Nom­i­nate them for this year's spe­cial re­port

The biotech industry has faced repeated calls to diversify its workforce — and in the last year, those calls got a lot louder. Though women account for just under half of all biotech employees around the world, they occupy very few places in C-suites, and even fewer make it to the helm.

Some companies are listening, according to a recent BIO survey which showed that this year’s companies were 2.5 times more likely to have a diversity and inclusion program compared to last year’s sample. But we still have a long way to go. Women represent just 31% of biotech executives, BIO reported. And those numbers are even more stark for women of color.

David Meek, new Mirati CEO (Marlene Awaad/Bloomberg via Getty Images)

Fresh off Fer­Gene's melt­down, David Meek takes over at Mi­rati with lead KRAS drug rac­ing to an ap­proval

In the insular world of biotech, a spectacular failure can sometimes stay on any executive’s record for a long time. But for David Meek, the man at the helm of FerGene’s recent implosion, two questionable exits made way for what could be an excellent rebound.

Meek, most recently FerGene’s CEO and a past head at Ipsen, has become CEO at Mirati Therapeutics, taking the reins from founding CEO Charles Baum, who will step over into the role of president and head of R&D, according to a release.

Jay Bradner (Jeff Rumans for Endpoints News)

Div­ing deep­er in­to in­her­it­ed reti­nal dis­or­ders, No­var­tis gob­bles up an­oth­er bite-sized op­to­ge­net­ics biotech

Right about a year ago, a Novartis team led by Jay Bradner and Cynthia Grosskreutz at NIBR swooped in to scoop up a Cambridge, MA-based opthalmology gene therapy company called Vedere. Their focus was on a specific market niche: inherited retinal dystrophies that include a wide range of genetic retinal disorders marked by the loss of photoreceptor cells and progressive vision loss.

But that was just the first deal that whet their appetite.

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When ef­fi­ca­cy is bor­der­line: FDA needs to get more con­sis­tent on close-call drug ap­provals, agency-fund­ed re­search finds

In the exceedingly rare instances in which clinical efficacy is the only barrier to a new drug’s approval, new FDA-funded research from FDA and Stanford found that the agency does not have a consistent standard for defining “substantial evidence” when flexible criteria are used for an approval.

The research comes as the FDA is at a crossroads with its expedited-review pathways. The accelerated approval pathway is under fire as the agency recently signed off on a controversial new Alzheimer’s drug, with little precedent to explain its decision. Meanwhile, top officials like Rick Pazdur have called for a major push to simplify and clarify all of the various expedited pathways, which have grown to be must-haves for sponsors of nearly every newly approved drug.

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Lat­est news: It’s a no on uni­ver­sal boost­ers; Pa­tient death stuns gene ther­a­py field; In­side Tril­li­um’s $2.3B turn­around; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Next week is shaping up to be a busy one, as our editor-in-chief John Carroll and managing editor Kyle Blankenship lead back-to-back discussions with a great group of experts to discuss the weekend news and trends. John will be spending 30 minutes with Jake Van Naarden, the CEO of Lilly Oncology, and Kyle has a brilliant panel lined up: Harvard’s Cigall Kadoch, Susan Galbraith, the new head of cancer R&D at AstraZeneca, Roy Baynes at Merck, and James Christensen at Mirati. Don’t miss out on the action — sign up here.

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FDA hands ac­cel­er­at­ed nod to Seagen, Gen­mab's so­lo ADC in cer­vi­cal can­cer, but com­bo stud­ies look even more promis­ing

Biopharma’s resident antibody-drug conjugate expert Seagen has scored a clutch of oncology approvals in recent years, finding gold in what are known as “third-gen” ADCs. Now, another of their partnered conjugates is ready for prime time.

The FDA on Monday handed an accelerated approval to Seagen and Genmab’s Tivdak (tisotumab vedotin-tftv, or “TV”) in second-line patients with recurrent or metastatic cervical cancer who previously progressed after chemotherapy rather than PD-(L)1 systemic therapy, the companies said in a release.