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

Late Fri­day ap­proval; Trio of biotechs wind down; Stem cell pi­o­neer finds new fron­tier; Biotech icon to re­tire; 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.

I hope your weekend is off to a nice start, wherever you are reading this email. As for me, I’m trying to catch the tail of the Lunar New Year festivities.

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Pfiz­er lays off em­ploy­ees at Cal­i­for­nia and Con­necti­cut sites

Pfizer has laid off employees at its La Jolla, CA, and Groton, CT sites, according to multiple LinkedIn posts from former employees.

The Big Pharma confirmed to Endpoints News it has let go of some employees, but a spokesperson declined to specify how many workers were impacted and the exact locations affected. Earlier this month, the drug developer had confirmed to Endpoints it was sharpening its focus and doing away with some early research on areas such as rare disease, oncology and gene therapies.

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Eliot Forster, F-star CEO (Rachel Kiki for Endpoints News)

F-star gets down to the wire with $161M sale to Chi­nese buy­er as na­tion­al se­cu­ri­ty con­cerns linger

With the clock ticking on F-star Therapeutics’ takeover by a Chinese buyer, the companies are still scrambling to remove a hold on the deal from the US government’s Committee on Foreign Investment in the United States.

F-star and invoX Pharma said they are “actively negotiating” with CFIUS “about the terms of a mitigation agreement to address CFIUS’s concerns regarding potential national security risks posed by the transaction.”

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Jake Van Naarden, Loxo@Lilly CEO

Lil­ly en­ters ripe BTK field with quick FDA nod in man­tle cell lym­phoma

Eli Lilly has succeeded in its attempt to get the first non-covalent version of Bruton’s tyrosine kinase, or BTK, inhibitors to market, pushing it past rival Merck.

The FDA gave an accelerated nod to Lilly’s daily oral med, to be sold as Jaypirca, for patients with relapsed or refractory mantle cell lymphoma.

The agency’s green light, disclosed by the Indianapolis Big Pharma on Friday afternoon, catapults Lilly into a field dominated by covalent BTK inhibitors, which includes AbbVie and Johnson & Johnson’s Imbruvica, AstraZeneca’s Calquence and BeiGene’s Brukinsa.

Filip Dubovsky, Novavax CMO

No­vavax gets ready to take an­oth­er shot at Covid vac­cine mar­ket with next sea­son plans

While mRNA took center stage at yesterday’s FDA vaccine advisory committee meeting, Novavax announced its plans to deliver an updated protein-based vaccine based on new guidance.

Vaccines and Related Biological Products Advisory Committee (VRBPAC) members voted unanimously in favor of “harmonizing” Covid vaccine compositions, meaning all future vaccine recipients would receive a bivalent vaccine, regardless of whether they’ve gotten their primary series.

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Alon Seri-Levy, Sol-Gel Technologies CEO

Bridge­Bio com­pa­ny sells off rare dis­ease can­di­date to Gal­der­ma part­ner

Israeli biotech Sol-Gel Technologies announced Friday that it got its hands on a rare disease drug candidate from PellePharm for almost $75 million, amid claims that the drug has the potential to reach a $300 million market.

Execs said on a conference call Friday morning that patidegib, a hedgehog signaling pathway blocker, is being investigated to treat Gorlin syndrome, a rare genetic disorder that increases the risk of developing certain kinds of cancer such as basal cell skin cancer and medulloblastoma, a type of brain cancer. The disease affects around one in every 31,000 people, and an estimated 70,000 people worldwide.

CBER Director Peter Marks (Susan Walsh/AP Images)

FDA ad­vi­so­ry com­mit­tee votes unan­i­mous­ly in fa­vor of bi­va­lent Covid shots re­plac­ing pri­ma­ry se­ries

The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted unanimously in favor of “harmonizing” Covid vaccine compositions, meaning all current vaccine recipients would receive a bivalent vaccine, regardless of whether they’ve gotten their primary series.

The vote marks an effort to clear up confusion around varying formulations and dosing schedules for current primary series and booster vaccines, as well as “get closer to the strains that are circulating,” according to committee member Paul Offit, professor of pediatrics at the Children’s Hospital of Philadelphia.

Rodney Rietze, iVexSol CEO

Bris­tol My­ers, Charles Riv­er join Se­ries A fund­ing for iVex­Sol

Massachusetts-based iVexSol has secured funding to the tune of $23.8 million in its latest Series A round. The new investors include Bristol Myers Squibb, manufacturer Charles River Laboratories and Asahi Kasei Medical.

iVexSol is a manufacturer of lentiviral vectors (LVV), used in making gene therapies, and this latest round of fundraising brings its total Series A total over $39 million, which will be used to recruit more employees and bolster its technology.

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John Rim, Samsung Biologics CEO (Samsung/PR Newswire)

Sam­sung Bi­o­log­ics spells out ex­pan­sion plans in South Ko­rea and US

The CDMO arm of one of South Korea’s largest conglomerates has posted its year-end results and plans for 2023, which include new construction.

Samsung Biologics netted north of KRW 3 trillion ($2.4 billion) in 2022 revenue and an operating profit of KRW 983.6 billion ($799 million), which the company touted on Friday as “record-high earnings.” The revenue boost was 55% compared to 2021.