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

Biotech in­vestors and CEOs see two paths to growth, but are they equal­ly vi­able?

The dynamic in the biotech market has been highly volatile in the last few years, from the high peaks immediately after the COVID vaccine in 2021, to the lowest downturns of the last 20 years in 2022. This uncertainty makes calling the exact timing of the market’s turn something of a fool’s errand, according to Dr. Chen Yu, Founder and Managing Partner of TCG Crossover (TCG X). He speaks with RBC’s Noël Brown, Head of US Biotechnology Investment Banking, about the market’s road ahead and two possible paths for growth.

Casey McPherson shows his daughters Rose (left) and Weston around Everlum Bio, a lab that he co-founded to spark a treatment for Rose and others with ultra-rare conditions. (Ilana Panich-Linsman)

Fa­ther starts lab af­ter in­tel­lec­tu­al prop­er­ty is­sues stymie rare dis­ease drug de­vel­op­ment

Under bright lab lights, Casey McPherson holds his 6-year-old daughter, Rose. His free hand directs Rose’s gaze toward a computer screen with potential clues in treating her one-of-a kind genetic condition.

Gray specks on the screen show her cells that scientists reprogrammed with the goal of zeroing in on a custom medicine. McPherson co-founded the lab, Everlum Bio, to spark a treatment for Rose — and others like her. A regarded singer-songwriter, McPherson never imagined going into drug development.

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Marc Dunoyer, Alexion CEO (AstraZeneca via YouTube)

Up­dat­ed: As­traZeneca nabs a small rare dis­ease gene ther­a­py play­er for 667% pre­mi­um

AstraZeneca is kicking off the fourth quarter with a little M&A Monday for a gene editing player recently overcoming a second clinical hold to its only program in human studies.

The Big Pharma and its subsidiary Alexion are buying out little LogicBio for $2.07 per share. That’s good for a massive 667% premium over its Friday closing price, when it headed into the weekend at 27 cents and just weeks after Nasdaq said LogicBio would have to delist, which has been put on hold as the biotech requests a hearing. It’s one of two biotech deals to commence October, alongside the news of Incyte buying a vitiligo-focused biotech.

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Dave Marek, Myovant CEO

My­ovant board balks as ma­jor­i­ty own­er Sum­it­o­mo swoops in with a $2.5B deal to buy them out

Three years after Sumitomo scooped up Roivant’s 46% stake in the publicly traded Myovant $MYOV as part of a 5-company, $3 billion deal, they’re coming back for the whole thing.

But these other investors at Myovant want more than what the Japanese pharma company is currently offering to pay at this stage.

Sumitomo is bidding $22.75 a share for the outstanding stock, which now represents 48% of the company after Sumitomo bumped its ownership since the original deal with Roivant. Myovant, however, created a special committee on the board, and they’re shaking their heads over the offer.

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Vlad Coric, Biohaven CEO

Vlad Coric charts course for new Bio­haven with neu­ro­science push and Big Phar­ma vets on board

What’s Biohaven without its CGRP portfolio? That’s what CEO Vlad Coric is tasked with deciding as he maps out the new Biohaven post-Pfizer takeover.

Pfizer officially scooped up Biohaven’s CGRP assets on Monday, including blockbuster migraine drug Nurtec and the investigational zavegepant, for $11.6 billion. As a result, Coric spun the broader pipeline into an independent company on Tuesday — with the same R&D team behind Nurtec but about 1,000 fewer staffers and a renewed focus on neuroscience and rare disease.

Benjamine Liu, TrialSpark CEO

Paul Hud­son and Tri­alSpark's mu­tu­al de­sire to speed up de­vel­op­ment con­verges in three-year, six-drug goal

A unicorn startup that originally set out to hasten clinical studies for biopharma partners dug further into its revised path of internal drug development by linking arms with Sanofi in a pact that the biotech’s CEO said originated from the top.

TrialSpark and the Big Pharma on Tuesday committed to in-licensing and/or acquiring six Phase II/Phase III drugs within the next three years.

“I’ve known Paul Hudson for a while and we were discussing the opportunity to really re-imagine a lot of different parts of pharma,” TrialSpark CEO Benjamine Liu told Endpoints News, “and one of the things that we discussed was this opportunity to accelerate the development of new medicines in mutual areas of interest.”

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In AstraZeneca's latest campaign, wild eosinophils called Phils personify the acting up often seen in uncontrolled asthma

As­traZeneca de­buts an­noy­ing pur­ple ‘Phil’ crea­tures, per­son­i­fied asth­ma eosinophils ‘be­hav­ing bad­ly’

There are some odd-looking purple creatures lurking around the halls of AstraZenca lately. The “Phil” character cutouts are purple, personified eosinophils with big buggy eyes and wide mouths, and they’re a part of AZ’s newest awareness effort to help people understand eosinophilic asthma.

The “Asthma Behaving Badly” characters aren’t only on the walls at AZ to show the new campaign to employees, however. The “Phils” are also showing up online on the campaign website, and in digital and social ads and posts on Facebook and Instagram.

Christophe Bourdon, Leo Pharma CEO

Leo Phar­ma looks 'be­yond the skin' in atopic der­mati­tis aware­ness cam­paign

As Leo Pharma aims to take on heavyweight champ Dupixent in atopic dermatitis, the company is launching “AD Days Around the World,” an awareness campaign documenting real patient stories across Europe.

The project, unveiled on Monday, spotlights four patients: Marjolaine, Laura, Julia and África from France, Italy, Germany and Spain, respectively, in short video clips on the challenges of living with AD, the most common form of eczema.

Bob Duggan (Duggan Investments)

Biotech bil­lion­aire Bob Dug­gan flies the white flag as Sum­mit hunts a new own­er, or part­ner, for sole clin­i­cal-stage ef­fort

Bob Duggan’s Summit Therapeutics $SMMT is running out of moves for its sole clinical-stage candidate.

The biotech issued a terse statement in an SEC filing that it’s pulling the plug on the only active clinical trial for ridinilazole, which has been through a failed late-stage trial for C. difficile. A pediatric study is being curtailed as Summit says it decided a few days ago to either partner out the therapy or get a buyer — if they can find one.

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