Novartis inks a $2.5B bispecific cancer drug development alliance with Xencor

Novartis is jumping on board Xencor’s growing bispecific oncology platform. The pharma giant is paying $150 million upfront for a ticket to ride, beginning at the preclinical stage of development. And Novartis ($NVS) is promising up to $2.4 billion in milestones as it paves the way for a major new alliance for Jay Bradner’s Novartis Institutes for BioMedical Research in Cambridge, MA.

The pharma giant announced the pact with the Monrovia, CA-based biotech early Tuesday. In return Novartis gains ex-U.S. rights on two preclinical programs — the AML drug XmAb14045 and XmAb13676 for B-cell malignancies, both headed to the clinic later this year — as well as non-exclusive use of the tech for up to 10 more programs.

In addition to sharing development costs, Xencor has an opt-in on co-commercializing one of the pharma giant’s drugs developed from an exclusive use of the tech on four undisclosed targets.

Novartis marks the latest in a string of heavyweight partners for Xencor. Amgen paid $45 million upfront to partner last fall in a $1.7 billion deal, following the likes of Merck, Novo Nordisk, J&J, Boehringer and Alexion.

Novartis is an aggressive player in the oncology arena. It moved decisively to ally itself with investigators at the University of Pennsylvania on CAR-T and swiftly moved from investor to partner with Intellia on gene editing tech. Generally circumspect about what it will pay in any deal, the company has signaled time and again that it will fork over what it needs to to get the tech that it wants. In this case the companies didn’t announce the upside on the hefty milestone package, but Xencor included the number in its SEC filing.

Xencor is by no means alone in bispecifics, but the biotech says it’s separate from the pack.

“What distinguishes us is plug-and-play simplicity,” Xencor CEO Bassil Dahiyat tells me in an email.  “Making a bispecific is just as easy as making a regular antibody candidate. And the manufacturing is standard Ab manufacturing with standard processes and great yields. Half-life is long like an antibody. And we’ve tuned their potency so they can bring T-cell killing against tumors while being tolerated, compared to the degree of tox seen with earlier platforms. We make it faster and simpler to do bispecifics and to give them to patients.”

Bassil Dahiyat, Xencor CEO

Bassil Dahiyat, Xencor CEO

Xencor’s lead in-house drug is the mid-stage bispecific XmAb5871, which targets CD-19 and the FcγRIIb receptor to block B cell activation without eliminating them. That kind of double team work could distinguish it from other autoimmune drugs. And the biotech has been at work testing it for rheumatoid arthritis.

In today’s deal, Novartis is following up with a pact that puts it in the lab with a group of Xencor scientists who have spent years refining a bispecific antibody approach to cancer therapy. While one segment of the antibody binds to a tumor cell, the Fc region flags an immune response, recruiting T cells to the target. And that’s a field that Novartis has been specializing in.

Cancer R&D has also been changing dramatically in recent years, compressing years of Phase I-through-Phase III work into one relatively quick lunge for accelerated approvals of the most promising programs. Changing that timeline has made it possible to do big-money up fronts for new cancer drugs.

“The critical aspect of this deal is we kept full U.S. commercialization rights and 50/50 worldwide development with Novartis,” notes Dahiyat. “So their capital and the upfront/milestones, combined with their expertise and scale, will help us in our ambitions to one day be a commercial company, if a lot of steps in between go well! This deal is a great help and we made sure not to license away our future.  Novartis is an excellent partner because they can derive a lot of value of these programs and the research programs of theirs that we enable.”

Xencor has just over 60 employees now and expects to add another 15 to 20 in the next 12 months, primarily to continue to scale up clinical development capability.

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VP Oncology Biology
Skyhawk Therapeutics Waltham, MA
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Elektroki Boston, MA
Director Process Development
Elektroki Boston, MA
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Recursion Pharmaceuticals Salt Lake City, UT

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