Early-stage asset risk no deterent to partnering deals

Lack of clinical evidence does not necessarily mean lack of value, as Genmab and MorphoSys can tell you. In the last couple of months both managed to extract huge amounts of money from partners for compounds that had been tested in only a handful of patients – the latest in a long line of substantial early clinical-stage licensing deals.

Of course, paying top dollar for a phase I asset does not guarantee success. A large proportion end up bust, according to the analysis below detailing some of the biggest deals struck over projects that in some cases had yet to generate any clinical data. It is also clear that once a drug class has seen one big early-stage deal others will follow; as well as the anti-CCR4 antibodies that returned so well for Genmab and MorphoSys, this was also seen with the glucokinase activators and the anti-NGF antibodies a couple of years ago. It seems that, to keep up with the Joneses, big pharma is willing to make risky and expensive bets (see table).

Hot assets

The remarkable €71m ($92m) that Celgene handed over for rights to MorphoSys’s anti-CD38 antibody MOR202 represents one of the biggest sums paid up front for a phase I asset. The deal, announced last month, came less than a year after Johnson & Johnson handed over an only slightly less impressive €55m for Genmab’s daratumumab, a similarly acting project at the same development stage (MorphoSys squares up to Genmab in multiple myeloma, June 27, 2013).

At the time the MorphoSys-Celgene deal was struck MOR202 had not generated any clinical results, although Genmab had presented data on daratumumab from 23 patients at a medical conference before it snared J&J – at the time of the deal the project had only been in 35 patients, the Danish company said at the time.

Despite the lack of clinical evidence both partners clearly felt the target was sufficiently validated to justify such sums; time will tell whether they were correct. According to EvaluatePharma the agents are two of three anti-CD38 antibodies in clinical testing – the other SAR650984 is owned by Sanofi, so MOR202 had scarcity value once daratumumab had been cornered.

For some assets in the table below, similar forces of market defence and scarcity value, no doubt fuelled by a competitive bidding process, were at play to push valuations through the roof. In others cases it looks more like a pipeline-hungry partner with the cash to place a high-risk/high-reward bet. The analysis includes all phase I deals with an up-front value of $50m or more that were struck in the absence of substantial clinical data. None has progressed further than phase II to date, and more than half have been abandoned.

Of course, all of the candidates in the list that remain active could go on to fail, given that success in phase I is hardly a guarantee of later glory. The analysis certainly suggests that paying sums normally associated with much later stages of development is not worth it.

When, or if, one of these deals pays off EP Vantage will let you know. But history tells us that the chance of Celgene and Johnson & Johnson breaking this pattern with their new assets is low.

Biggest early-stage licensing deals
Company Product Pharma class Partner Current status Up-front fee ($m) Deal value ($m) Deal date
1 Abbott Laboratories ABT-110 Anti-nerve growth factor (NGF) MAb PanGenetics Unclear 170 190 2009
2 Amgen AMG 761 Anti-CCR4 MAb Kyowa Hakko Kogyo Assumed abandoned 100 520 2008
3 Celgene  MOR202 Anti-CD38 MAb MorphoSys Phase I/II 92 818 2013
4 Astellas Pharma CTS-21166 Beta secretase inhibitor CoMentis Assumed abandoned 80 760 2008
5 Roche TB-403 Anti-placental growth factor (PlGF) MAb  ThromboGenics Assumed abandoned 66 662 2008
6 Sanofi SAR256212/ MM-121 Anti-HER3 (ErbB-3) MAb  Merrimack Pharmaceuticals Phase II 60 530 2009
7 Roche PLX5568 (RG7376) c-Raf kinase inhibitor  Plexxikon Assumed abandoned  60 335 2009
8 Amgen AMG 151/ ARRY-403 glucokinase activator Array BioPharma Phase II 60 726 2009
9 Johnson & Johnson HuMax-CD38 Anti-CD38 MAb Genmab Phase II 55 1,055 2012
10 Forest Laboratories TTP399 glucokinase activator TransTech Pharma Assumed abandoned 50 1,155 2010
11 Johnson & Johnson AMG 403 Anti-nerve growth factor (NGF) MAb Amgen Unclear 50 435 2008
12 Human Genome Sciences FP-1039/ HGS1036 Fibroblast growth factor (FGF) antagonist FivePrime Therapeutics Phase I  50 495 2011
13 Sanofi SAR339658/ GBR500 Anti-VLA-2 MAb Glenmark Pharmaceuticals Phase II 50 663 2011

Anti-NGF antibodies was another class that saw huge early-stage deals. They were at one point viewed as promising new pain therapies – no drug with a novel mechanism of action to treat pain has reached the market in about 20 years.

This promise prompted J&J to pay $50m for an Amgen antibody, fulranumab, in 2008 – it is not clear what data were available at the time although it was only listed as being in phase I – followed by the outright acquisition of PanGenetics’ ABT-110 for $170m by Abbott the following year. PanGenetics had only started a 56-patient phase I trial in patients with osteoarthritis knee pain a few months before the deal was announced, so very little if any data can have been available for Abbott to assess (PanGenetics cashes in on Abbott's early stage bet, November 13, 2009).

At that point, however, Pfizer’s anti-NGF tanezumab was in several phase III studies, so at least these partners had a more clinically validated mechanism to point to when writing their respective cheques. Still, they could have both saved themselves a lot of money if they had waited – just months after Abbott pulled the trigger reports of rapid joint destruction in the tanezumab programme prompted the FDA to halt work on the entire class.

Last year, an advisory committee agreed that work could restart, but companies involved have been slow to resume and the future of the class is clouded (Therapeutic focus - Return of anti-NGF class gets FDA panel's backing, March 13, 2012).

Big bucks

Amgen was also responsible for the biggest straight licensing deal in this analysis, paying a huge $100m to Kyowa Hakko Kogyo for its anti-CCR4 antibody in 2008. This had completed Phase I studies in healthy volunteers and allergic rhinitis patients and was in a phase I lymphoma trial at the time of signing; the deal only included an option over oncology rights.

While Kyowa pushed on with development – it has won approval in Japan for lymphoma and started phase III trials in the US – Amgen rarely spoke about the asset. It no longer lists the compound and it has to be assumed to have walked away, with no hope of a return on that $100m.

For a company so successful at cancer innovation, it is surprising to see Roche feature in the list for an oncology compound, although the Swiss pharma giant was the logical partner for ThromboGenics and BioInvent International’s anti PIGF antibody.

It was hoped that this could be used in combination with an anti-VEGF therapy like Avastin, producing greater efficacy at lower doses with a subsequent reduction of toxicity. Roche paid $66m on the basis of phase I results in 16 healthy subjects, but the project did not even make it into phase II. The rights were handed back in 2012 – pipeline prioritisation was blamed.

Not all these phase I bets have failed.

Three large phase II studies are currently on going with MM-121, and ErbB3 receptor blocker, in ovarian and breast cancers. Merrimack Pharmaceuticals had started a phase I safety trial with the project 10 months before the deal was signed with Sanofi, but had not publically revealed any data. This early-stage bet could still pay off.

And FivePrime Therapeutics' FGF/FGFR antagonist FP-1039 could still prove itself, albeit for its new owner GlaxoSmithKline, which inherited the project when it bought Human Genome Sciences. HGS snapped up rights for $50m on the back of phase I data from a trial that had recruited 39 patients. Work elsewhere in the class does not make for encouraging reading and progress with FP-1039 has been slow, so the jury is still out.

To contact the writer of this story email Amy Brown in London at [email protected] or follow @AmyEPVantage on Twitter

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