If Baxalta is a company about to agree to a takeout by Shire, as reports would have the sector believe, today’s collaboration with the private Danish antibody developer Symphogen is a funny way of showing it.
For $175m up front, the US-based group has purchased rights to opt in to six checkpoint inhibition therapies, taking it out of its comfort zone of marketed blood products and clinical-stage kinase inhibitors in oncology. The late-hour deal complicates Shire’s decision-making as it prepares another bid for Baxalta, although the suitor might be thankful that the tie-up has been structured as an option rather than a full licensing deal.
The spin-out of Baxalta from Baxter International last year was accompanied by hype about building a “third business” out of oncology. This is a therapy area where it had virtually no commercial presence until the predecessor company bought the chemotherapy drug Oncaspar from Sigma-Tau Group in the weeks before the split; that transaction was hailed for providing an “immediate commercial footprint”.
The commercial footprint looks like it could get a bit wider in the coming months as Merrimack’s longer-lasting chemotherapy Onivyde (MM-398) is due a decision in pancreatic cancer in Europe, where Baxalta holds rights.
Legacy clinical stage assets from Baxter look a little more intriguing, with partnerships on two kinase inhibitors, CTI Biopharma’s pacritinib and Onconova’s Estybon. But it is immuno-oncology where biopharma wants to be these days. Baxalta has decided that now is a good time for a fairly low-risk, if high-priced, buy-in, regardless of the status of the Shire talks.
The six Symphogen projects to which Baxalta will gain option rights have not been revealed beyond the fact that they target checkpoint inhibitors. The first one is expected to enter the clinic in 2017.
Symphogen will be paying R&D expenses through completion of phase I, at which time Baxalta will make its opt-in decision. The total deal value is $1.6bn.
The infusion of the Baxalta option fees could come in handy for Symphogen. Having raised €182m ($197m) in venture funding over nine years, the group made a cash call on its existing investors in 2015 in the form of a €67.5m convertible debt facility. That money was raised to support clinical work on its lead project, the EGFR antibody Sym004, rights to which Merck KGaA handed back in early 2015.
Shire, meanwhile, has no presence in oncology. When it confirmed its interest in buying Baxalta, the UK-headquartered group highlighted the target’s rare disease franchises – its products have orphan drug designation in such conditions as haemophilia and multifocal motor neuropathy – but the “third business” was not mentioned.
Shire might not say no to an established business with an established commercial infrastructure like Oncaspar – especially given EvaluatePharma’s 2020 sales forecast of $253m, which is the equal of Shire’s next-generation ADHD candidate SHP465. However, early-stage assets like Symphogen’s could be due a harder look, especially as immuno-oncology might need added R&D expertise.
In short, Baxalta just added a new twist to the conclusion of the Shire takeout story. But perhaps complicating things was its objective.