Bayer beefs up discovery work with Vividion buyout

Growing interest in protein degradation helps explain why Bayer had to pay $1.5bn to corner the private group.

Deals

Discovery-stage deals rarely involve big up-front fees, so the $1.5bn Bayer has agreed to pay for the private group Vividion catches the eye. But the US developer is active in a very hot space – protein degradation – and had filed to float; compared against valuations achieved recently by similar companies at IPO the terms start to make more sense. 

It is also notable that Vividion will be run at arm's length, mirroring the German company’s strategy in its cell and gene therapy units. This is a big bet on some very early  science, however: Bayer hopes to start filing INDs next year, presumably involving NRF2 modulation, which was the only specifically named target in the press release.

NRF2 is a transcription factor thought to be involved in regulating oxidative stress, and active in many disease areas. Bayer intends to explore the role of antagonists and activators of NRF2 in cancer and inflammatory disorders.

Vividion says its technology can generate small-molecule modulators or degraders of targets considered undruggable, a claim widely made in protein degradation. This approach initially involved tagging disease-causing proteins for disposal by the cell, but has expanded to encompass the activation, modulation or protection of targets, and even the clearance of extracellular proteins.

Essentially, this is achieved by simultaneously binding a target and an enzyme that can alter that target, sometimes by using two molecules linked together, or by using molecules capable of both functions.

Interest in this approach is high across biopharma, with numerous deals struck by big developers to access the work being done by young biotechs. And those transactions are getting richer: last month Pfizer paid $650m up front to license Arvinas’s oestrogen receptor degrader ARV-471. The project is one of the most advanced protein degraders in the clinic, and further data due later this year will be closely watched.

Targeted protein degradation: notable players and progress
Company  Valuation Notable deals/progress in protein degradation
Vividion Bought for up to $2bn by Bayer; had raised $271m in VC cash since 2017 Preclinical; 2019 Roche discovery deal ($135m up front); 2018 Celgene discovery deal ($110m up front)
Arvinas Market cap $4.7bn (Nasdaq listed) Licensed ph2 ARV-471 to Pfizer for $650m up front; 2019 Bayer deal (incl agriculture applications) for $110m up front
Kymera $2.7bn market cap (Nasdaq listed) Irak4 degrader KT-474 in ph1, being developed under broad deal with Sanofi ($150m up front)
Nurix $1.5bn market cap (Nasdaq listed) BTK degrader NX-2127 in ph1; 2020 Sanofi deal ($55m up front); 2019 Gilead deal ($45m up front)
C4 Therapeutics $2.1bn market cap (Nasdaq listed) IKZF1/3 degrader CFT7455 in ph1; 2016 discovery deal with Roche extended in 2019
Monte Rosa Therapeutics $1.3bn market cap Work preclinical
Roivant Due to float via Spac with estimated proforma EV $5bn Bought Silicon Therapeutics to boost platform for $450m in stock
Seed Therapeutics Beyondspring subsidiary 2020 discovery deal with Lilly ($10m up front)
Cullgen Raised $81m in VC cash since 2018 Plans IND later this year for TRK protein degrader CG001419
Plexium Raised $63m in VC cash since 2019 Preclinical
Lycia Therapeutics Launched in 2020 with $50m VC cash Preclinical
Mission Therapeutics Raised $184m in VC cash since 2011 Research deal with Abbvie over deubiquitylating enzymes to treat Alzheimer’s and Parkinson’s
Frontier Medicines Raised $155m in VC cash since 2019 Preclinical
Note: list not exhaustive. Source: Evaluate Pharma & company statements. 

Interestingly, Bayer struck a deal with Arvinas in 2019 to explore targeted protein degradation in oncology, gynaecology and cardiovascular areas, and this is still active. Perhaps this tie-up persuaded Pfizer that this was a technology it needed in house.

Other big pharma names that come up frequently here include Sanofi, Bristol Myers Squibb and Roche. In fact the last two already have deals in place with Vividion that will continue, Bayer says. The deal with Roche over a “well-known but difficult to drug” cancer target recently completed preclinical development.

Only Bayer has pulled the trigger on an acquisition, however, and the valuations of some of the independent players – despite the vast majority of their work being preclinical – helps to explain why.

Nurix, Kymera and Monte Rosa – all of which boast targeted protein modulation or degradation platforms – floated this year, with upsized and oversubscribed offerings. All now sport market caps well north of $1bn. Bayer presumably took the view that buying Vividion would be cheaper now than after the public markets put an acquisition premium on the stock.

Still, Vividion’s backers, which include the venture firms Cardinal, Versant and Arch, will be enjoying this substantial payday. A further $500m is on the table should milestones be hit.

Considering that this area still requires much development work, even before clinical proof of concept can be achieved, $1.5bn in the bank was clearly an offer that could not be refused.

This article has been updated to remove Palleon Pharmaceuticals, which is not involved in protein degradation. 

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