Bayer beefs up discovery work with Vividion buyout

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.

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.