Deal making in the immuno-oncology space was always going to be a big theme of 2015, and Bristol-Myers Squibb’s moves yesterday – most notably the $800m it paid to secure Flexus Biosciences’ preclinical IDO-targeting projects – show exactly how big.
The staggering amount of money that the start-up biotech managed to extract from what must have been an intensely competitive bidding process underscores this mechanism of action as one to watch, as well as no doubt speaking to scarcity value. Incyte is now surely rueing the string of non-exclusive deals signed over its contender, a strategy that is unlikely to provide a template to others working in this space (see table).
The analysis, extracted from EvaluatePharma, highlights the rarity of IDO-targeting projects, and pretty much all are already cornered by big pharma. IDO and TDO are enzymes that break down tryptophan, prompting T-cells to become inactive – a mechanism that tumour cells can also hijack to dampen the immune response. It is one of many pathways being enthusiastically tested in combination with other immuno-oncology assets, most notably PD-1 or PD-L1 agents, by the main players in this space.
|The IDO/TDO pipeline|
|Phase II||INCB24360||Incyte (four non-exclusive research deals in place)|
|Phase I||NLG919||Roche (from NewLink collaboration)|
|Pre-clinical||TDO & IDO Dual Inhibitor Program||Roche (from NewLink collaboration)|
|IDO1 Program||Pfizer (from iTeos collaboration)|
|IDO & TDO Research Project||Curadev Pharma|
|IDO Research Project||Curadev Pharma|
|IDO1 Cancer Immunotherapy Program 1||Bristol-Myers Squibb (from Flexus deal)|
|Research project||NewLink/Roche IDO/TDO Inhibitor Program||Roche (from NewLink collaboration)|
|IDO Inhibitor Research Project||Redx Oncology|
Roche moved in on NewLink’s projects last year, paying $150m up front, although interestingly it rebuffed the company’s most advanced candidate in favour of earlier-stage compounds (NewLink gets one over on Incyte, October 21, 2014).
Last December Pfizer cornered iTeos’s IDO1 and TDO2 preclinical compounds in a deal that also covers the discovery of new immuno-oncology targets. The transaction only involved an up-front of €24m ($27m), however; time will tell whether Pfizer got itself a bargain.
RedX Oncology says it has an IDO programme approaching lead optimisation stage; the private UK drug developer signed a research collaboration with AstraZeneca last September to develop new molecules targeting a genetic driver of tumour growth and survival, although the press release made no specific mention of the IDO pathway.
Finally, the Indian drug developer Curadev claims to have an IDO-TDO combination in candidate selection phase and an IDO at lead optimisation.
Incyte, meanwhile, has been widely applauded by investors and analysts alike for its string of deals involving INCB24360, the most advanced asset in this class. Since signing the first with Merck & Co in February 2014 and then going on to forge collaborations with Astra, Bristol-Myers and Roche the company’s value has grown by almost a third, or $3bn.
This growth is not entirely down to INCB24360, but hopes for this project have certainly contributed. However, with Roche and Bristol-Myers now forging exclusive deals elsewhere, shareholders would be forgiven for questioning the decision not to lock in a committed partner in a space that is clearly highly competitive – and all the financial benefits that come with doing so.
At Roche's full-year results presentation last month executives hinted strongly that the involvement of multiple partners in a project like Incyte's made licensing it a non-starter. "We want to cover the bases and have as much control as possible," said Roche's pharma chief Daniel O’Day in reference to the NewLink deal.
The Flexus deal illustrates just how lucrative those terms can be: as well as the $800m up front, development milestones could total up to $450m. Investors in the youthful company – Kleiner Perkins Caufield & Byers, The Column Group and Celgene – are no doubt delighted; Flexus only emerged from “stealth mode” last December with a series B financing that took its total funds raised to $38m.
And the acquisition can only just about be described as such: Flexus shareholders get to keep all non-IDO/TDO projects, which includes molecules targeting other hot immuno-oncology areas like FLT3 and CDK4/6, as well as the company’s current personnel and facilities to spin out into a new business. All of this makes the takeover look a lot more like a very, very expensive preclinical licensing deal.
This was announced alongside a more standard and less eye-watering $30m immuno-oncology collaboration with Rigel Pharmaceuticals over the discovery and development of TGF beta receptor kinase inhibitors; TGF beta can promote tumour growth and broadly suppress the immune system.
It will take some time to determine whether Bristol-Myers has paid top dollar for best-in-class assets from Flexus, or simply moved to benefit from the full economics of a product in a competitive class.
Either way, Flexus's strategy has definitely paid more immediate dividends than Incyte’s promiscuous approach. Other immuno-oncology hopefuls in IDO and beyond should take note; all the attention might be flattering at the time, but will a non-exclusive partner stick around for long?