Merck & Co makes biggest oncolytic virus bet since Amgen in 2011

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You might have expected commercial failure and the lack of convincing clinical data to have deterred big pharma from oncolytic viruses. But you’d have been wrong, as Merck & Co today showed when it bought the Australian biotech Viralytics for $394m.

The massive share price premium – 184% – suggests that this was an asset Merck had to own, though in the current environment a deal of this size hardly moves the needle. Things were different when Amgen paid $424m for Biovex in 2011, and other big pharmas have quietly continued to pursue oncolytic viruses, most likely attracted by their potential as combination treatments (see table below).

A good recent example was Pfizer buying a majority stake in the private company Ignite Immunotherapy in December 2016, including the promise of full R&D funding and a full buyout option. The stated aim of that deal was to use oncolytic viruses in combination with immune checkpoint inhibitors.

Keytruda combo

A similar focus lies behind Merck’s Viralytics acquisition. The two companies were already studying Viralytics’ Cavatak in combination with Merck’s Keytruda in phase I studies against bladder cancer (Keynote-200), melanoma and NSCLC.

A separate Cavatak combo, with Bristol-Myers Squibb’s Yervoy in 18 melanoma subjects, yielded promising data at last year’s AACR meeting: unconfirmed remission rates were 60% in checkpoint therapy-naive and 38% in experienced patients, with “surprisingly” only one serious treatment-related adverse event.

Cavatak is a formulation of a common cold coxsackievirus, which like other oncolytic viruses is supposed to infect and kill cancer cells preferentially. Other oncolytic viruses include vesicular stomatitis, herpes simplex and reovirus, some with viral virulence and functional genes deleted, and others with gene insertions; for instance, Amgen’s Imlygic expresses GM-CSF.

Selected oncolytic virus projects
Project Company Note
Marketed
Imlygic Amgen HSV-1, genetically modified to express GM-CSF
Oncorine Shanghai Sunway Biotech Adenovirus type 5; sold in China
Phase III
Pexa-Vec Transgene/Sillajen Copenhagen strain vaccinia poxvirus, genetically modified to express GM-CSF 
Reolysin Oncolytics Biotech Reovirus
Phase II
DS-1647 Daiichi Sankyo 3rd-generation HSV-1
TG1042/ ASN-002 Transgene/Ascend Adenovirus-interferon-γ
TG6002 Transgene Oncolytic vaccinia virus expressing the suicide gene FCU1
Cavatak Merck & Co (Viralytics) Coxsackievirus A21
GL-ONC1 Genelux Laboratory strain GLV-1h68
Marabex Turnstone Biologics/Abbvie Bioselected from rhabdovirus isolates 
ORCA-010 Orca Therapeutics/VCN Biosciences Adenovirus serotype 5 
ParvOryx Oryx Parvovirus H-1 
LOAd703 Lokon Pharma Adenovirus that introduces expression of CD40L & 4-1BBL 
PV701 Wellstat Group Replication-competent Newcastle disease virus strain
MV-NIS Vyriad Edmonston strain of measles virus
ONCOS-102 Targovax Adenovirus serotype 5 
Seprehvir Sorrento HSV-1
Enadenotucirev Psioxus Non-naturally occurring Group B adenovirus 
CG0070 Cold Genesys Common cold adenovirus modified to express GM-CSF
Telomelysin Oncolys Biopharma Adenovirus that introduces expression of hTERT promotor
Phase I
JX-929 Sillajen Biotherapeutics Western Reserve strain of oncolytic vaccinia virus
VSV Cancer Project AstraZeneca/Omnis Vesicular stomatitis virus
Ad-VirRx 007 Multivir Adenovirus overexpressing Adenovirus Death Protein 
Preclinical
NG-348 Psioxus/Bristol-Myers Squibb Enadenotucirev additionally encoding CD80 & CD3 Ab fragment
VSV-GP Viratherapeuics/Boehringer Ingelheim Vesicular stomatitis virus pseudotyped with lymphocytic choriomeningitis virus glycoprotein
WO-12 Western Oncolytics/Pfizer Oncolytic vaccinia virus expressing undisclosed genes
Undisclosed Ignite Immunotherapy (Pfizer) Undisclosed, IV delivery
Source: EvaluatePharma.

However, Imlygic has shown how far the oncolytic virus approach still is from living up to its early promise. Amgen’s $424m acquisition of its originator, Biovex, included another $575m in future milestones, yet Imlygic, launched for melanoma in 2015, barely generated sales of $50m last year.

In fact, most companies now accept that oncolytic viruses only have promise in combination, as shown by studies like that of Imlygic and Yervoy. Another major problem of the approach is the need for cumbersome intratumoural injections, and work is increasingly geared towards developing systemically available viruses.

At roughly the same time that Pfizer bought Ignite, Bristol handed over $50m to Psioxus to develop NG-348, an armed oncolytic virus; this deal yielded Psioxus a $15m milestone a year later.

Earlier, big pharma interest was seen when Astrazeneca licensed Omnis Pharmaceuticals’ lead, a vesicular stomatitis virus-based asset. And Boehringer Ingelheim’s 2016 tie-up with Viratherapeutics was worth €20m ($25m) up front (Setbacks fail to stifle oncolytic virus business development, December 13, 2016).

With the industry increasingly looking at ways of making “cold” tumours immunogenic – witness Bristol’s recent $1.9bn deal with Nektar – there can be little doubt as to what piqued Merck’s interest in Viralytics: early findings from the Keynote-200 study of Cavatak and Keytruda suggested upregulation of PD-L1 expression.

Keynote-200 is set to yield its next update in the second quarter. Perhaps Merck thought it wise to strike while it could still justify the price.

Study Trial ID
Keynote-200 NCT02043665

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