Taiho shows Arcus trying to repeat the Flexus trick
If many follow-on immuno-oncology targets have lost their mojo of late this has not put off Arcus Biosciences, a young Californian start-up that this week struck its first pharma deal, a $35m option with Japan’s Taiho.
True, the dollar amount is relatively small, but the approach hints at the strategy Arcus’s founders took with their previous biotech venture, Flexus Biosciences, which scored a monster $800m buyout with Bristol-Myers Squibb in 2015. The cash presumably helped get Arcus off the ground, and the founders will be living the biotech dream if they can repeat the Flexus trick.
The keys to success for Flexus were to work on desirable assets – in its case IDO inhibitors – and to get corporate venture capitalists on board early with the result that deal interest could be ratcheted up in a competitive bidding scenario.
Celgene was an early VC investor in Flexus, and has also backed Arcus, as have Novartis and Google Ventures. It stands to reason that Taiho is not new to Arcus either, having participated in the start-up’s $70m series B round a year ago.
That had come barely four months after Arcus closed a $46m series A, and a year and a half since Flexus was sold to Bristol for its preclinical portfolio of IDO inhibitors (Flexus shows other immuno-oncology wannabes how it's done, February 24, 2015).
There is broader similarity between Flexus and Arcus: IDO inhibition represents a means of triggering immuno-oncology mechanisms using small molecules rather than antibodies, and Arcus’s pipeline plays on this theme too. Two of its lead assets – the adenosine A2A antagonist AB928 and the CD73 inhibitor AB421 – are small molecules.
Arcus earlier also had an anti-CD39 small molecule in development, but this no longer appears in its pipeline. Still, targeting adenosine A2A is not exactly a novel approach, and indeed recent data from Corvus show that it might need more work; Arcus highlights AB928’s ability to target both the A2aR and A2bR subtypes.
The Taiho tie-up, worth $35m over three years plus one-off fees if exercised, gives the Japanese group the option to license in any of Arcus’s clinical-stage assets for development in certain Asian territories excluding China.
|Arcus Biosciences' pipeline|
|AB928||Adenosine A2A antagonists||Small molecule||Clinical trial expected imminently|
|GLS-010/AB122||PD-1||MAb||Clinical trial expected Q4 2017|
|AB421||CD73||Small molecule||Clinical trial expected in 2018|
|AB154||Tigit||MAb||Clinical trial expected Q2 2018|
Of course, Arcus is working on antibodies too, though these do not seem to be hugely original. A fully human anti-PD-1 MAb already in phase I in China was licensed from Wuxi for $18.5m last month. And an anti-Tigit MAb could be in the clinic next year; competitor anti-Tigit projects already in human trials include Bristol’s BMS-986207, Celgene/Oncomed’s OMP-313M32 and Roche’s RG6058.
As such it might be that AB421, which Arcus calls the first small-molecule CD73 inhibitor and which only faces competition from early-stage MAbs, ends up attracting the most serious partnering interest. The company boasts that both AB421 and AB928 could, like the Flexus IDO portfolio, be best in class.
Since it is no longer 2015, however, Arcus might need to do a bit more to demonstrate this view if it does hope to repeat the Flexus success.