Teva optimising CureTech investment

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Cash-strapped privately-held biotechs will be looking on with some envy at CureTech’s five-year relationship with Teva. The Israeli generics giant has just invested a further $19m in CureTech, taking its ownership of the Israeli biotech to 75%, and agreed to contribute $50m to CureTech’s R&D costs which now include a phase III trial for a novel antibody to treat a common type of non-Hodgkin lymphoma.

Aligning a company so closely with a big pharma partner is sometimes perceived to be an option and value limiting move for a small biotech and is certainly not for everyone. But when that big partner makes such hefty commitments to fund product development and provides original investors with a clear exit, in today’s financing environment those benefits must outweigh any concerns about extracting maximum value. Teva’s interest in CureTech also highlights the potential of antibodies targeting PD1, of which there are surprisingly few in development (see table below).

Burgeoning relationship

Established in 2001, CureTech’s founder investors include Clal Biotechnology Industries, Clal Venture Capital, Koonras Technologies and Technorov Holdings.

Teva came on board in May 2006, after CureTech had completed phase I studies of its anti-PD1 candidate CT-011, with a $6m investment which gave Teva an undisclosed ownership of CureTech’s shares. Teva also gained an option to invest a further $23m, depending on development milestones, in return for a greater share in the private biotech.

CureTech's funding support from Teva
Teva Invested Teva's agreement to invest Teva ownership
 May-2006  $6m  $23m  -
 Aug-2008  $10.5m  -  33%
 Sep-2011  $19m  $50m  75%

In 2008, Teva agreed to put a further $10.5m into CureTech, to support two phase II trials of CT-011. By the end of this phase of the investment, Teva’s ownership had increased to 33%.

Yesterday, Teva announced its commitment to invest a further $69m, bringing its ownership of CureTech to 75%, and revealed it held an option to buyout CureTech shares in full.

Although the actual amounts Teva has invested in CureTech have not been fully disclosed, assuming the majority have been paid and adding in the new $50m commitment, Teva has paid around $100m so far for a promising phase II cancer antibody candidate.

Given the upfront fees and potential milestones that can be factored in to licensing deals for a cancer antibody with potentially wide uses, Teva’s $100m looks reasonable - it will also not have to pay out big milestones or royalties as it will end up owning 100% of the product and any follow-ons.

Novel class

What prompted Teva to make its latest investment was positive phase II data for CT-011 announced in May in treating diffuse large B-Cell lymphoma, an aggressive high grade form of non-Hodgkin lymphoma (NHL) which occurs in around 40% of NHL cases.

The study enrolled 72 patients and met its primary and secondary endpoints of progression-free survival (PFS) and overall survival (OS). After 13 months, 70% of patients treated with CT-011 were progression-free and 84% were still alive, compared to PFS and OS rates of 47% and 62% respectively, from previous trials with standard chemotherapy regimens.

CureTech now plans to launch a phase III trial in this lymphoma type, while the second phase II study in colorectal cancer is ongoing. The $50m from Teva will also enable CureTech to start a third phase II trial of CT-011 in metastatic melanoma.

The imminent start of a phase III trial makes CT-011 the most advanced anti-PD1 antibody in development, pipeline data from EvaluatePharma shows (see table below).

Many cancer cells avoid the body's immune system by interacting with a receptor called ‘programmed death’ (PD1), present on lymphocytes such as T-cells, causing apoptosis of the very cells that should be mounting an immune response to the tumour.

So by blocking PD1, the body's immune system is revitalised, boosting T-cell and natural killer cells to target cancer cells. This immunotherapeutic approach has struggled for traction, but the recent FDA approvals for the likes of Bristol-Myers Squibb’s Yervoy for melanoma have sparked renewed interest and confidence.

With just Ono Pharmaceutical and BMS, through its acquisition of Medarex, developing clinical stage candidates adopting an anti-PD1 approach, CT-011 is well placed to be the flag bearer for this novel class and holds significant potential. Teva certainly thinks so.

Anti-PD-1 Antibodies in Development
Status Product Company Originator Lead Indications
Phase II CT-011 CureTech / Teva CureTech B-Cell lymphoma; Colorectal cancer; Melanoma
ONO-4538 / BMS-936558 / MDX-1106 Ono Pharmaceutical / Bristol-Myers Squibb Ono Pharmaceutical Renal cell carcinoma (RCC)
Phase I MDX-1105 Bristol-Myers Squibb Medarex Multiple solid tumours

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