Over the next year, a series of clinical milestones and regulatory decisions—what companies and investors like to call “inflection points”—will set for years to come the direction of what has been until now the fledgling biotech segment focused on genome editing.

Yet this week, investors received a reminder that in genome editing, inflection points don’t always lead to big stock gains: Beam Therapeutics (BEAM) shares skidded 12% in early trading, reaching a new 52-week low as it slid from $20.80 to $18.36, after the company announced a restructuring and reprioritization of its pipeline of base editing therapies that will include elimination of about 100 jobs—some 20% of its workforce.

Beam said it will prioritize development of its ex vivo and in vivo sickle cell disease programs—including BEAM-101, which applies the company’s Engineered Stem Cell Antibody Paired Evasion (ESCAPE) non-genotoxic conditioning strategy, and in vivo delivery to hematopoietic stem cells (HSCs).

Beam also said it will:

• Prioritize development of its in vivo base editor BEAM-302 for the treatment of alpha-1 antitrypsin deficiency (AATD).

• Conduct an initial clinical trial in the U.S. assessing BEAM-301 as a treatment for glycogen storage disease 1a (GSD1a).
• Seek partnerships for BEAM-201 and other potential ex vivo CAR-T programs, including ongoing research to create next-generation allogeneic cell therapies with multiplex base editing. For BEAM-201, Beam plans to generate a focused clinical dataset in T-cell acute lymphoblastic leukemia (T-ALL).
• Focus near-term spending on research and platform applications that apply Beam’s in vivo editing capabilities in the liver, targeting both rare genetic and common disorders, as well as select opportunities in hematology and immunology/oncology.
• Pause its hepatitis B virus program and seek for it a partner “given the requirement of specialized development and commercial capabilities.”

“From the beginning, Beam’s strategy has been to develop base editing technology broadly across a diverse portfolio of programs and delivery modalities, and our science and pipeline continue to progress across the board,” Beam CEO John Evans stated. “In this challenging market environment, however, we need to make the difficult decision to focus our resources on those clinical programs and research areas we believe have the highest potential for near-term value creation, while continuing to build a strong company for the future.”

Intellia Therapeutics (NTLA) shares fell about 3% on Wednesday from $29.05 to $27.96, and dipped another 3% on Thursday, to $27.10, despite the company sharing more positive news.

Intellia’s NTLA-2001 became the first first-ever investigational in vivo CRISPR-based gene editing therapy cleared to enter late-stage clinical development when the FDA cleared the company’s Investigational New Drug (IND) application for NTLA-2001 for the treatment of transthyretin (ATTR) amyloidosis with cardiomyopathy. The decision paves the way for a global Phase III study of NTLA-2001 that is expected to start by year-end 2023.

In a statement, Intellia president and CEO John Leonard, MD, said the company will share details about that pivotal trial on its third-quarter earnings call with analysts, set for November 9.

“Details on trial design at 3Q call Nov 9 should clarify next steps and further move the stock. We expect (+)ve [positive] readthrough to other editing cos [companies] too,” Jefferies equity analyst Maury Raycroft, PhD, wrote Wednesday in a research note. “The bar for FDA has been unclear, and NTLA now sets precedent for others to follow.”

He said Intellia had noted to him that while global trial start-up activities will start, “actual dosing may begin early ’24 depending on how fast things move.”

Raycroft added that he and other Intellia watchers will be seeking more specifics about the size and duration of the Phase III trial compared to the pivotal trials for other non genome-edited therapy developers of ATTR amyloidosis-caused cardiomyopathy treatments.

Pfizer (PFE) crossed the proverbial finish line first when it won FDA approval in 2019 for its wild-type or hereditary ATTR amyloidosis treatments, Vyndaqel^® (tafamidis meglumine) and Vyndamax^® (tafamidis). Each uses a different form of active ingredient tafamidis (micronized meglumine salt and free acid form, respectively), and each is taken a different dosage.

The Pfizer drugs are expected to be joined soon by treatments being developed by other companies—a group that includes Anlylam Pharmaceuticals (ALNY), BridgeBio Pharma (BBIO), and the tandem of Ionis Pharmaceuticals and AstraZeneca (IONS/AZN). Those treatments “pose substantial headwinds” to Intellia’s NTLA-2001, observed David Nierengarten, PhD, managing director and head of equity research focusing on biotech for Wedbush Securities, according to Investor’s Business Daily.

However, whatever headwinds Alnylam posed to Intellia have been significantly stilled.

As Raycroft commented, Alnylam saw a setback to development of patisiran for cardiomyopathy of ATTR amyloidosis on October 9 when the FDA refused to approve Alnylam’s supplemental NDA for the RNA interference (RNAi)-based therapy already marketed as Onpattro^® for polyneuropathy of hereditary ATTR amyloidosis in adults. Instead, the agency sent Alnylam a Complete Response Letter stating that data from the company’s Phase III APOLLO-B trial (NCT03997383) had not established the clinical meaningfulness of patisiran’s treatment effects in ATTR amyloidosis. Alnylam responded by saying it was no longer pursuing the additional indication in the U.S.

Earlier this year, BridgeBio and Ionis/AstraZeneca announced positive Phase III results for their ATTR amyloidosis candidates—acoramidis and eplontersen, respectively.

Intellia is among a half-dozen genome editing therapy developers with key clinical and regulatory inflection points to watch in coming months. Following is a roundup of those companies, their anticipated events, and recent actions by analysts covering the company:

Beam Therapeutics (BEAM)

Inflection Points: BEAM restructured operations and reprioritized its pipeline on Thursday (see above), listing first its ex vivo and in vivo sickle cell disease programs, which include BEAM-101—for which the company anticipates reporting initial data in 2024 on multiple patients from its Phase I/II BEACON trial (NCT05456880) assessing BEAM-101 in severe SCD.

In August, BEAM said it anticipated having enough currently consented patients to fill a three-patient sentinel cohort and launch an expansion cohort. Beam will continue adding additional patients to the BEACON trial through the end of year and beyond, until it reaches a total target of 45 treated patients. The trial has an estimated primary completion date of February 1, 2025.

Significance: BEAM-101 is an ex vivo therapy that produces base edits designed to potentially alleviate the effects of SCD by mimicking genetic variants seen in individuals who have hereditary persistence of fetal hemoglobin.

Other catalysts: BEAM is also prioritizing development of BEAM-302 in AATD, saying in August it expected to submit a regulatory filing in the first quarter of 2024 to begin a clinical trial. A similar filing is expected in the first half of 2024 for BEAM-301 in GSD1a, with BEAM saying Thursday that an initial clinical trial is still planned.

BEAM-301 is a liver-targeting lipid nanoparticle (LNP) formulation of base editing reagents designed to correct the R83C mutation—the most common mutation responsible for causing GSD1a. BEAM-302 is a liver-targeting LNP formulation of base editing reagents designed to correct the PiZ allele, the most common gene variant associated with severe AATD.

However, BEAM is seeking a partner for BEAM-201, for which it dosed the first patient with BEAM-201 in a Phase I/II trial (NCT05885464) assessing the CD7+ relapsed/refractory T-ALL/T-LL (T-cell lymphoblastic leukemia) in August. The trial has an estimated primary completion date of December 2031. BEAM-201 is, according to Beam, the first quadruplex-edited, allogeneic CAR-T cell therapy candidate in clinical-stage development, and the first treatment with a base editing candidate in the U.S.

Analyst action: Cantor Fitzgerald’s Rick Bienkowski on Tuesday lowered his firm’s 12-month price target on Beam shares 43%, from $56 to $32, but maintained its “Overweight” rating.

Caribou Biosciences (CRBU)

Inflection Point: CRBU expects to begin patient enrollment in the Phase I AMpLify trial by mid-2024. AMpLify is designed to assess the safety and tolerability of a single administration of CB-012 for relapsed or refractory acute myeloid leukemia (r/r AML) at dose level 1 (25×10⁶ CAR-T cells). The FDA has cleared Caribou’s IND for the trial, the company said Wednesday.

Caribou said it is beginning Part A of AMpLify, a 3+3 dose escalation design that will evaluate the safety and tolerability of CB-012 at ascending dose levels to determine the maximum tolerated dose and/or the recommended doses for expansion. Part B, the dose expansion portion, has as its primary objective determining antitumor response, assessed by overall response rate (ORR), after a single dose of CB-012. AMpLify will include patients who have not responded to or relapsed after standard treatment and will exclude patients who have been treated with more than three prior lines of therapy and patients with proliferative disease.

Significance: According to CRBU, CB-012 is the first allogeneic CAR-T cell therapy with both checkpoint disruption through a PD-1 knockout, and immune cloaking through a B2M knockout and B2M–HLA-E fusion transgene insertion.

Analyst action: Nothing since July 26, when HC Wainwright’s Robert Burns lowered his firm’s price target 8%, from $25 to $23, but maintained its “Buy” rating.

CRISPR Therapeutics (CRSP) and Vertex Pharmaceuticals (VRTX)

Inflection points: The FDA’s Cellular, Tissue, and Gene Therapies Advisory Committee will meet October 31 to recommend how the agency should act on exagamglogene autotemcel (exa-cel), the companies’ autologous, ex vivo CRISPR/Cas9 gene-edited for severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia.

The FDA, which typically heeds the advice of its “adcomms,” has set for December 8 its Prescription Drug User Fee Act (PDUFA) target action date on the companies’ biologics license application (BLA) for exa-cel in SCD. In beta thalassemia, the agency has set a PDUFA date of March 30, 2024.

Significance: If approved, exa-cel would be the first CRISPR-Cas9 gene-edited therapy to win FDA approval.

Other catalysts: Cardiovascular candidate CTX310, which applies in vivo editing of the ANGPTL3 gene, is expected to enter the clinic by year’s end; Atherosclerotic cardiovascular disease candidate CTX320 is expected to begin clinical trials in the first half of 2024.

Analyst action: Cantor Fitzgerald’s Eric Schmidt on Tuesday downgraded CRSP shares from “Overweight” to “Neutral.” Mizuho’s Salim Syed, however, initiated coverage of CRSP on September 27 with a “Buy” rating.

Editas Medicine (EDIT)

Inflection Point: Editas’ EDIT-301, an ex vivo autologous CRISPR gene edited gene-edited CD34+ hematopoietic stem and progenitor cell therapy candidate, received the FDA’s Regenerative Medicine Advanced Therapy (RMAT) designation on Monday. EDIT-301 is on track to dose 20 total sickle cell disease (SCD) patients in the Phase I/II RUBY trial (NCT04853576), and deliver a clinical update on the study, by the end of this year, the company said in August.

In June, Editas presented positive initial clinical safety and efficacy data from the RUBY trial in an oral presentation at the European Hematology Association (EHA) Hybrid Congress in Frankfurt, Germany, and in a company-sponsored webinar.

Significance: In EDIT-301, patient-derived CD34⁺ hematopoietic stem and progenitor cells are edited at the gamma globin gene (HBG1 and HBG2) promoters, where naturally occurring fetal hemoglobin (HbF) inducing mutations reside, by a highly specific and efficient proprietary engineered AsCas12a nuclease. Red blood cells derived from EDIT-301 CD34⁺ cells have shown a sustained increase in fetal hemoglobin production, which according to Editas could provide a one-time, durable treatment benefit for people living with severe SCD and TDT.

The RUBY trial marked the first time that a novel type of CRISPR gene-editing technology—CRISPR/CA12—was used in a human clinical study to alter the defective gene, according to the scientists.

Other catalysts: SCD is one of two indications for which Editas is developing EDIT-301; the other is transfusion-dependent beta thalassemia (TDT), for which Editas also has a clinical update planned by year’s end, from the Phase I/II EDITHAL trial (NCT05444894). Editas presented positive initial clinical safety and efficacy data from the first EDITHAL patient in June, in a company-sponsored webinar.

Analyst action: J.P. Morgan’s Brian Cheng on Wednesday upgraded his firm’s rating on EDIT stock from “Underweight” to “Neutral,” and announced a price target of $8 a share. However, Cantor Fitsgerald’s Eric Schmidt downgraded EDIT on Tuesday from “Overweight” to “Neutral.” Last month, Stifel’s Dae Gon Ha upgraded the stock from “Hold” to “Buy” and nearly doubled his firm’s price target, from $9 to $17.

Intellia Therapeutics (NTLA)

Inflection Point: Intellia said Wednesday its NTLA-2001, being co-developed with Regeneron Pharmaceuticals (REGN), won FDA clearance of its IND application for a trial assessing the in vivo CRISPR-based therapy as a treatment of transthyretin (ATTR) amyloidosis with cardiomyopathy. The decision paves the way for a global Phase III study of NTLA-2001 that is expected to start by the end of this year. In a statement, Intellia President and CEO John Leonard, MD, said the company will share details about that pivotal trial on its third-quarter earnings call with analysts, set for November 9.

Significance: NTLA-2001 is the first first-ever investigational in vivo CRISPR-based gene editing therapy cleared to enter late-stage clinical development when the FDA cleared. If approved by the agency, it could potentially be the first single-dose treatment for ATTR amyloidosis, according to Intellia.

Other catalysts: NTLA-2002, an in vivo CRISPR-based treatment candidate for hereditary angioedema, earlier this month was granted the European Medicines Agency (EMA)’s Priority Medicine (PRIME) designation. NTLA-2002 is set to start a global pivotal Phase III trial as early as Q3 2024 “subject to regulatory feedback,” Intellia said in August, following release of positive Phase I data including extended data announced in June. According to Intellia, NTLA-2002 is the first single-dose investigational treatment being explored in clinical trials for the potential to continuously reduce kallikrein activity and prevent attacks in people with HAE.

Analyst action: Nothing since September 13, when Cantor Fitzgerald’s Rick Bienkowski maintained his firm’s “Overweight” rating and $65 a share price target on the stock.

Prime Medicine (PRME)

Inflection Point: PRME expects to submit an IND in 2024 for its first clinical candidate to the FDA, the company’s co-founder, prime editing and base editing pioneer David R. Liu told an investor conference earlier this month.

While the company has not identified that candidate, its pipeline shows only one of its 18 programs has reached the phase of IND-enabling studies—a blood-targeting candidate for chronic granulomatous disease (CGD), designed to be administered ex vivo. Additional IND filings are anticipated in 2025, Prime Medicine said in a company presentation to investors last month.

Significance: If Prime wins FDA clearance for its IND, it could be the first drug developer to bring a base edited therapy into the clinic. By contrast, base editing technology, first disclosed in 2016 by Liu’s lab—is under investigation in six ongoing clinical trial.

Other catalysts: Three other programs in Prime’s pipeline are in lead optimization phases—a Wilson’s disease candidate targeting liver tissue and using lipid nanoparticle (LNP) delivery; a retinitis pigmentosa/rhodopsin candidate targeting eye tissue and using adeno-associated virus (AAV) vector delivery; and a neuromuscular tissue targeting candidate for Friedreich’s ataxia also delivered via AAV. The rest of Prime Medicine’s programs are in preclinical discovery phases.

Analyst action: BMO Capital’s Kostas Biliouris initiated coverage of PRME on October 9 with an “Outperform” rating and a price target of $19 a share. A month earlier on September 6, JonesTrading’s Justin Walsh initiated coverage with a “Buy” rating and a price target of $20 a share.

Leaders & Laggards

• Aldeyra (ALDX) shares plunged 66% on Monday, from $5.43 to $1.83, after it disclosed that according to minutes of a late-cycle review meeting with the FDA, the company “needs to conduct an additional clinical trial to satisfy efficacy requirements for reproxalap as a treatment for signs and symptoms of dry eye disease. Aldeyra quoted from the minutes: “[i]t does not appear that you have data to support the clinical relevance of the ocular signs to support your dry eye indication.” As a result, Aldeyra acknowledged, “the FDA may not be in the position to approve the NDA [New Drug Application] for reproxalap on or about the Prescription Drug User Fee Act (PDUFA) target action date of November 23, 2023 or afterwards, and it may issue a Complete Response Letter.”
• Assembly Biosciences (ASMB) shares rocketed 71%, from 73 cents to $1.25, after the company announced a 12-year partnership with Gilead Sciences (GILD) to advance R&D of novel antiviral therapies, focusing initially on herpes, hepatitis B, and hepatitis D viruses. Gilead agreed to pay Assembly Bio an initial $100 million consisting of $84.8 millionupfront and a $15.2 million equity investment. Gilead also agreed to pay at least $45 million per program after clinical proof-of-concept is achieved to opt into exclusive rights for each of Assembly Bio’s current and future programs,. If Gilead opts-in to any program, it will pay Assembly Bio up to $330 million per program tied to achieving regulatory and commercial milestones, plus royalties. Assembly Bio is also be eligible to receive three separate $75 million collaboration extension payments toward funding future R&D. Gilead shares rose 2% from $79.20 to $80.48.
• Evelo Biosciences (EVLO) shares plummeted 59% on Tuesday, from $2.91 to $1.20, after the company acknowledged that it had begun exploring strategic alternatives after its moderate psoriasis candidate EDP2939 failed the Phase II EDP2939-101 trial. EDP2939 missed the study’s primary endpoint of achieving a statistically significant difference in the proportion of patients who achieved an outcome of a 50% improvement from baseline in Psoriasis Area and Severity Index (PASI) score (PASI-50) between EDP2939 and placebo after 16 weeks of daily treatment. Evelo added that EDP2939 went from being inferior to placebo at week 16 (19.6% vs 25%) to being superior at the week 20 follow-up visit (33.9% vs. 26.9%).
• Nkarta (NKTX) shares more than doubled, zooming 112% on Tuesday from $1.48 to $3.14, after the company said the FDA had cleared its IND application to evaluate NKX019, its allogeneic, CD19-directed CAR NK cell therapy for lupus nephritis (LN). The company plans to launch a multi-center, open label, dose escalation clinical trial designed to assess the safety and clinical activity of NKX019 in patients with refractory LN. The study is designed to enroll up to 12 patients, with the first patient expected to be enrolled in the first half of 2024. Nkarta also disclosed plans to eliminate 18 jobs—about 10% of its workforce—among cost containment measures designed to extend its projected cash runway by one year into 2026.

Alex Philippidis is Senior Business Editor of GEN.

The post StockWatch: For Genome Editing, Inflection Points Crowd the Calendar appeared first on GEN - Genetic Engineering and Biotechnology News.

Thermo Fisher Scientific has agreed to acquire Olink Holding for approximately $3.1 billion, the companies said today, in a deal intended to expand the buyer’s presence in proteomics.

Headquartered in Uppsala, Sweden, with offices in Boston, Shanghai, Singapore, and Tokyo, Olink was founded as Olink Proteomics in 2004. The company spun out of the Uppsala University lab of Ulf Landegren, MD, PhD, a professor of molecular medicine whose research focuses on developing and applying advanced molecular tools for precision medicine at levels of nucleic acids and proteins.

Olink offers a platform of proteomics-focused products and services—the best-known of which is its proximity extension assay (PEA) technology, designed to enable high-throughput, multiplex immunoassays of proteins using minimal volumes of serum, plasma, or almost any other type of biological sample.

Based on Landegren’s earlier proximity ligation assay (PLA), PEA has evolved since its first publication in 2011, and its first protein panel two years later, to provide protein analysis for qPCR and next-generation sequencing readout systems. PEA has a library of more than 5,300 validated protein biomarker targets, and citations in more than 1,400 scientific publications.

“The acquisition of Olink underscores the profound impact that proteomics is having as our customers continue to advance life science research and precision medicine,” Thermo Fisher chairman, president, and CEO Marc N. Casper said in a statement. “Olink’s proven and transformative innovation is highly complementary to our leading mass spectrometry and life sciences platforms.”

Olink investors embraced the Thermo Fisher acquisition with a buying surge that sent Olink share prices soaring 66.5% Tuesday, to $24.94 as of 1:52 p.m. ET. Thermo Fisher shares stayed all but flat, dipping 0.61% to $485.56 after peaking at $489.88 at 12:26 p.m. ET, an 0.8% gain.

Reflecting that sense of caution on Thermo Fisher, one analyst—Tycho Peterson of J.P. Morgan—lowered his firm’s 12-month price target on the company’s shares by 6%, from $670 to $630. Peterson, however, maintained J.P. Morgan’s “Overweight” rating on the stock.

However, two other analysts were more positive about the deal.

Brandon Couillard, a senior analyst, equity research with Jefferies covering healthcare / dental, diagnostics and life science tools, observed in a research note that Olink brings to Thermo Fisher a leading player in proteomics, especially on the research side, with PEA differentiated fomr the proteomics platforms of competitors by delivering “high-throughput protein analysis that is highly complementary to TMO’s existing mass spec & life science reagents platforms.

“Over time, we expect it will be able to leverage TMO’s leading qPCR [quantitative polymerase chain reaction] franchise & NGS [next=-generation sequencing] installed base to accelerate meaningful discovery work, removing a prior hurdle (dependent on third-party read-out instruments = don’t control own destiny),” Couillard wrote.

Puneet Souda, a senior research analyst at Leerink Partners covering Life Science Tools and Diagnostics, was more positive about the deal: “TMO, we believe, can scale OLK’s business up significantly and drive penetration into new markets, while strengthening its proteomics franchise of an already strong lineup of Orbitrap mass specs.”

Growing footprint

The Olink acquisition comes some four months after Thermo Fisher grew its footprint of proteomic products by unveiling its Thermo Scientific Orbitrap Astral mass spectrometer at the American Society for Mass Spectrometry, held June 4–8 in Houston.

Orbitrap Astral is designed to help researchers find proteins that had previously evaded detection by offering what the company said was up to two times deeper proteome coverage and up to four times more throughput than current mass spectrometers.

“We’ve already started to deliver the Astral to our customers, and we’re very pleased with the strong bookings performance to date,” Casper told analysts July 26 during the company’s quarterly earnings call, without furnishing details.

In announcing the acquisition, Thermo Fisher said Olink was on track to generate more than $200 million in revenue in 2024. Olink has guided investors to a projection of between $192 million to $200 million in revenues this year—between 37% and 43% annual growth.

Thermo Fisher projected that Olink will grow by a “mid-teens” percentage organically. The deal is expected to lower Thermo’s “adjusted” (excluding certain acquisition-related costs) earnings per share (EPS) by 17 cents in the first full year of ownership—but is also expected to add to EPS by 10 cents a share.

By the fifth year following completion of the acquisition, Thermo Fisher said, it expects to realize approximately $125 million of adjusted operating income through from revenue and cost “synergies.”

“The expected strong long-term business growth and synergy realization profile make the financial returns on the transaction very compelling,” Thermo Fisher added in its announcement.

However, Couillard of Jefferies cautioned that the synergies projection “seems high to us,” since it equates to ~80% of Olink’s estimated 2023 operating expenses of about $150 million, based on a workforce of about 300 commercial and research-and-development (R&D) full-time equivalent employees. “We think >50% of targeted synergies may come from revenues.”

Olink is Thermo Fisher’s second acquisition since July. The first was CorEvitas, a clinical data intelligence company acquired for $912.5 million cash, in a deal completed in August.

Growing net losses, revenue

Olink finished the first six months of this year with a net loss that grew 31% year-over-year to $22.231 million, up from a net loss of $16.992 million in January–June 2022.  That includes a second-quarter net loss of $8.274 million, up about 72% from a $4.822 million net loss in Q2 of last year.

The company’s total revenue grew 13% in the first half of 2023, to $56.893 million from $50.191 million, with Q2 revenue rising 7% year-over-year, to $29.436 million from $27.514 million.

The acquisition deal is expected to be completed by mid-2024, subject to customary closing conditions that inclulde receipt of applicable regulatory approvals, and completion of the tender offer.

In 2019, Summa Equity acquired Olink for an undisclosed price, becoming Olink’s largest shareholder. Summa Equity and additional Olink shareholders and management—which combined hold more than 63% of Olink’s common shares—have entered into support agreements agreeing to tender their shares into a tender offer to be commenced by Thermo Fisher to acquire all outstanding Olink common shares and ADS shares.

The $3.1 billion purchase price includes net cash of approximately $143 million. At $26 a share cash, the purchase price represents $26 per American depositary share (ADS) cash—a 74% premium to Olink’s closing price Monday of $14.98.

Thermo Fisher said it expects to fund the acquisition using cash on hand and debt financing. Upon completion, Olink will become part of Thermo Fisher’s Life Sciences Solutions segment.

“Thermo Fisher’s deep life sciences expertise, global reach and proven operational excellence will enable significant opportunities for both customers and colleagues, while also providing immediate value to our shareholders,” Olink CEO Jon Heimer stated.

Alex Philippidis is Senior Business Editor of GEN.

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Illumina responded Friday to the European Commission (EC)’s order to divest itself of cancer blood test developer Grail by saying it will comply should it lose its European court appeal of the directive—or lose an appeal it is pursuing of a separate U.S. order to divest.

The EC’s order, issued Thursday, requires Illumina to dissolve or “unwind” its purchase of Grail, now a subsidiary, so that Grail has the same independence from Illumina that it had before the deal was announced in 2020.

The sequencing giant is still fighting the order by appealing the jurisdiction of the EC over Grail to the European Court of Justice (ECJ). Illumina has said in the past it will pursue a jurisdictional appeal even as it works to divest Grail in accordance with the EC.

In a statement, Illumina disclosed that it would have 12 months to divest of Grail, with a three-month extension possible. Illumina also confirmed an earlier EC statement by saying it will be permitted to explore a range of options for carrying out the divestiture, including but not limited to a third-party sale or a capital markets transaction.

Should Illumina choose to divest of Grail via a capital markets transaction, Illumina must capitalize Grail with two-and-a-half years of funding based on the cancer blood test developer’s long-range plan.

“Notably, the terms of the order provide for flexibility in transaction structure, an encouraging outcome from Illumina’s ongoing dialogue with the EC,” Illumina stated.

The order also calls for Illumina to retain a stake in Grail of up to 14.5%—the stake it had before acquiring the company—and reestablish a royalty arrangement it previously had in place with Grail.

Illumina said that with help from financial and legal advisors, it has already begun preparatory work necessary for divesting of Grail “if needed.” The divestiture process will be led by Illumina.

“Most negative” scenario

“For long-term shareholders, we think a quick sale to a competitor may be the most negative divestiture scenario, given weak market sentiment and tax obligations that could cut into the $68 per share of value that we place on Grail,” Morningstar analyst Julie Utterback commented on the firm’s website.

If Illumina is able to spin off Grail to shareholders in a tax-free manner—as Danaher recently did when it spun out Veralto, which has nearly $5 billion in sales, into a public company—Morningstar’s fair value estimate of Grail may remain roughly intact until the spinoff is complete, Utterback continued. She added that the intrinsic value of Grail to Illumina shareholders would remain largely the same minus dilution to help fund Grail’s operations.

“If a spinoff to shareholders is completed, Illumina’s fair value estimate will likely revert to the value of the genomic sequencing business, which we currently estimate at $201 per share or well above recent prices,” Utterback commented. “Positively, with a divestiture, Illumina’s intrinsic value may be easier for the market to recognize without Grail’s ongoing losses overshadowing the results of the legacy business.”

Morningstar’s estimate is just above the $200 12-month price target set for Illumina shares by Stifel. On Thursday, Dan Arias, managing director, life sciences & diagnostics with Stifel, reiterated the firm’s “Buy” rating and $200 price target on Illumina.

Illumina said it is required to continue funding Grail until any divestiture occurs.

“Illumina is committed to resolving all issues regarding Grail in a timely manner, with the objective of achieving the maximum value for shareholders and the best outcome for Grail,” the company added.

Illumina announced its plan to buy Grail in September 2020, saying the deal would accelerate commercialization of the Grail-developed Galleri cancer blood test, then being planned for launch in 2021. According to Illumina, Galleri can detect more than 50 cancers across all stages and has correctly identified the tissue of origin in 93% of positive results, with >99% specificity.

Illumina disclosed the deal as being $8 billion but still had a stake in Grail, reducing its value to $7.1 billion.

Angering regulators

The U.S. Federal Trade Commission (FTC) began challenging Illumina’s purchase of Grail in March 2021. Five months later, Illumina completed its purchase of Grail despite the FTC challenge and the EC’s antitrust review of the deal, angering both regulators.

Illumina is also appealing an FTC Opinion and Order to divest itself of Grail, issued in April. The order contended that an Illumina merger would lessen innovation in the U.S. market for multi-cancer early detection (MCED) tests like those marketed by the cancer blood test developer, since Illumina is the nation’s only provider of DNA sequencing that is a viable option for MCED liquid biopsy tests.

In challenging the FTC order, Illumina has argued that the leadership structure of the FTC violates the U.S. Constitution because FTC commissioners can only be removed for cause in violation of the Constitution’s Article II, which vests executive power in the President. Illumina has also contended that the FTC violated due process by depriving Illumina and Grail of a fair proceeding before an impartial tribunal.

But if it loses a final decision of the U.S. Fifth Circuit Court of Appeals, Illumina acknowledged, it will divest of Grail.

In August upon releasing second-quarter results, Illumina tucked within its Form 10-Q quarterly filing a terse acknowledgment that staffers from the U.S. Securities and Exchange Commission had been “requesting documents and communications primarily related to Illumina’s acquisition of GRAIL and certain statements and disclosures concerning GRAIL, its products and its acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things.”

“Illumina is cooperating with the SEC in this investigation,” the company stated.

Illumina’s execution of its Grail acquisition emerged as a key argument made by activist investor Carl C. Icahn during his partially successful proxy campaign last spring—a campaign that involved several letters to shareholders and an exclusive GEN interview. Icahn asserted that Illumina’s insistence on carrying out the acquisition despite regulator opposition drained the company of resources, an argument that Illumina has rejected.

Illumina said it will answer further questions about the Grail divestiture from analysts when it releases third-quarter 2023 earnings, which is scheduled for November 9.

Alex Philippidis is senior business editor of GEN.

The post Illumina Links Grail Divestiture to Losing European Or U.S. Appeals appeared first on GEN - Genetic Engineering and Biotechnology News.

The European Commission (EC) has formally ordered Illumina to divest itself of Grail, more than two years after the sequencing giant angered the regulator by completing the $7.1 billion deal for the cancer blood test developer before receiving EC approval.

The divestment order was all but expected since July, when the EC fined Illumina and Grail approximately €432 million ($456.4 million), amounting to 10% of Illumina’s revenue—the largest fine ever imposed by the Commission. The EC also fined Grail a symbolic €1000 ($1,056) in connection with the merger, which has drawn the ire of antitrust regulators in Europe and the U.S.

The fine followed the EC’s ruling last year that Illumina’s purchase of Grail violated antitrust regulations. The EC then blocked the acquisition, asserting that the deal would stifle innovation and reduce choice in the emerging market for blood-based early cancer detection tests.

“With today’s decision, the Commission has adopted restorative measures requiring Illumina to divest Grail and restore the situation prevailing before the completion of the acquisition,” the EU wrote (emphasis in original).

An Illumina spokesperson said the company was reviewing the divestment order.

Illumina has maintained that there’s no legal basis to order a divestiture and that the EC does not have jurisdiction over the Grail acquisition since Grail only operates in the U.S. and the U.K., not in any EU member states. Illumina is appealing the jurisdiction of the EC over Grail to the European Court of Justice (ECJ).

Illumina has said in the past it will pursue a jurisdictional appeal even as it works to divest Grail in accordance with the EC.

The EC’s order requires Illumina to dissolve or “unwind” its purchase of Grail, now a subsidiary, so that Grail has the same independence from Illumina that it had before the deal was announced in 2020.

“Restoring Grail’s independence will remove the harm to competition resulting from Illumina’s ability and incentive to delay or disadvantage Grail’s rivals,” the EC asserted.

“Viable and Competitive”

The EC ordered the newly-independent Grail to be “as viable and competitive after the divestment as it was before Illumina’s acquisition” (emphasis in original). And the Commission said the divestment must take place “within strict deadlines and with sufficient certainty,” though an EC announcement did not detail what those deadlines are.

It will be up to Illumina to choose how to divest itself of Grail. The EC suggested as alternatives a trade sale and a capital markets transaction. Illumina has to submit a concrete divestment plan for the disposal of Grail that must be approved by the Commission.

“Illumina could try and sell Grail to another LS [life sciences] company but I don’t know if anyone would take it because of poor results and the high burn. Same problem with VCs [venture capitalists],” Alex Dickinson, executive chair of Synthetica Bio, developer of a generative-AI data analytics platform for biopharmas, wrote on LinkedIn this week.

Dickinson was a senior VP with Illumina from 2010 to 2017, during which he founded and led BaseSpace, Illumina’s AWS-based informatics platform, and later led Illumina’s global population sequencing (PopSeq) business.

Grail has generated $42 million in revenue during the first six months of this year, including $22 million in the second quarter.  While those revenue numbers are up 90% from $22 million in January-June 2022 and 20% from $12 million in Q2 2022, Grail’s operating losses in January-June rose 14% from last year, to $408 million from $359 million. During Q2, the quarterly loss rose 23% year-over-year, from $152 million to $187 million.

Illumina announced its plan to buy Grail in September 2020, saying the deal would accelerate the commercialization of Galleri, then being planned for launch in 2021 as a laboratory-developed test (LDT). According to Illumina, Galleri can detect more than 50 cancers across all stages and correctly identified the tissue of origin in 93% of positive results, with >99% specificity.

While Illumina disclosed the deal as being $8 billion, it still had a stake in Grail, reducing its value to $7.1 billion.

The U.S. Federal Trade Commission (FTC) began challenging Ilumina’s purchase of Grail in March 2021. Five months later, Illumina completed its purchase of Grail despite the FTC challenge and the EC’s antitrust review of the deal.

Illumina is appealing an FTC Opinion and Order to divest itself of Grail, issued in April. The order contended that an Illumina merger would lessen innovation in the U.S. market for multi-cancer early detection (MCED) tests like those marketed by the cancer blood test developer, since Illumina is the nation’s only provider of DNA sequencing that is a viable option for MCED liquid biopsy tests.

Icahn’s Key Argument

Illumina’s insistence on carrying out the acquisition despite regulator opposition drained the company of resources, according to a key argument made by activist investor Carl C. Icahn during his partially successful proxy campaign last spring—a campaign that involved several letters to shareholders and an exclusive GEN interview.  Icahn also took aim at Illumina’s shrinking stock price since 2021, which he calculated reduced its market capitalization by some $50 billion; and the near-doubling last year of then-CEO Francis deSouza’s total compensation to almost $27 million.

deSouza kept his board seat—but quit two weeks after shareholders voted to oust board chairman John W. Thompson, who has ties to deSouza, and instead elect to the board Andrew J. Teno, a portfolio manager at Icahn’s investment management firm Icahn Capital since October 2020.

Last month, Illumina’s board appointed Jacob Thaysen, PhD, as CEO effective September 25. Thaysen was previously senior vice president of Agilent Technologies and president of its Life Sciences and Applied Markets Group—but no previous CEO experience, which led investors and some analysts to question the appointment.

Dickinson said Illumina should consider Icahn’s proposal for selling off Grail, in which existing illumina shareholders each get a share of Grail: “Maybe Icahn’s proposed rights offering would work.”

But back when Illumina snapped up Grail in 2020, Dickinson noted, the initial public offering (IPO) market was hot, as was the market for venture capital.

“What does it mean to make Grail “as viable and competitive” when the entire financial market for medtech has crashed? What happens when the $800M Illumina puts in has gone? So many questions.”

Alex Philippidis is Senior Business Editor of GEN.

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Bristol Myers Squibb (BMS) has agreed to acquire Mirati Therapeutics for up to $5.8 billion, the companies said, in a deal that expands the buyer’s cancer portfolio with Mirati’s marketed drug Krazati^® (adagrasib) and several pipeline candidates that have shown positive albeit early clinical data.

Krazati is an inhibitor of the RAS GTPase family that became Mirati’s first drug to generate sales after winning FDA accelerated approval last December. Krazati is indicated as a treatment for adults with KRAS^G12C-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC), as determined by an FDA-approved test—and who have received at least one prior systemic therapy. KRAS^G12C mutations account for approximately 14% of all NSCLC patients, representing one of the most frequent alterations in NSCLC.

In gaining authorization from the agency, Krazati became the first drug to challenge Amgen’s KRAS inhibitor Lumakras^® (sotorasib), which carries an identical indication and was approved by the FDA in 2021 as the first KRAS-targeted therapy authorized by the agency. Mirati said Krazati’s long half-life and ability to be combined with a PD-1 inhibitor in first-line treatment of NSCLC position the drug for greater future success.

During the first half of this year, Lumakras generated $151 million, more than half of which consisted of the $77 million collected in the second quarter.

Krazati, by contrast, generated $19.656 million in net product revenue, of which more than two-thirds (68% or $13.365 million) came in the second quarter. The Q2 number included about $11.7 million of commercial sales and $1.7 million of sales to a third-party commercial customer for its clinical trials, Mirati said in August.

“Uptake in 2L+ [second and subsequent line] NSCLC has been slow for both MRTX and AMGN,” Jefferies analyst Maury Raycroft, PhD, and colleagues observed in a research note. “However, we believe MRTX’s drug could be best-in-class w/ better CNS penetration and combinability w/ IO agents, which could support 1L [first line] use w/ access to a much larger mkt oppty [market opportunity].”

Did Amgen setback trigger deal?

Raycroft and colleagues questioned whether BMS moved to buy Mirati because of a setback to Amgen’s quest to expand the FDA’s accelerated approval for Lumakras into full approval.

Earlier this month, the FDA’s Oncologic Drugs Advisory Committee recommended against the expansion 10–2 by concluding that it could not reliably interpret Amgen’s progression-free survival data from the Phase III CodeBreaK 200 confirmatory study (NCT04303780) comparing Lumakras with docetaxel in NSCLC patients with a KRAS p. G12c mutation. The panel cited factors ranging from potential bias from investigators to the trial patient population, and a high number of patients dropping out of the study.

The FDA’s PDUFA target decision date on full approval is December 24.

BMS agreed to $58 a share for Mirati—approximately $4.8 billion—representing a 52% premium to the 30-day volume-weighted average price as of Wednesday, before speculation arose about a Mirati buyout, plus an additional contingent value right (CVR) of $1 per share upon FDA acceptance of a new drug application for MRTX1719 to treat either locally advanced or metastatic NSCLC in patients who have received up to two prior lines of systemic therapy within seven years after the closing of the acquisition deal.

While the $58-per-share price is 4% below Mirati’s Friday closing price of $60.20, it is fair because oncology drug companies have sold for about 3.5 to 4 times peak sales, Raycroft and colleagues added.

Jefferies forecasts peak year worldwide sales in 2032 of $1.4 billion for Krazati just on its current indication—with peak year sales growing by an additional $420 million should it add an indication for KRAS^G12C-mutated colorectal cancer (CRC), where Mirati is expected to file a supplemental NDA for third-line and beyond CRC treatment by year’s end.

Buyout speculation

Speculation about a buyout of Mirati emerged in August, after CEO David Meek stepped down as CEO and a board member after just two years in the position. He and Mirati “mutually agreed” on Meek’s departure, the company announced at the time.

Meek succeeded founder Charles M. Baum, MD, PhD, who became Mirati’s president. When Meek left, Mirati returned Baum to the helm as interim CEO, but retained Meek as a consultant through October 15.

Krazti’s revenues could grow if BMS can fulfill Mirati’s quest of adding indications for the drug—both as a monotherapy and in combination with PD-1 inhibitors. Mirati said has begun working with regulators to expand the use of adagrasib based on it having shown central nervous system (CNS) penetration and intracranial responses in patients with active and untreated brain metastases.

The drug has also demonstrated efficacy as a second- and third-line treatment for colorectal cancer in combination with Eli Lilly’s Erbitux^® (cetuximab), and as a monotherapy in previously treated pancreatic ductal adenocarcinoma.

Also in Mirati’s pipeline:

• MRTX1719, a Phase I MTA-cooperative PRMT5 inhibitor that has shown positive early efficacy data across several tumor types with MTAP deletion, including NSCLC, bile duct cancer, and melanoma. MRTX1719 is designed to target MTAP-deleted tumors that comprise approximately 10% of all cancers. MRTX1719 is expected to enter Phase II clinical study in the first half of 2024.

• MRTX0902, a Phase I SOS1 inhibitor that has shown the potential for combination use with other agents targeting the MAPK/RAS pathway, including Krazati.
• MRTX1133, which targets the KRAS^G12D mutation implicated in pancreatic cancer, NSCLC—and colorectal cancer, in which the KRAS^G12D mutation is implicated in over 30% of patients.

“With a strong strategic fit, great science, and clear value creation opportunities for our shareholders, the Mirati transaction is aligned with our business development goals,” BMS CEO and Board Chair Giovanni Caforio said in a statement. “By leveraging our skills and capabilities, including our global commercial infrastructure, we will ensure patients globally can benefit from Mirati’s portfolio of innovative medicines.”

BMS acknowledged the deal would reduce its non-GAAP earnings per share by approximately 35 cents per share in the first 12 months after the transaction closes.

BMS said it expects to use a combination of cash and debt to finance its buyout of Mirati, which has been unanimously approved by the boards of both companies. The deal is expected to close by the first half of 2024, subject to fulfillment of customary closing conditions, including approval by Mirati stockholders and regulatory approvals.

Alex Philippidis is senior business editor of GEN.

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“We’re thrilled to announce this recent support from ARPA-H. This funding will empower us to reshape drug development by harnessing cutting-edge advancements in thymus biology, iPSC technology, and machine learning,” said Stan Wang, MD, PhD, founder & CEO of Thymmune. “Drawing from decades of dedicated research on the thymus gland, our approach has the potential to revolutionize immunology through the creation of innovative therapies for patients in need with a range of immune system disorders.”

Thymmune is developing a machine learning-enabled thymic cell engineering platform to restore normal immune function in aging and disease. The Cambridge, MA-based company uses iPSC-thymic cell manufacturing to generate off-the-shelf cells at scale. It is developing a pipeline of therapies to treat immunodeficiencies, transplant related, and autoimmune diseases.

The thymus is not only responsible for supporting normal immune cell development, but may also potentially restore immune system function as people age. More than 10,000 new patients are diagnosed each year with a thymus disorder, often related to congenital defects or cancer treatments. More broadly, thymus function naturally declines with age, which can contribute to poorer immune system function, and lead to increased vulnerability to illness and poorer health outcomes.

The thymus is a critical organ in the immune system that regulates and develops T cells, which are essential for fighting infection and disease, along with mounting effective responses to vaccines. As part of the natural aging process, the functional thymus begins to shrink and its ability to produce naïve T cells decreases, leading to immune dysfunction and disease. For children born without a thymus, those with thymus defects, and elderly patients with failing immune function, restoring thymus function could be a game changer in their health and quality of life.

Thymmune Therapeutics is developing scalable thymic cell therapies to restore immune function in aging and disease through the Thymus Rejuvenation project which aims to restore damaged or non-functional thymus tissue. The Thymus Rejuvenation project is divided into two phases. The goal of the first phase is to make best-in-class human induced pluripotent stem cell-derived thymic epithelial cells (iPS-TECs) to restore T-cell development in thymic deficient animals, and slow immune decline in animal models of aging. In the second phase, Thymmune plans to scale up the production of iPS-TECs for transplantation and engraftment in animal models to achieve effective immune function, demonstrating a clinical pathway to treat patients lacking a functional thymus.

“For children born without a thymus, those with thymus defects, and elderly patients with failing immune function, restoring thymus function could be a game changer in their health and quality of life,” explained Amy Jenkins, PhD, director of the ARPA-H Health Science Futures office. “ARPA-H looks to support cutting-edge technologies like this one that, if successful, could have applications beyond just one disease.”

Thymmune’s disease-agnostic approach to combat thymus dysfunction by bolstering immune responses against pathogens, cancer, and vaccines presents a potentially revolutionary means to reboot immunity. Thymmune has the potential to rescue patients lacking a functional thymus from morbidity and mortality and address a crucial unmet need to rejuvenate immunity in the aging population.

This is the first industry project funded by the ARPA-H Open Broad Agency Announcement (Open BAA) which seeks transformative ideas for health research or technology breakthroughs. Continued support of each award is contingent on projects meeting aggressive milestones. The Open BAA began accepting abstracts in March 2023 and is open until March 2024. Future projects will be funded on a rolling basis.

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Immunotherapy is proving a massive draw for investors and big pharma companies alike. These privately-owned immuno-oncology startups have bagged hefty funding rounds in the last two years.

For decades, the mainstays of cancer treatment have been chemotherapy, radiotherapy, and surgery. In the last decade, however, a new option has emerged: cancer immunotherapy, which boosts the immune system’s fight against cancer cells.

One of the best-known forms of immunotherapy is immune checkpoint inhibitors, the first of which, Yervoy, was approved by the U.S. Food and Drug Administration (FDA) in 2011 for the treatment of melanoma. These antibody drugs are designed to block immune checkpoints, proteins on the surface of immune cells that bind to a target cell and send an “off” signal to the immune cell. Blocking these immune checkpoints prevents cancer cells from hijacking the proteins and evading immune attack.

Another form of immunotherapy that is attracting huge interest is CAR-T cell therapy. This involves extracting a patient’s T cells, genetically engineering them to hunt cancer cells more effectively, and reinfusing them into the patient. The first CAR-T therapy, named Kymriah, was approved by the U.S. FDA in 2017 for the treatment of a form of blood cancer.

Despite their potential to produce long lasting benefits, cancer immunotherapies have limitations. One is that not all patients respond to cancer immunotherapy; this is sometimes due to tumors creating a complex “microenvironment” that suppresses the immune system. And CAR-T therapy has several other drawbacks: it is expensive, limited to blood cancer, and can take a long time to produce from cancer patients’ own cells.

There are many biotech startups aiming to overcome these challenges in cancer immunotherapy, and many have attracted large venture capital funding rounds in the last few years. Check below for our list of six private immuno-oncology startups around the world that have raised the biggest funding rounds in the last two years.

1. Bicara Therapeutics 
Founded: 2020 |  Headquarters: Cambridge, Massachusetts, U.S.

Bicara Therapeutics was spun out from compatriot company Biocon, which was founded by the Indian billionaire Kiran Mazumdar-Shaw.The startup raised $108 million in a Series B financing round in March 2023, co-led by Red Tree Venture Capital and RA Capital Management. Bicara is using the funding to fuel the development of its lead program and the rest of its pipeline aimed at treating solid tumors.

Bicara’s lead candidate is a dual-action bifunctional antibody that blocks the protein epidermal growth factor receptor (EGFR), an established target linked to many types of tumors. The candidate also traps transforming growth factor beta (TGF-β), which boosts tumor growth in the presence of EGFR and is linked to immune suppression in the tumor microenvironment. Blocking the two together is intended to hit the tumor harder than blocking EGFR alone and can also lower the risk of side effects.

According to interim data from a Phase I/Ib trial released in June 2023, Bicara’s lead candidate in combination with the checkpoint inhibitor Keytruda achieved a 65% overall response rate (ORR) in late-stage human papillomavirus (HPV)-negative head and neck squamous cell carcinoma. The company heralded this result as better than Keytruda alone.

Bicara also has an immunotherapy candidate in preclinical development and other undisclosed projects at the discovery stage.

2. Domain Therapeutics
Founded: 2001 | Headquarters: Strasbourg, France, and Montreal, Canada

Domain Therapeutics makes this list due to an impressive $42 million Series A round that it raised in May 2022, co-led by Panacea Venture, CTI Life Sciences, and 3B Future
Health Fund.

The company is developing cancer drugs that target a type of cell surface proteins called G protein-coupled receptors (GPCRs). According to the company, some GPCRs play a major role in helping tumors to suppress the immune system and resist immune checkpoint inhibitor treatments.

One of Domain’s lead programs is in Phase I development and is designed to block receptors of adenosine, a chemical signal that some tumors release into the microenvironment to help them to escape the immune response. By blocking these receptors, specifically A2aR and A2bR, Domain is crafting therapies that can be combined with existing immunotherapies to benefit cancer patients who do not respond to current approaches.

Domain has been developing its lead program in tandem with Merck KGaA since 2017 and is eligible for more than €240 million in milestones and undisclosed royalties.

Domain is using its Series A winnings to advance the clinical development of another Phase I-stage program, this time blocking a protein called prostaglandin receptor 4. Additionally, the company is advancing two GPCR programs toward clinical testing, and researching other discovery-stage programs targeting GPCRs and degeneration, with results similarly expected in late 2023.

3. Elpiscience Biopharmaceuticals
Founded: 2017 | Headquarters: Shanghai, China

Elpiscience Biopharmaceuticals focuses on developing the next generation of immune checkpoint inhibitors and other cancer immunotherapies and aims to take at least one program into clinical testing each year.

Elpiscience raised an impressive Series C round worth $105 million in May 2021, which was led by the Hong Kong-based private equity firm Greater Bay Area Homeland Development Fund. Elpiscience has been using the financing to expand its R&D around the world, including advancing programs into clinical trials in the U.S. and launching strategic partnerships.

Of five clinical-stage programs in Elpiscience’s pipeline, the most advanced is a bispecific antibody—an antibody that can block two different targets at the same time. In the case of Elpiscience’s candidate, one arm blocks a protein called Delta-like ligand 4/Notch (DLL4), and another blocks a protein called vascular endothelial growth factor A (VEGF-A). These targets are vital for tumors to create blood vessels to sustain themselves, and VEGF is also instrumental in creating an immunosuppressive tumor microenvironment.

Elpiscience licensed the greater China development rights for its lead candidate from Compass Therapeutics in 2021, and the drug is being tested in combination with chemotherapy in Phase I and Phase II trials.

Other programs in Elpiscience’s pipeline include drugs that block immunosuppression in the tumor microenvironment and boost exhausted T cells to keep fighting cancer cells.

4. Grey Wolf Therapeutics
Founded: 2017 | Headquarters: Abingdon, U.K.

Grey Wolf Therapeutics aims to address a key way that some tumors resist current immunotherapies: they can hide cell surface markers of cancer known as neoantigens so that T cells cannot detect them, even when boosted by immunotherapy.

The company is developing small molecules that block two proteins known as endoplasmic reticulum aminopeptidases (ERAP1 and ERAP2). These proteins influence what antigens cells make visible to the immune system. By blocking these targets, Grey Wolf aims to change which antigens tumor cells present to immune cells, making them more visible for attack.

Grey Wolf’s lead candidate drug blocks ERAP1 and entered a Phase I trial in Australia in March 2023. The company has another ERAP1 program in preclinical development in addition to an ERAP2 program and more at the discovery stage.

To finance the clinical and preclinical development of its pipeline, Grey Wolf raised $49 million in an oversubscribed Series B round in January 2023. The round was led by Pfizer’s venture capital arm and Earlybird Venture Capital.

5. OriCell Therapeutics
Founded: 2015 | Headquarters: Shanghai, China

OriCell Therapeutics is striving to become a world leader in the development of novel cancer immunotherapies. In August 2022, the biotech company bagged more than $120 million in Series B cash in a round led by Qiming Venture Partners and Quan Capital. In February 2023, OriCell topped up with a $45 million Series B1 round led by RTW Investments and Qatar Investment Authority.

OriCell is using the funding to build up manufacturing muscle for clinical and commercial production and propel its pipeline, particularly in the U.S.

OriCell’s pipeline consists of a mixture of antibody drugs and cell therapies, six of which are at the clinical stage. The company’s most advanced CAR-T therapies are designed to treat solid tumors and blood cancer via emerging targets such as GPC-3 and GPRC5D. The cell therapies are also designed to contain more T memory cells than current therapies. These memory T cells are also designed to expand and attack cancer cells more efficiently than current therapies, potentially overcoming immunotherapy resistance in the tumor microenvironment.

OriCell expects to go public in an initial public offering in around 2025 and to launch its first cell therapy into the market by around 2026.

6. Umoja Biopharma
Founded: 2019 | Headquarters: Seattle, Washington, U.S.

Umoja Biopharma launched with a hefty $53 million Series A round in November 2020 led by MPM Capital and Qiming Venture Partners USA. The biotech startup followed up in June 2021 with a spectacular Series B round worth $210 million, led by SoftBank Vision Fund 2 and Cormorant Asset Management.

To tackle difficulties in manufacturing CAR-T therapies for cancer patients, Umoja is developing a pipeline of off-the-shelf cell therapies such as CAR-T therapies, in addition to CAR-T therapies that can be genetically engineered in vivo rather than in the lab.

One of Umoja’s most advanced clinical programs involves delivering viral vectors into patients that stimulate them to generate their own CAR-T cells. These cells are genetically engineered to be activated and to expand in response to treatment with the approved drug rapamycin, which simultaneously slows tumor growth and stops the patient’s immune system from attacking the viral vectors and genetically engineered cells. The program is currently at a preclinical stage, and Umoja expects to develop it in tandem with a partner.

Umoja is also recruiting cancer patients into a Phase I trial of its so-called “TumorTag” technology. This consists of small molecules that bind to cancer cells and stromal cells that are recruited by cancer cells in the tumor microenvironment to help suppress the immune system. This bound drug flags the cells for attack by CAR-T cells more precisely and effectively than current approaches.

Jonathan Smith is a freelance science journalist based in the U.K. and Spain. He previously worked in Berlin as reporter and news editor at Labiotech, a website covering the biotech industry. Prior to this, he completed a PhD in behavioral neurobiology at the University of Leicester and freelanced for the U.K. organizations Research Media and Society of Experimental Biology. He has also written for medwireNews, Biopharma Reporter, and Outsourcing Pharma.

This article was originally published in the August 2023 issue of Inside Precision Medicine. For more content like this and details on how to get a free subscription, go to www.insideprecisionmedicine.com.

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By Alex Philippidis

It’s too early to call it a boom, but the cycle of biopharma mergers and acquisitions (M&A) has returned to one of “conscious coupling” as large pharmas desperate to replenish pipelines find the promising drug candidates they’re looking for from smaller biotechs.

Acquisitions of biopharma companies totaling tens of billions of dollars have slowly but surely resurfaced since the end of 2022, when Amgen agreed to acquire Horizon Therapeutics for $27.8 billion—a deal the U.S. Federal Trade Commission (FTC) initially sought to torpedo as being anticompetitive and thus hurtful to consumers, before settling differences with Amgen earlier this month.

This year, the M&A merger-go-round was stoked by Merck’s $10.8 billion purchase of Prometheus Biosciences, completed in June, and especially Pfizer’s planned $43-billion buyout of Seagen, the antibody-drug conjugate developer once known as Seattle Genetics, which investors rightly speculated would run afoul of regulators based on antitrust concerns. Unlike with Amgen-Horizon, the FTC signaled it may block the Pfizer-Seagen merger in July, when it issued a second request for data about the deal.

Following close behind were five M&A deals in the single billions of dollars by biopharma giants:

• Biogen’s planned $7.3 billion acquisition of Reata Pharmaceuticals, a deal intended to bolster the buyer’s neurological drug portfolio. Last week, Reata shareholders approved the deal, which is expected to close on September 26.
• Astellas Pharma’s $5.9 billion purchase of Iveric Bio, completed in July. The transaction expanded Astellas’ pipeline of treatments for eye disorders.
• Novartis’ up to $3.5 billion buyout of Chinook Therapeutics, completed in August. Novartis paid $3.2 billion upfront for Chinook, gaining access to its two Phase II candidates for Immunoglobulin A Nephropathy (IgAN).
• Sanofi’s $2.9 billion acquisition of Provention Bio, completed in April. The deal added to Sanofi’s portfolio Tzield (teplizumab-mzwv), which won FDA approval last year as the first and only therapy to delay the onset of Stage III type 1 diabetes (T1D) in adults and children aged eight plus years with Stage II T1D.
• Eli Lilly’s recent expansion of its immunology portfolio by acquiring Dice Therapeutics for $2.4 billion, a deal completed in August.

According to EY, the professional services firm originally known as Ernst & Young, biopharma M&A deals during the first six months of 2023 more than doubled in value year-over-year, to $97.296 billion from $36.12 billion in the first six months of 2022—though nearly half of the H1 2023 total reflects the single Pfizer-Seagen deal. However, the number of deals dipped during the period, from 37 to 32.

The uptick in M&A may help explain a fall-off in the number and value of collaboration deals year-over-year. The first half of 2023 saw a total of 105 collaborations launched worth $63.8 billion. The value of the alliances fell nearly 17% from $76.5 billion in January–June 2022, while the number of alliances dipped 10% from 117.

Subin Baral, EY Global Life Sciences Deals Leader, recently discussed factors that help explain the budding comeback of biopharma M&A, and what the next few months may hold, with GEN Edge. (This interview has been lightly edited for length and clarity.)

GEN Edge: Back in January, we chatted about what 2023 would be like for M&A. How much has this unfolded according to your expectation? And how much is it maybe even exceeded those expectations?

Subin Baral: We have always said an M&A comeback was a matter of when and not if. The industry fundamentals have been pretty strong, and we have been a big advocate when the market was down from a macroeconomic perspective.

If you drill down, particularly in the biopharma space where we’re looking at record firepower, we’re looking at the patent cliff that is looming—the majority of the branded drugs coming off patent between now and 2030—and we’re also looking at the R&D deficit within the big biopharma companies. There is not enough in the pipeline to be able to replenish, or substitute for their revenue potentially lost through the patent cliff.

If you just focus on those three factors alone, there are enough drivers to continue the deal making when you think about it. We’re bullish. Obviously, the macroeconomic environment was a little bit more uncertain, and the deal market doesn’t like a lot of uncertainty and volatility, right? Coupled with the fact that the valuations of the big biotech companies have actually stabilized, we are not really surprised by this comeback. We were just waiting for things to happen, and we even asked in our prior publication, how long can biopharma companies really wait on the sidelines, because the patent cliff is looming? We’re not overly surprised that the market has rebounded in in the way it has.

The right deals are getting done, and the right assets are getting the valuation that that they deserve. Now it’s a buyers’ market. But if you have the right seller with the right data and science behind it, those deals are getting the valuations that are high and attractive. So, while these are very exciting times, we expected this to happen. Perhaps this is signaling that the companies are not sitting on the sideline any longer for the right deals.

GEN Edge: Some recent M&A deals have generated huge numbers: Pfizer-Seagen ($43 billion), Merck-Prometheus ($10.8 billion), Biogen-Reata ($7.3 billion). Is this the low end of where we’ll see these numbers?

Baral: The average deal size has increased by over 60% year-over-year. The average deal size is about $1.5 billion. So, asset valuations continue to go up. Again, I keep coming back to the quality of assets, and there are not many out there. The ones that are really good quality, backed by the right science and so forth, they’re attracting the valuation. Obviously, the rare disease area is attracting a lot of premium deals, but it we’re seeing this across the board.

GEN Edge: Has there been any change in what constitutes the right assets now, compared to even a few months ago?

Baral: It’s almost becoming a portfolio play in the unmet need area. Oncology and immunology continue to be big areas. Rare disease has always been an area that has always attracted high premiums. I think the question companies are looking at with M&A is: Does this make a strategic fit with our strategic vision? And how do you create value and meet the unmet need?

A lot of the immunology and oncology deals that are happening, they’re all attracting those high valuations. That’s because the priority focus is the area. I hate to say it, but I don’t think anything has changed drastically in terms of what makes it an attractive asset.

GEN Edge: To what degree are the top M&A deals this year more like the smaller bolt-on deals, where buyers are snapping up a smaller company in order to fill a specific niche, as opposed to expanding into four or five new specialties or therapeutic areas?

Baral: Focus is back. Certain companies, like larger biopharmas, can afford to have a little bit more of a diverse therapeutic area focus. But generally speaking, companies ask, what are our key focus areas? What we’ll see even more of in the back half of this year is this whole notion of divest to invest. Companies are divesting their non-core assets to really focus on their cores. And that could mean getting out of the segments that probably are not their longer-term perspective, and where they can create value for those segments as either a standalone company or finding a buyer that could create value for them.

This whole notion that we have been talking about for a long time is, how do you look at portfolio? How do you prioritize portfolio? How do you use the investment as a fundraising mechanism to invest in the priority areas? That will continue. And we’re already seeing this in the numbers. A lot of larger spinoffs have happened. A lot of companies in the services phase, whether it’s a CRO [contract research organization] or CDMO [contract development and manufacturing organization], are attracting investments from private equity buyers. We expect that trend to continue in the back half of 2023.

GEN Edge: You mentioned macroeconomic trends earlier. So far this year we’ve seen central banks in the U.S. and Europe raise interest rates several times. There’s still inflation, even if it’s not as high as it was a year ago. What effect have those conditions had on M&A dealmaking? And what effect will that have on M&A the rest of this year?

Baral: I would be lying if I say they wouldn’t have any impact. They will have impact. The cost of capital continues to go up. So, the business case of justifying some of these investments continues to be a higher threshold to fly. I come back to the fundamentals: What choice do you really have, because your pipeline is not there. Your LoE’s [losses of exclusivity] are impending. And can you afford to sit on the sidelines for too long? And how long is that?

The question that’s even more important on the buyer side is, how do you capture synergy out of these acquisitions? Because you are paying a high multiple on a lot of these deals. The cost of capital continues to be high. Are you integrating these businesses well enough? Are you providing the level of support well enough for the business that you bought, whether it has commercial assets or R&D assets? Are you maximizing value creation or value capture? Execution risk in planning is much more rigorous and higher, so there is increased focus on companies making sure that they execute to their plan, that they are able to capture the value that is contemplated in their deal models.

GEN Edge: Have there been areas where this year missed expectations in any way, in terms of the types of deals that are still not happening to a great extent?

Baral: I don’t think so. I think we’re seeing what we expected to see. We said divest-to-invest will continue to be a theme. We said in our prior report that it [an M&A comeback] was a matter of time, because the industry fundamentals continue to be strong. We said the therapeutic areas where the larger unmet need will continue to be in areas such as oncology, such as immunology; that has continued to happen. And we said the good companies with what I’ll call quality assets will continue to attract higher valuations, so that hasn’t really changed from our perspective. So we’re glad that what we have narrated as a forward looking comment continues to unfold as we look at the last two quarters in 2023, and we expect the same for the back half.

GEN Edge: Despite several recent IPO filings, far fewer biopharma companies are going public now compared with two years ago. Is the IPO market poised for the sort of comeback we’ve seen with M&A?

Baral: It’s hard to tell. There is a natural level of attrition that happened with public biopharmas, because we all know that there are certain companies that probably went public when they were not ready to go public. In the down market, it’s inevitable that they will dissipate because of lack of funding, and there is limited access to capital, so to speak, available for them.

I think the interesting part here is that a lot of the early-stage companies are in the predicament that venture capitalists are looking toward a good data set at certain points to de-risk risk some of their downside—while larger companies are also saying, show me a certain data set to limit my downside. [Startups] are in this predicament of, who’s going to fund me when I have no data set yet to prove any of the science? Very, very early-stage funding is a tough piece.

Big biopharma is looking at companies that are Phase II and beyond. That creates a natural challenge for them with respect to the IPO market. I don’t see [companies going public] coming at the same pace that we had seen in the in the few years back, but we see odd ones here and there getting listed. Quality companies will very likely be snapped up by larger biotech companies before anything else happens.

GEN Edge: Speaking of larger companies, big pharmas have been buying a lot of smaller biotechs this year. Novartis has bought two companies, so too Eli Lilly. Gilead, Astellas, GSK, Merck, Pfizer, Sanofi, AstraZeneca, BioNTech and Moderna have each bought one biotech. Why have so many of the bigger companies been such active buyers?

Baral: I don’t think this is any different than what we have seen in the past, where biotech companies have continued to feed into the big biopharma companies. It’s even more so now because of the two factors that that I talked about before, the LoE pressures, and the lack of R&D pipeline within these biopharma companies. Those two factors are always an attractive measure as to why biotech companies have continuously been a good mechanism for the big biopharma companies to fill their pipelines.

Alex Philippidis is Senior Business Editor of GEN.

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During their post-docs, Elizabeth Wood, PhD, CEO of Jura Bio and Julie Norville, PhD, the company’s CSO, shared a vision to build a drug development company based on the principle of translating the success they were seeing in the development of therapies for malignancies to the autoimmune space. Over the past six years, the two scientists have combined their deep knowledge of artificial intelligence with synthetic biology, to uncover the area of T-cell receptor and antigen binding, and build an end-to-end discovery and development platform to develop immune-based therapeutics.

“Therapeutic success hangs on the TCR-Epitope-HLA synapse,” noted Cameron Gardner, PhD, Jura Bio’s director of research, during a talk at the Bioprocess International meeting, taking place this week in Boston.

To achieve their goal, the company needed a map from any antigen/HLA to any candidate TCR. The map would allow them to find TCRs that are, effective, safe, tunable, and polyclonal. In order to do that, the map would need to predict 10²⁸ interactions (a conservative estimate that is still more than the number of stars in the universe.) A key bottleneck in mapping the synapse was the ability to manufacture and test TCRs, epitopes, and HLAs.

The company’s ML-first workflow allows it to build and train models from huge amounts of data, enabling Jura Bio to propose, build, and physically assay candidates at a very large scale.

Some groups work with small libraries with a large proportion of useful targets. Other libraries are large, but low quality. Jura Bio’s approach of bringing their technology to the manufacturing floor resulted in a large library, with a large number of useful targets.

“In areas where conventional methodologies are insufficient, machine learning emerges as the catalyst that unlocks the full potential of cell-based therapy and personalized medicine,” said Norville.”

Jura Bio’s ML-improved gene synthesis technology has generated a library of 100 billion potential human and improved TCR candidates that allow for antigen-specific TCR discovery and development. The company has already discovered TCRs for prostate cancer and other neoantigen targets that have never been before recorded in key HLA-types.

One example of target discovery, Gardner described, occurred when the company was sent sequences of six patients with melanoma refractory to MART-1 specific adoptive cell therapy. They were asked, can you generate additional TCRs for those patients? Using their HLA-matched variational synthesis library of TCR candidates, Jura Bio found 300 candidate sequences and was able to identify 10 candidates for expansion and engineering. The company has also manufactured peptidome- and virodome-scale libraries of antigens to help shed light on the underlying mechanisms of autoimmunity that still evade understanding.

“AI-ML and multiplex libraries are useful tools individually, but when combined together they can generate remarkable synergy, known as ML-ML variational synthesis,” noted George Church, PhD, founder and scientific advisory board chair of Jura Bio. “This has the potential to generate billions to trillions-fold of potential candidates. The mastery of this strategy for TCR, MHC, and T-cell engineering at Jura Bio is without competition and in huge demand.”

Now, Jura Bio announced a research collaboration with Syena, a cell therapy product company and subsidiary of the genome writing company Replay, to develop TCR-based therapies.

“We’re thrilled to announce our first partnership with Replay and its product company Syena. This partnership validates our approach of using synthesized human T-cell repertoires to generate safe and effective libraries to discover antigen-specific TCRs at scale,” said Wood.“The human immune system is a powerful source of safe and effective immune receptors, and while one patient might lack a TCR necessary to fight cancer, it may be present in another. By leveraging machine learning to rewrite the gene synthesis process from the ground up, we can produce extraordinarily high-quality immune receptors libraries to discover and train probabilistic machine learning models to ensure a faster development process that identifies TCRs recognizing the most challenging therapeutic targets.”

“Jura Bio’s highly differentiated TCR discovery platform has transformative potential and combines the power of synthetic biology with that of machine learning. We look forward to working with them to identify high-performing TCRs recognizing challenging but therapeutically important targets such as KRAS G12D,” said Adrian Woolfson, executive chairman, president, and co-founder of Replay. “Jura Bio’s unique tools and expertise offer a differentiated approach for discovering challenging TCRs of therapeutic significance. This will be invaluable in helping Replay and its cell therapy product company Syena to advance novel TCR-NK therapies into the clinic.”

Financial terms of the agreement were not disclosed. Jura Bio will receive an upfront payment as well as research funding for the period of the partnership. If the option is exercised, Replay and Syena will be responsible for global development and hold exclusive worldwide commercialization rights on all TCR-NK therapies resulting from the partnership.

In addition to the partnership with Replay and Syena, Jura Bio also announced $16.1M in financing. The funding will accelerate the mapping of the human adaptive immune system. Jura Bio’s goal is to have completed a predictive map of TCR-antigen-HLA binding powered by an off-the-shelf library of >100B synthesized human T cells and their cognate antigens and HLAs by the end of 2024 as well as to have expanded their machine-learning backed gene synthesis into the design and discovery of B cell receptors.

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