Big pharma continues to invest in immuno-oncology innovation

Print 11 August 2015
Peter Winter / BioWorld

Big pharmas are continuing to exhibit a healthy appetite for deal making, particularly for early stage therapeutic assets. Last week, for example, Merck & Co. Inc. scooped up a small Israeli biotech, Ccam Biotherapeutics Ltd., to add its immuno-oncology (I-O) pipeline. The space is hot and like many big pharmas, Merck is "scouring the world, looking for immunomodulatory agents," according to Eric Rubin, vice president and therapeutic area head of oncology early stage development at Merck Research Laboratories. (SeeBioWorld Today, July 29, 2015.)

The pharma brings into the fold a next-generation monoclonal antibody (MAb) targeting the immune checkpoint protein known as carcinoembryonic antigen-related cell adhesion molecule 1 (CEACAM1), paying $95 million in cash up front, with a further $510 million earmarked for development, regulatory and commercial milestone payments.

Earlier this year Ccam received FDA approval to begin a phase I trial of CM-24, an immunomodulatory monoclonal antibody directed against CEACAM1, which has been shown in studies to be different from other checkpoint pathways such as PD-1 in that it is both up-regulated in T cells and overexpressed in cancer cells.

EXCITING TIMES

These are exciting times in cancer research as pharma and biotech companies ramp up their focus on I-O strategies employing both monotherapy as well as combination drugs in an effort to overcome various cancers.

It was a sentiment echoed by Ken Frazier, chairman and CEO of Merck, on a conference call to discuss its second quarter results noting it is a propitious time for biomedical research generally with "the introduction of breakthrough therapies and in some cases cures for some of the most difficult-to-treat diseases."

In oncology, the company is building on its PD-1-targeting Keytruda (pembrolizumab) for melanoma, which received FDA clearance almost a year ago. Sales of the drug have reached $110 million. According to Adam Schechter, president, Global Human Health at Merck, Keytruda is now the number one therapy used to treat melanoma in the U.S.

STRONG MOMENTUM

Merck oncology, one of its four key health care areas, contributed to a strong second quarter performance and is helping to maintain what Frazier described as a strong momentum "achieved earlier in the year by executing well on our focused and discipline strategy."

It is a momentum shared by many pharmas these days and a factor that has contributed to the almost 10 percent year-to-date growth in the BioWorld Pharma Index. (See chart, below.)

One of the strong performers in the group is Pfizer Inc. whose share performance jumped more than 6 percent in July and has grown more than 13 percent YTD.

The company, according to Jefferies analyst Tom Tarrant, reported a great second quarter beating consensus revenues and EPS by 4 percent and 9 percent, respectively.

Like Merck & Co., Pfizer also is looking to build out its immuno-oncology portfolio. Speaking on its second quarter results conference call, Ian Read, the company's chairman and CEO, said it is one of the areas "where we see the largest potential to benefit patients."

In November last year the company signed a blockbuster collaboration with Merck KGaA involving the development of its programmed death ligand 1 (PD-L1) inhibitor MSB0010718C in a global deal worth $850 million up front and about $2 billion more in regulatory and commercial milestones. (See BioWorld Today, Nov. 18, 2014.)

The two companies are pooling their resources in both PD-L1 and PD-1 inhibition. Darmstadt, Germany-based Merck will take a 50 percent interest in Pfizer's PD-1 inhibitor program and will help its partner steer the molecule toward the clinic. The companies are sharing costs and revenues across the two programs.

MSB0010718C is currently undergoing a large-scale phase I trial in 550 patients with advanced cancers, which includes expanded cohorts in lung, breast and gastric cancers, and a phase II study in Merkel cell carcinoma, a rare form of skin cancer.

Pfizer and Merck plan to initiate up to 20 immuno-oncology development programs, six of which could potentially be pivotal phase II or phase III studies.

This is why Read said they "have one of the most comprehensive I-O platforms in development in the pharma industry today."

While Pfizer appears comfortable with its partnering strategy with biotech companies to grow its innovative pipeline in oncology, analysts wonder whether it will pull the trigger to acquire a biotech company like other pharmas seem to be doing.

When asked that question on the conference call, Read said he felt that the marketplace "is extremely efficient, and that the valuations in biotech are in many ways, priced to perfection." However, of the deals that have been done, it couldn't have achieved the synergies that the other companies executing the deals could with their pipelines.

Nevertheless, Pfizer said it continues to evaluate the market opportunities. It has plenty of cash on hand and going forward the company's preference is to do a deal in the innovative space rather than the established space such as the one it did in acquiring Hospira Inc. (See BioWorld Today, Feb. 6, 2015.)

HIGH VALUATIONS

Right now biotech companies don't come cheap given their present valuations, but this shouldn't be an issue if the right opportunity was to come along.

However, they are in an extremely competitive space with all big pharma business development teams scouting for I-O opportunities, which is good news for biotech companies developing technologies and products in this area.

Sanofi SA, for example, revealed last week it will invest up to $2.2 billion in a new collaboration with Regeneron Pharmaceuticals Inc. in which these longtime partners will jointly develop and commercialize the programmed cell death protein-1 (PD-1) inhibitor REGN-2810 and other new immuno-oncology antibodies. (See BioWorld Today, July 29, 2015.)

The five-year deal includes $640 million up front for Regeneron and extends and deepens the partners' commitment to the space.

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