Merck & Co./VelosBio
Deal value: $2.75 billion
Premium to previous closing price: N/A
Date announced: Nov. 5, 2020
The antibody-drug conjugate (ADC) field is gaining more steam, with Merck & Co. the latest to bet on the flourishing oncology space with two billion-dollar deals in 2020.
In November, Merck unveiled a $2.75 billion transaction for San Diego biotech VelosBio, one of few companies working on therapies against ROR1, which is overexpressed in multiple cancers. The company had just wrapped up a $137 million series B in the summer to support its lead candidate, an ADC dubbed VLS-101.
Somehow the deal came back to back with two other pacts centered on ROR1 ADCs. A month later, NBE Therapeutics, the only other company with a clinical-stage anti-ROR1 ADC registered on clinicaltrials.gov, became the target in a €1.2 billion ($1.5 billion) buyout by Boehringer Ingelheim.
Just days before the Merck-VelosBio announcement, China’s CStone Pharmaceuticals licensed ex-Korea global rights to LegoChem Biosciences’ preclinical ROR1 ADC, LCB71, for $10 million upfront and $353.5 million in milestones.
VelosBio’s drug has shown early promise in blood cancer. In a phase 1 study, seven of the 15 heavily pretreated mantle cell lymphoma patients responded to VLS-101, including three who saw their cancer completely gone, according to data presented at this year’s American Society of Hematology annual event. Among patients with diffuse large B-cell lymphoma, four out of five responded to treatment.
Besides the ADCs, Oncternal Therapeutics, from which VelosBio spun off and got VLS-101, is working on a ROR1 monoclonal antibody called cirmtuzumab in phase 2 development, plus a preclinical ROR1 CAR-T therapy. Bristol Myers Squibb, through its Celgene buyout, also owns an anti-ROR1 CAR-T drug dubbed JCAR024. Kancera is developing small-molecule inhibitors of ROR1 in the belief they can reprogram cancer cells to destroy themselves.
Merck rides a wave of fresh interest in ADCs, heralded by AstraZeneca’s $6.9 billion Enhertu partnership with Daiichi Sankyo. Merck bought its way into the space with a deal in September to collaborate on Seagen’s LIV-1 ADC ladiratuzumab vedotin.
For the Seagen therapy, Merck paid $600 million upfront, plus a $1 billion equity investment, and committed up to $2.6 billion in milestone payments. The idea is that ladiratuzumab vedotin, besides its direct cancer-killing effect, can create a more favorable tumor microenvironment for Merck’s blockbuster PD-1 Keytruda.
The theory was supported by early clinical data showing 35% of patients with newly diagnosed locally advanced or metastatic triple-negative breast cancer responded to the combo. Additional trials are planned for ladiratuzumab vedotin monotherapy or the combo in TNBC, HR-positive breast cancer and other LIV-1-expressing solid tumors.
The Merck-Seagen pact came through the wire just hours after Gilead Sciences dropped the bombshell $21 billion acquisition of Immunomedics, which features anti-TROP-2 ADC Trodelvy front and center. Gilead’s move itself came weeks after AZ expanded its Daiichi Sankyo partnership, putting down up to $6 billion for the Japanese pharma’s rival TROP-2 ADC, DS-1062.
In addition to the cancer play, Merck in 2020 also joined the COVID-19 vaccine race with the purchase of Themis, which uses a measles vector platform developed by Institut Pasteur for vaccine designs.