GSK Pays Up to $4.2 Billion For German Merck KGaA Cancer Immunotherapy

Feb 8, 2019 | Immunotherapy for Cancer, Leading Pharma

Reuters reports that UK-giant GSK has increased its cancer drug development pipeline by paying Germany’s Merck KGaA up to 3.7 billion Euros ( $4.12 billion) for the rights to a next-generation immunotherapy.  Developing cancer drugs is one of the hottest areas in drug development. New immunotherapies are commanding considerable premiums. The deal:

  • GSK pays Merck upfront payment of 300 million Euros for M7824 (bintrafusp alfa)
  • Merck is eligible for payments of up to 500 million euros depending on development milestones in lung cancer
  • Merck could also receive another 2.9 billion euros based on commercial milestones
  • Merck will book future U.S. sales while GSK would earn sales from ROW
  • Important to note that GSK bolstered its cancer pipeline with the recent acquisition of Tesaro for $5.1 billion. And last month it announced it would separate its prescription drugs and vaccines business from over-the-counter products unit under a joint venture with Pfizer Consumer Health Division.

What is M7824? A fusion protein that triggers two immune responses to cancer cells, it is being tested on 10 tumor types and was recently shown to delay the progression of a certain type of lung cancer for at least 9.5 months in half of the trial participants. Initially developed by EMD Serono, it is a a fusion protein (made from a fusion gene created by joining parts of two different genes), M7824 is designed to block two signaling pathways commonly used by cancer cells to avoid being destroyed by the immune system. M7824 consists of a monoclonal antibody against a protein called programmed death-ligand 1 (PD-L1) linked to the extracellular domain of the human transforming growth factor beta (TGF-β) receptor 2 protein. The PD-L1 and TGF-β proteins are overproduced by certain types of cancers and associated with a poor prognosis. Upon administration, the PD-L1 monoclonal antibody part of M7854 binds PD-L1 while the TGF-β part binds to and neutralizes TGF-β receptor 2 protein. This prevents TGF-β- and PD-L1-mediated signaling, and increases T-cell-mediated immune response against cancer cells, ultimately inhibiting tumor cell growth.

Merck has already started a mid-stage phase II trial in non-small cell lung cancer, comparing M7824 directly with U.S. rival Merck & Co’s Keytruda, currently seen as the most promising cancer immunotherapy on the market with $7.2 billion in 2018 sales.

Keytruda is part of a class of immunotherapies known as checkpoint inhibitors, which are expected to generate well over $20 billion in combined annual revenues over the next few years.

Merck KGaA, which has no ownership ties with Merck & Co, is competing in that class with a drug called Bavencio, jointly developed with Pfizer, but analysts expect the drug to play only a minor commercial role. For M7824, Merck combined Bavencio’s mode of action with another immune response booster known as TGF-beta-inhibtion.

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