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Merck buys cancer-killing virus firm Viralytics for $394m

It will acquire the Australian biotech’s lead cancer therapy Cavatek in the process

Merck & CoMerck & Co has bolted on another immuno-oncology asset to pair with its flagship checkpoint inhibitor Keytruda in clinical trials.

The pharma group - known as MSD outside the US and Canada - has agreed to buy Australian biotech Viralytics and Cavatek (CVA21), the company’s lead virus-based cancer therapy which is currently in several phase I and II trials. That includes studies testing the combination with Keytruda (pembrolizumab) under the terms of a 2015 agreement between the two companies.

The deal is the latest in a series of deals by the big players in cancer immunotherapy as they try to anticipate which new technologies and combinations will complement the current wave of PD-1 and PD-L1 inhibitors, which are already pulling in billions of dollars in sales but don’t work in a sizeable proportion of patients.

Viralytics’ approach is to use a virus called coxsackievirus Type A21 - which seems to preferentially infect and kill cancer cells - to fight tumours.

Roy Baynes, Merck’s chief medical officer, said: “Viralytics’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients.”

Trials of Cavatek with Keytruda are ongoing in melanoma, prostate, lung and bladder cancers, and the two companies have already reported phase Ib data showing that the duo achieved a 100% disease control rate in 10 melanoma patients, reducing tumour size in seven and stabilising disease in the remaining three.

Merck has agreed to pay A$502m ($394m) for Sydney-based Viralytics, which will become a wholly-owned Merck subsidiary if the deal goes through. It is however conditional on no better offer emerging from a counter-bidder.

One potentially interested party could be Bristol-Myers Squibb, which makes rival PD-1 inhibitor Opdivo (nivolumab) that has also been tested alongside Cavatek in early-stage trials with impressive results. BMS has been active itself in immuno-oncology M&A however, having just agreed a whopping $3.6bn deal to claim rights to Nektar’s CD122-biased agonist NKTR-214.

Analysts have suggested that another party is however unlikely to come forward at this stage, given the longstanding relationship between Merck and Viralytics and the fact that the boards of both companies are fully behind the takeover.

Article by
Phil Taylor

22nd February 2018

From: Sales

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