GSK gets serious about immunotherapy with Merck deal worth up to $4.2bn

GlaxoSmithKline is showing its determination to make up for lost time in oncology by signing a major new immunotherapy partnership with Germany’s Merck.

The two companies have just unveiled a global alliance to jointly develop and commercialise M7824, a novel immunotherapy with potential in a number of difficult-to-treat cancers, which could be worth a very sizeable $4.2bn (€3.7 billion or £3.2bn) to the Darmstadt-headquartered firm.

M7824 (bintrafusp alfa) is a bifunctional fusion protein immunotherapy being studied in numerous trials, including a phase 2 head-to-head versus Keytruda as a first-line treatment in patients with PD-L1 expressing advanced non-small cell lung cancer (NSCLC).

This is one of eight immuno-oncology studies ongoing or expected to begin in 2019, and which GSK hope can catapult it into contention in the red-hot IO market.

M7824 is part of a new wave of bispecific antibodies, being developed across the industry as potential successors to the PD-1/PD-L1 inhibitor class, but targets different pathways to candidates from Amgen, Regeneron and others.

The molecule is designed to simultaneously target two immuno-suppressive pathways, transforming growth factor-β (TGF-β) trap and an anti-programmed cell death ligand-1 (PD-L1), that are commonly used by cancer cells to evade the immune system.

The companies say M7824 is being considered for use as a monotherapy and in combination with other assets from both their pipelines.

For Merck, the deal could be very lucrative, and eventually help it overcome its disappointing performance with PD-L1 immunotherapy Bavencio, which it co-markets with Pfizer.

The deal with GSK sees Merck receive an upfront payment of €300m with potential development milestone payments of up to €500m triggered by data from the M7824 lung cancer programme. Add to this future approval and commercial milestones of up to €2.9bn (£2.5bn) and the total potential deal value comes to €3.7bn or $4.2bn.

GSK's new R&D chief Hal Barron and CEO Emma Walmsley are determined to make up for the decision taken by former chief exec Sir Andrew Witty to sell off its cancer portfolio in 2015 as part of an asset-swap with Novartis.

In December, the firm entered the M&A market with the $5.1bn acquisition of cancer firm Tesaro, bringing with it PARP inhibitor Zejula and a pipeline including a PD-L1. It also adds to its existing IO alliance with UK biotech Immunocore in novel T-cell immunotherapy.

For GSK, the Merck deal signals its willingness to take a lead in cutting edge immune-oncology.

Many patients with difficult to treat tumours still don’t benefit from immunotherapies such as Merck & Co’s market leading checkpoint inhibitor Keytruda, and Hal Barron says the new alliance would address this need.

GSK's Hal Barron

“M7824 brings together two different biological functions in a single molecule and we have observed encouraging clinical results in treating certain cancer patients, particularly those people with non-small cell lung cancer. I’m excited by the potential impact this first-in-class immunotherapy could have on the lives of cancer patients.”

By clinching the deal, GSK is likely to have had to outbid other interested parties – Pfizer being the most likely candidate, given its existing alliance with Merck in IO.

Dr Belén Garijo, CEO of healthcare of Merck indicated that GSK had impressed her team as the best partners

“GSK clearly emerged as the ideal partner due to their strong commitment to oncology, and the complementary talent and capabilities they will bring to our alliance. We now look forward to harnessing the full potential of M7824 across a broad range of cancer indications as we continue to advance our oncology portfolio.”

GSK and Merck will jointly conduct development and commercialisation with all profits and costs from the collaboration being shared equally on a global basis.

The companies are not the only ones showing an interest in (TGFβ); Gilead and Scholar Rock joined forces in December to study the mechanism in another disease setting, fibrotic diseases.