The Biopharma Report #008
Lilly Enters The Hearing Loss Space, Gilead Strikes A Bispecific Antibody Deal
Welcome to a new issue of The Biopharma Report!
Lilly to Acquire Akouos to Discover and Develop Treatments for Hearing Loss
This is Eli Lilly’s second acquisition in the gene therapy space. Interestingly enough Eli Lilly’s management didn’t seem interested in gene therapy a few years ago - unlike most large pharmas. The misguided rationale was that the total addressable market was simply too small because of the rarity of the targeted conditions. It is ironic because back then, Eli Lilly was becoming more aggressive in terms of oncology licensing and acquisitions, as this was an area they were clearly behind in - but that didn’t stop them from making the same strategic mistake with gene therapy. Once again, Eli Lilly was late to the party.
But things changed in 2020 with Eli Lilly striking a licensing deal with Precision BioSciences for gene therapies targeting Duchenne muscular dystrophy and 2 other unnamed conditions. The fact that Pfizer was developing its own gene therapy for Duchenne perhaps made the decision easier for Eli Lilly.
One month later, Eli Lilly announced that it was acquiring Prevail Therapeutics. The biotech’s pipeline encompassed assets for a wide range of neurodegenerative conditions, from Alzheimer’s, to Parkinson’s, synucleinopathies, ALS, and Gaucher disease. The deal made a lot of sense for Eli Lilly given its position and experience in the CNS space.
Earlier this year, Eli Lilly announced the construction of a $700M genetic medicine research hub in order to beef up its gene therapy pipeline. The facility will also allow Eli Lilly to keep tabs on biotechs in the gene therapy space since they will be offering shared office space to startups. Not bad for a company that wanted nothing to do with gene therapy only a few years ago!
Delivering gene therapies to the inner ear is a nightmare in terms of complexity, which makes Akouos’ library of vectors as well as its non-invasive delivery technology very interesting. The biotech’s preclinical and clinical assets have 4 different ear-related target indications with a total prevalence of around 200,000 - 400,000 patients - which is a very attractive opportunity for Eli Lilly since this is an area of unmet medical needs. Akouos’ platform can also be leveraged to develop assets that can target other forms of sensorineural hearing loss where no drugs are currently approved. Eli Lilly might have entered the hearing loss arena by acquiring Akouos, but it is not the only player in this space.
Decibel Therapeutics is another biotech with a focus on hearing loss. It is developing gene therapies for the same indications as Akouos - OTOF-related hearing loss and GJB2-related hearing loss - as well as other indications. Akouos and Decibel respectively received FDA clearance to enter trials in September and October, which puts the 2 competitors in a virtual tie.
Decibel’s lead program is being developed as part of a broader collaboration with Regeneron. The Eli Lilly move leveled the playing field to an extent by significantly increasing the likelihood of success for Akouos’ lead program AK-OTOF but also led to an increased interest in gene therapies targeting hearing loss - both from the Street and industry. This, coupled with strong data from its otoprotective program DB-020 would probably make Decibel an attractive acquisition target. Regeneron would be the most natural suitor but other large pharmas flirting with Decibel is not completely out of the question.
Gilead and MacroGenics Announce Oncology Collaboration to Develop Bispecific Antibodies
Gilead’s quest for oncology supremacy continues - this time with CD123.
The last months have been rocky for MacroGenics. Over 15% of the workforce was let go and 2 manufacturing facilities were shut down in order to preserve cash. Back in February MacroGenics had 4 bispecific antibody programs in its pipeline.
One of them, flotetuzumab, which is a CD123xCD3 bispecific antibody, had strong early efficacy data in AML (acute myeloid leukemia). But the asset had its fair share of drawbacks: it presented a high risk of cytokine release syndrome and it had to be infused in an inpatient setting. MacroGenics made the very smart and strategic decision to kill the program and shift resources to MGD024, a next-gen bispecific antibody with the same targets. The move significantly paid-off with the very welcomed cash injection from Gilead - much to the delight of investors.
Drugs targeting CD123 have been piquing the interest of large pharmas for the last years, especially with Stemline Therapeutics’ Elzonris becoming the first FDA-approved CD123-directed drug in 2019.
In 2016, Novartis signed a co-development deal to get the extra-US commercialization rights to Xencor’s CD123xCD3 asset vibecotamab. In 2017, Jazz Pharmaceuticals inked a long-term deal with ImmunoGen for the possibility to commercialize its CD123-directed IMGN632 among other assets. Later in 2017, J&J started touting its CD123-directing antibody talacotuzumab that was developed using Xencor’s technology as a potential blockbuster. Earlier this year, Sanofi struck a deal with IMG Biosciences to develop and eventually commercialize its CD123xCD3 drug IGM-2537.
That being said, there has been a lot of disappointment in CD123-land.
J&J abruptly ended its talacotuzumab program in 2017. Seagen also had to discontinue developing its CD123 antibody-drug conjugate. By that time, the industry in general had began to understand that the best way to target CD123 is through bispecific antibodies - but that didn’t stop Novartis from ditching Xencor’s bispecific antibody because of disappointing early clinical results. Xencor also decided to entirely kill the program off. Affimed announced that it was withdrawing its IND application for AFM28 - its CD123/CD16A asset - after negative feedback from the FDA with regards to its trial design. Immunogen announced recently that it will be facing a 2-year delay in its IMGN632 program due to changes in trial design. Pyxis had to put its CD123-directed program on hold as part of a resource allocation effort. Interestingly enough, its CD123-directed antibody-drug conjugate PYX-203 was in-licensed from Pfizer.
If MGD024 was to hit the market, it would not only be a perfect fit for Gilead’s oncology portfolio but also another stepping stone towards the company’s oncology leadership aspirations. Gilead could very well be the biggest fish in the CD123 pond given everything that has happened recently, but will the Gilead-MacroGenics duo be able to bring the drug to the finish line without significant hiccups given the historically high risk of failure in this space?
DISCLAIMER: This is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
DISCLOSURE: I have no business relationships with any company that is mentioned in this article.