Gilead's $375 million Calistoga buy signals shift into oncology and inflammation
This article was originally published in Scrip
Gilead Sciences is broadening its cancer and inflammatory pipeline through a $375 million acquisition of Calistoga Pharmaceuticals, with the potential for that deal to be expanded by an additional $225 million if certain milestones are met.
Investors, however, reacted negatively to the deal, pushing shares of Gilead down as low as $1.03, or 3% on 22 February, before closing at $38.51, a loss of 79 cents, or 2%.
The Calistoga acquisition follows Gilead's earlier deals to acquire Arresto Biosciences, signed in December 2010 for $225 million (scripintelligence.com, 22 December 2010), and CGI Pharmaceuticals, inked in June 2010 for $120 million. ISI Group analyst Mark Schoenebaum said the deals signal a "strategic shift" for the Foster City, California-based HIV and hepatitis B and C drug maker into oncology and inflammation.
With those deals, Gilead is building an oncology franchise with relatively low-cost acquisitions, which Oppenheimer analyst Dr Bret Holley called a "reasonable pipeline diversification approach".
Given Gilead's $5.3 billion in cash and equivalents and an annual cash flow of about $3 billion, Dr Holley said he expected the company to continue to expend cash on share repurchases and additional small, "bolt-on" acquisitions to further diversify the pipeline beyond antivirals.
Seattle-based Calistoga, a privately held firm formed in 2006, with its first financing in March 2007, has a portfolio of compounds that selectively target isoforms of phosphoinositide-3 kinase (PI3K), a pathway that has been shown to be central for signalling cellular proliferation, survival and trafficking.
Calistoga's lead compound, CAL-101, is a first-in-class specific inhibitor of PI3K delta, which is preferentially expressed in leukocytes involved in a variety of inflammatory and autoimmune diseases and haematological cancers.
The compound currently is in Phase II testing as a single agent in patients with refractory indolent non-Hodgkin's lymphoma (iNHL) and in combination with rituximab in treatment-naïve elderly patients with chronic lymphocytic leukaemia (CLL).
Calistoga CEO Dr Carol Gallagher noted that her firm was the first to demonstrate the clinical benefit of targeting the delta isoform of PI3K as a treatment approach for patients with CLL and iNHL.
She praised Calistoga co-founders Drs Mike Gallatin, Roger Ulrich and Neill Giese for their foresight in pursuing delta PI3K isoforms for hematological tumours "at a time when everyone else in the space was focused on pan-PI3K inhibitors and solid tumours".
"They really did see the opportunity in a different way from the rest of the pack," Dr Gallagher told Scrip.
Although Calistoga does not have a special protocol assessment agreement with the US FDA, the firm has been in discussions with the agency about using the results of the company's Phase II study of CAL-101 as the basis for an accelerated approval application of the drug as a treatment for patients with iNHL refractory to rituximab and alkylating agent-containing chemotherapy, Dr Gallagher said.
Phase I data reported this past December in Orlando at the annual meeting of the American Society of Hematology (ASH) showed that 30 patients with iNHL who had received a median of four prior therapies demonstrated an overall intention-to-treat (ITT) response rate of 63% and a median progression-free survival (PFS) exceeding 11 months after receiving CAL-101 as a single agent, Dr Gallagher noted.
Patients treated with CAL-101 did not experience the types of adverse effects routinely associated with many other cancer treatments, such as vomiting, severe headaches and hair loss, she said.
Results also reported at the December 2010 ASH meeting showed that all 51 CLL patients treated with CAL-101 as a single agent had tumour reduction in a follow-up tumour assessment. In an ITT analysis, 80% of the patients had greater than a 50% decrease in lymph node swelling. The median PFS exceeded 11 months, and patients were continuing on treatment past 18 months with sustained tumour control.
Interim results from Calistoga's open-label, multicenter Phase I combination trial also reported at ASH showed that all six patients with iNHL who received CAL-101 plus Treanda (bendamustine) had an objective tumour response, with one patient achieving a complete response. In addition, all five patients with iNHL who had a median of 3.5 prior therapies experienced a decrease in tumour volume with CAL-101 plus Rituxan (rituximab) and 80% had an objective response.
Two patients with CLL receiving CAL-101 plus Treanda and three patients receiving CAL-101 plus Rituxan had an objective response.
"These data have been quite exciting to the community," Dr Gallagher said, adding that those results along with earlier data sparked "quite a lot of interest over the last year or so in our program."
Before the deal with Gilead, "a number of companies" had approached Calistoga about potential partnerships or acquisitions.
Ultimately, Gilead became Calistoga's acquisition partner of choice because of its "shared vision" for developing combination targeted cancer therapies, Dr Gallagher said.
Gilead's combination approach with its HIV drugs, such as Atripla (efavirenz/emtricitabine/tenofovir disoproxil fumarate) and Truvada (emtricitabine/tenofovir disoproxil fumarate), not only provide patients with effective therapies, but treatments that are tolerable and convenient, she said.
"We are not there yet by any means in the cancer world, but I think Gilead has been clearly very successful in developing and commercializing combination therapies for bettering peoples' lives," Dr Gallagher said.
Calistoga also is investigating an oral inhibitor of PI3K delta CAL-263 as a treatment for patients with allergic rhinitis. Its development pipeline also includes preclinical selective PI3K inhibitors, which the firm said may have applications in oncology and inflammatory diseases.
Last June, Calistoga closed a Series C financing of $40 million, which was led by Quogue Capital, along with existing investors Alta Partners, Amgen Ventures, Frazier Healthcare and Three Arch Partners and new investor Latterell Venture Partners. Those funds followed the May 2009 closing of a Series B financing of $30 million and a Series A financing of $26.2 million, which closed in January 2008.
Dr Gallagher said the firms anticipate closing the deal in the second quarter.