Merck & Co's Viralytics Buy Puts Oncolytic Viruses Back In Spotlight
Executive Summary
The US major is spending $394m to get hold of Cavatak, an immunotherapy that it hopes will work well in combination with the anti-PD-1 blockbuster Keytruda.
Merck & Co. Inc. has jumped on the merger and acquisitions merry-go-round to snap up Australia's Viralytics Ltd. and broaden its research efforts in oncolytic virus therapy.
The US giant is paying A$502m ($394m), or A$1.75 per share, which represents a premium of 160% to the Sydney-headquartered group's average stock price over the last month. For its money, Merck will gain full rights to Cavatak, an immunotherapy based on Viralytics’ formulation of an oncolytic virus (Coxsackievirus type A21) that has been shown to preferentially infect and kill cancer cells and is being investigated both as an intratumoral and intravenous agent.
The companies have been partners since November 2015 when they inked an agreement to look at combining Cavatak with Merck's anti-PD-1 blockbuster Keytruda (pembrolizumab) and Viralytics provided a progress report at the Society for Immunotherapy and Cancer (SITC) meeting in November last year in National Harbor, MD, about ongoing trials.
Updated results from the Phase Ib CAPRA study in late-stage melanoma patients of the Canatak/Keytruda combination showed good tolerability and a preliminary best overall response rate (ORR) of 61% (14 out of 23 patients) and a disease control rate of 78% (18/23), with very promising durability of response in seven of eleven patients with the most advanced Stage IV disease. These response rates, albeit in the relatively small CAPRA study, exceed the published rates for either agent used alone in patients with late-stage melanoma , Viralytics noted (Cavatak: 28% and Keytruda 33%), adding that there are now 26 of 50 planned patients enrolled in the study. The combo is also in early-stage trials for advanced non-small cell lung cancer and metastatic bladder cancer. (Also see "Nektar/Bristol Deal May Shake Up Immuno-Oncology Landscape" - Scrip, 14 Feb, 2018.)
Catavak is also being studied in combination with Bristol-Myers Squibb Co.'s CTLA-4 immune checkpoint inhibitor Yervoy (ipilimumab) and at SITC, Viralytics gave an update of the MITCI clinical trial, which showed that the combo is well tolerated and has activity in advanced melanoma patients whether or not they have been previously been treated with anti-PD-1 therapies. In the 14 patients who had not been previously treated with Keytruda or other anti-PD-1 therapies, the response rate was 57% and the company noted that in the seven patients who had failed earlier single-line anti-PD-1 treatment, responses have been seen in two of them.
Merck seems to like what it has seen so far and Roy Baynes, head of global clinical development and chief medical officer at Merck Research Laboratories, said in a statement that 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."
The purchase of Viralytics is yet another example of a major checkpoint inhibitor company looking to combinations with other immunotherapies which they hope will prove more effective in more patients than their current offerings. Last week, Bristol signed a headline-grabbing deal (involving a $1.85bn upfront payment) with Nektar Therapeutics which will look at the combination of the latter's interleukin-2 agonist NKTR-214 with Bristol's PD-1 inhibitor Opdivo (nivolumab) and Yervoy.
The proposed acquisition represents something of a revival of interest in oncolytic viruses. The first such therapy to be approved by the US Food and Drug Administration, back in October 2015 for melanoma, was Amgen Inc.'s Imlygic (talimogene laherparepvec), but strong competition from the likes of Keytruda, Yervoy and Opdivo has limited its commercial success.
Interestingly, Merck R&D chief Roger Perlmutter was research head at Amgen in 2011 when the firm got hold of Imlygic through its $1bn acquisition of Biovex. Merck and Amgen have been working on a Keytruda/Imlygic combo since 2014 and there may be a readout from a Phase III trial, KEYNOTE-034, later this year.
As for the acquisition, the board of directors at Viralytics unanimously recommended the deal, subject to there being no superior proposal and an independent expert concluding that it is in the best interest of shareholders. If all goes well, the transaction should be completed by the second quarter.
The news that Viralytics is likely to be bought will have been noted by other biotechs in the oncolytic virus space. These include the UK's Psioxus Therapeutics Ltd., which is developing enadenotucirev with Bristol and France’s Transgene SA, whose Pexa-Vec (pexastimogene devacirepvec) is being investigated in combination with Opdivo for liver cancer. (Also see "PsiOxus Will Seek $50m Series D Financing In H1 2018 To Fund Pipeline" - Scrip, 19 Dec, 2017.)