Seagen Digs Deep For Lava’s Bispecific Antibody
Executive Summary
Deal Snapshot: The Dutch biotech planned to move its preclinical candidate, the EGFR-targeting LAVA-1223, into the clinic later this year. Seagen has shown interest in business development as Merck merger talks have quieted down.
Who: Seagen Inc. , Lava Therapeutics NV
What: Seagen is licensing Lava’s bispecific gamma delta T-cell engager, LAVA-1223.
Why: Irrespective of whether the deal with Merck goes through, Seagen is moving ahead with its own business development strategies.
Financials: The deal includes $50m upfront and up to $650m in milestones.
Analysis: With its potential buyout by Merck & Co., Inc. in limbo, Seagen, Inc. is making good on a hint that an executive made earlier this month that the Bothell, Washington-based biotech would pursue its own corporate development initiatives with a new deal focused on bispecific antibodies with the Dutch biotech Lava Therapeutics, N.V.
The deal centers around LAVA-1223, a bispecific antibody designed to target and activate Vg9Vd2 T cells in the presence of EGFR-expressing solid tumors, which is in advanced preclinical development. Seagen will receive an exclusive global license for the asset enabling it to develop, manufacture and commercialize the drug, paying $50m upfront and up to $650m in development, regulatory and commercial milestones, as well as royalties ranging from the single digits to mid-teens on future sales. Seagen will also have the opportunity to exclusively negotiate rights to apply Lava’s Gammabody technology platform to up to two additional tumor targets.
Despite speculation in June that Merck would acquire Seagen for more than $30bn, the initial fanfare has cooled off as the price of a deal has emerged as an apparent sticking point in negotiations between the two companies, with Seagen’s market capitalization falling from the $33bn it reached back down to pre-rumor levels. Seagen chief financial officer Todd Simpson told a Morgan Stanley investor call on 14 September that he “would not be surprised if Seagen moves forward on some pretty creative and accretive corporate development initiatives.” Investors have reportedly interpreted Simpson’s remarks as signaling a move away from the Merck deal and toward a greater focus on Seagen making deals of its own. (Also see "Investors Cool On Seagen As Merck & Co Merger Hopes Fade" - Scrip, 16 Sep, 2022.)
In addition to fulfilling those remarks, the Seagen/Lava deal also helps to expand Seagen’s overall business from antibody-drug conjugates (ADCs) and small molecules into cancer immunotherapy, given Lava’s focus on bispecific antibodies. Seagen’s approved drugs include three ADCs – Adcetris (brentuximab vedotin), Padcev (enfortumab vedotin-ejfv) and Tivdak (tisotumab vedotin-tftv) – as well as the small-molecule kinase inhibitor Tukysa (tucatinib).
In a 26 September note, SVB Securities analyst Daina Graybosch said the deal was validating for Lava’s technology, while also pointing to a “diverse” group of mid- and large-sized companies exploring the gamma-delta T-cell approach, including a discovery collaboration between Johnson & Johnson with Lava announced in May 2020, as well as Takeda Pharmaceutical Co. Ltd.’s acquisitions of GammaDelta Therapeutics and Adaptate Biotherapeutics in October 2021 and January 2022, respectively. (Also see "Deal Watch: Bristol, Pfizer Lead Off J.P. Morgan Week With Two Deals Apiece" - Scrip, 11 Jan, 2022.)
In a 16 September note following Lava’s second quarter earnings, J.P. Morgan analyst Daniel Wolle noted that the company had been planning to file to start clinical development of LAVA-1223 in late 2022. While LAVA-1223 itself is preclinical, Lava has already had the opportunity to bring some of its assets developed using the same platform technology into the clinic.
Its lead candidate is LAVA-051, a CD1d-targeting Gammabody bispecific in Phase I/IIa development for multiple myeloma, chronic lymphocytic leukemia and acute myeloid leukemia. The company presented data in a poster at the European Hematology Association meeting in June showing early signs of clinical activity in a CLL patient and a multiple myeloma patient, and it plans to have further data from that program in the fourth quarter, with initial Phase IIa expansion cohort data expected in the first half of 2023. An open-label Phase I/IIa study of its other lead clinical asset, the PSMA-targeting LAVA-1207, is expected to have initial data from the Phase I dose-escalation portion in the fourth quarter.