Big pharma turns to small biotechs for edge in cancer treatment

Partnerships between big pharma and small biotech companies have highlighted the scramble for assets in a new category of medicines billed as the most important breakthrough against cancer for decades.

Novartis of Switzerland, Merck of the US and its German namesake Merck Serono have all forged alliances aimed at strengthening their position in the race to develop so-called cancer immunotherapies.

These are drugs that harness the immune system to fight tumours by removing the "invisibility cloak" that cancer cells use to evade detection. In clinical trials, people with advanced forms of the disease have been kept alive for months and in some cases years after exhausting other treatment options.

This, in turn, has stirred investor excitement about a drug category that some analysts think could be worth up to $40bn a year within a decade - and intensified competition among pharma companies for the most promising research and development.

The early leaders are Merck and Bristol-Myers Squibb. They won approval from the US Food and Drug Administration last year for rival melanoma treatments that work by disabling a protein called the programmed death receptor, or PD-1, that normally defends cancer cells from attack by the immune system.

However, everyone agrees that these drugs - Keytruda from Merck and Opdivo from Bristol-Myers - are only a first and imperfect step. While producing impressive results in some patients, more than two-thirds of trial participants showed no response.

This has encouraged other companies to think that, while Merck and Bristol-Myers have a head start, there is still everything to play for. "Checkpoint inhibitors are going to be important, but on their own they will not cure cancer," says Mark Fishman, president of the Novartis Institutes for Biomedical Research, the drug discovery arm of the Swiss group.

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"If you inject a tumour with this agonist in mice, it not only destroys that tumour but other tumours also disappear," he says. "So the immune system is being educated to identify cancer. We have effectively vaccinated the mouse against the disease."

However, the reference to mice brings a reminder that this is early stage science yet to be proven in humans. Novartis agreed last week to pay $200m upfront to license the Sting technology from Aduro with a further $500m dependent on success.

Andrew Baum, analyst at Citigroup, says the deal highlights "the significant value that industry is willing to place on truly novel immunotherapies, even ones in pre-clinical development". He has likened the potential of immuno-oncology to the antiretroviral drugs that have turned HIV from a death sentence into a chronic disease.

Some sceptics worry the industry is getting carried away. Amit Roy, an experienced pharmaceuticals analyst who runs research firm Foveal, last week predicted that checkpoint inhibitor sales would peak at about $10bn a year - less than half that expected by many investors.

This uncertainty helps explain why the two frontrunners are trying to widen their portfolios beyond Keytruda and Opdivo. Bristol-Myers in February agreed to acquire Flexus, a Californian biotech company, for up to $1.25bn to gain access to a different kind of checkpoint inhibitor, targeting an enzyme called IDO that plays a similar role to PD-1 in disguising cancer.

Merck last week agreed a deal to test Keytruda together with a different kind of cancer drug being developed by a Massachusetts company called Syndax. This reflects a growing consensus that checkpoint inhibitors will work best in combination with other therapies.

Novartis, Roche and AstraZeneca all believe their greater breadth of existing cancer drugs combined with new immunotherapies will allow them to prevail in the long run. "Monotherapies might put you in remission, but the cancer will come back," says Mr Fishman. "So we need a mopping up operation that finishes the cancer completely."

Perhaps the greatest buzz surrounds a technique called adoptive cell therapy. This involves removing immune cells from the patient's body and re-engineering them into chimeric antigen receptor T-cells able to hunt and destroy tumours. Novartis is at the forefront with its CART-19 leukaemia treatment but others are crowding in.

Amgen, the big US biotech group, in January agreed an R&D collaboration worth up to $585m with Kite Pharma, a Californian company that, together with Seattle-based Juno Therapeutics, is vying with Novartis for leadership in CAR-T cell therapy.

Pfizer, Johnson & Johnson and Celgene have also partnered with smaller companies in the CAR-T cell field. They were joined last week by Merck Serono after its co-development deal worth up to $941m with US-based Intrexon. The German company is also developing a checkpoint inhibitor with Pfizer in a $2.85bn collaboration.

Belen Garijo, chief executive of Merck Serono, the drugs arm of the German Merck group, says that, in such a fast-moving field, partnerships are a good way of sharing risk and expertise. "There will be [types of cancer] where we are third or fourth [in the market], but there will be others where we are first or second and they will be our priority," she says.

Not all the deals will pay off. There remains much to prove medically and commercially. Pricing will be a challenge as financially strained health systems try to keep a lid on costs. But, with more than 200 different types of cancer to target and rising demand from an ageing population, Mr Fishman says there is no shortage of opportunity. "This is a marathon and we are only just at the beginning."

Investment targets immune system

A range of different approaches falls under the umbrella of immuno-oncology. The common factor is that they all involve enhancing the ability of the immune system to identify and destroy cancer cells.

Scientists often describe these techniques as applying an accelerator to the immune system, or removing the brakes that normally hold it back. Of the various types of immunotherapy, two are causing the greatest excitement.

The first aims to disable the "immune checkpoints" that deter disease-fighting T cells from attacking tumours. These checkpoints are designed to prevent the immune system killing healthy cells. But they are exploited by cancer to avoid detection.

Drugs such as Keytruda from Merck and Opdivo from Bristol-Myers Squibb work by blocking a checkpoint called the programmed cell death receptor 1, or PD-1. This clears the way for T cells to attack the tumour. However, these drugs have so far proved effective in only a minority of patients. Research is now focused on how to widen their benefit.

The second area attracting heavy investment is adoptive cell therapy. This involves removing T cells from the patient's body and modifying them in a laboratory with chimeric antigen receptors.

Once reinfused in the blood, these genetically engineered CAR-T cells proliferate into a cancer-hunting army that targets proteins on the surface of tumour cells.

This technique has produced impressive results against leukaemia and other blood cancers in early trials of drugs from Novartis, Juno and Kite. But their potential in solid tumours remains unproven and the great potency of the therapies also brings safety risks.

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