GlaxoSmithKline PLC (GSK, Financial) just announced it has executed on an option that will see it license a technology developed, and proprietary to, by small-cap biotechnology stock Adaptimmune Therapeutics PLC (ADAP, Financial).
The option exercise comes way in advance of expiry, suggesting GlaxoSmithKline is eager to get things moving with the technology in question. It is an oncology-based technology, which very much goes against the grain of the company's efforts in developing stage health care over the last couple of years. Some may remember the company offloading pretty much its entire oncology portfolio to Novartis AG (NVS, Financial) back in 2015, a swap that saw it pick up Novartis' vaccines unit in return.
Many will also be aware that, under the leadership of relatively new CEO Emma Walmsley, GlaxoSmithKline has been axing development programs and collaboration deals left and right, with a large number of these rooted in oncology assets.
Adaptimmune's technology has avoided the chop.
So why is GlaxoSmithKline so excited about this technology and what does it mean for the company and the oncology space as a whole going forward?
Well, it is worth mentioning up front this is not a brand new collaboration effort. As far back as June 2014, the two companies signed a collaboration agreement that gave GlaxoSmithKline access to a number of assets rooted in the technology in question, which is called NY-ESO. This deal was further solidified in January when the company nominated a second target associated with the NY-ESO technology and, with the nomination, picked up rights to a third and a fourth target going forward.
The latest deal, then, is effectively GlaxoSmithKline saying this – we do not want to mess around with individual assets anymore. We like the technology so much, we want full control of what it produces.
Of course, this is a great validation of the system from Adaptimmune's perspective, and GlaxoSmithKline has paid handsomely for the privilege. Adaptimmune will pick up around $61 million over the course of the transition period (the period during which the assets associated with the technology are transferred), which includes development milestones of up to $23 million and the option payment of $38 million. The successful continuation of development and subsequent commercialization of NY-ESO will trigger additional payments from GlaxoSmithKline to Adaptimmune, rooted in development milestones, tiered sales milestones and mid-single to low double-digit royalties on worldwide net sales.
What's the technology?
As mentioned, it is called NY-ESO. NY-ESO-1 is a cancer antigen or molecule that can trigger an immune response against cancer. The lead application of the tech right now is called NY-ESO SPEAR. This application is rooted in the company's ability to engineer patients’ T-cells to express a T-cell receptor that has a high affinity for — or desire to bond with — specific cancer proteins. Basically, the system allows the immune system to recognize and target cancer cells it otherwise would not be able to and – as a result – would otherwise be pretty much impossible to treat with an immune oncology asset.
Data to date, derived from early to mid-stage trials, has shown this approach can be incredibly effective in these hard to treat cancer types. It is this data that has driven GlaxoSmithKline to make the latest move.
So what is next?
The lead program right now is investigating this treatment accepting a synovial sarcoma indication and there is an ongoing trial underway. As per the latest transaction and its terms, Adaptimmune will continue enrollment in the ongoing synovial sarcoma pilot study, which will ultimately transition to GlaxoSmithKline at the close of the deal. Beyond that, the latter will be responsible for continued clinical investigations, including initiating the registration study in this indication. There is also an ongoing myxoid/round cell liposarcoma (MRCLS) study that will follow pretty much exactly the same path, with Adaptimmune continuing to enroll and GlaxoSmithKline eventually taking the program over entirely.
In two other earlier stage indications, lung cancer and ovarian cancer, Adaptimmune will cease enrollment in ongoing studies and GlaxoSmithKline will take over the development .
Bottom line here is this is a deal in which everybody seems to win. GlaxoSmithKline gets a very promising portfolio of cancer drugs and a platform with which it can create fresh assets over time. Adaptimmune gets a nice infusion of cash, a validation of its primary technology and a one-way extension through at least 2020 (it is not often you can say that about a young biotech company). The oncology space, in particular those patients suffering from cancers mentioned above, are safe in the knowledge this very promising treatment type is being developed quickly and effectively by one of the world's biggest health care companies and will not fall by the wayside for anything outside of inefficacy or lack of safety (i.e., the program will not stop because of a lack of funding).
Disclosure: The author has no positions in any of the stocks mentioned.
