This Biotech Forges $200+ Million Research Pact With Incyte

December 21, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Incyte Corporation , located in Wilmington, Del., and Merus NV , headquartered in Utrecht, Netherlands, announced they have signed a global, strategic collaboration deal. The two companies will identify, discover and develop bispecific antibodies for immuno-oncology purposes.

The companies will use Merus’ Biclonics technology platform. Biclonics are human bispecific antibody therapeutics based on a full-length IgG format.

Incyte, as part of the deal, gets exclusive rights for up to 11 bispecific antibody research programs, including two of Merus’ preclinical discovery programs. Incyte will pay Merus $120 million up front. Incyte also is buying 3.2 million shares of Merus stock at $25 per share, an equity investment of $80 million.

Of the 11 programs, one of those is a current preclinical program, and Merus will retain all rights to develop and market any products in the U.S., with Incyte holding the rights to develop and market approved products outside the U.S. Of that particular program, both companies will pay the other tiered royalties from six to 10 percent on net sales in their respective territories.

Merus also holds the option to co-fund development of any potential products that come out of two other programs. For any product that comes out of exercising that option, Merus will take on 35 percent of global development costs in exchange for a 50 percent share of U.S. profits and losses and tiered royalties ranging from six to 10 percent on sales outside the U.S. by Incyte. In addition, Merus can provide up to 50 percent of “detailing activities” for any products that come out of these programs in the U.S.

That leaves eight more programs. For those eight, Incyte will fund all development and commercialization activities. Merus could receive various milestone payments up to $350 million per program. If all were successful, the total milestones could hit $2.8 billion.

Just yesterday, The Motley Fool cited Incyte as a company whose stock is undervalued and likely to dramatically improve. The company currently has two products on the market, Jakafi and Iclusig. Jakafi is a JAK1 and JAK2 inhibitor to treat polycythemia vera. In May, Incyte acquired the European rights to leukemia drug Iclusig from Ariad Pharmaceuticals .

Jakafi sales grew 38.8 percent in the third quarter, and are projected to double in the coming years. It has a strong pipeline. Baricitinib, with which it has partnered with Eli Lilly , showed positive results in a head-to-head trial against Humira. If approved, it could generate $2 billion-plus annually for the two companies.

Incyte also has epacadostat in a late-stage combination trial with Merck and Co. ’s Keytruda. If successful, it could hit the market as part of a combination therapy for patients newly diagnosed with advanced melanoma.

In addition, Merus will hold on to both of its clinical candidates and MCLA-158, as well as its technology platform and any future programs that it develops outside this deal. MCLA-158 is expected to begin clinical trials for colorectal cancer by the end of 2017.

“By virtue of a unique ability to simultaneously engage multiple protein targets, we believe bispecific antibodies have the potential to play an important role in the future of biotherapeutics,” said Reid Huber, Incyte’s chief scientific officer, in a statement. “This collaboration with Merus expands our large molecule discovery capabilities into an innovation-rich area of research, creating additional opportunities for us to deliver on our commitment to improving and extending the lives of patients with cancer and other serious diseases.”