Affimed Stock More Than Doubles After $4.9 Billion Deal with Roche

Woman in a white shirt signing a contract with a pen

Heidelberg, Germany-based Affimed NV inked a licensing deal with Switzerland-based Roche for $96 million upfront, but that was only a fraction of the entire deal. Affimed shares rocketed, more than doubling to hit $148.07.

Under the deal, Roche will pay Affimed $96 million in upfront and near-term payments over the first 12 months. Affimed is then eligible for $250 million in developmental milestones, $1.1 billion in regulatory milestones, and $3.5 billion in commercial milestones. This is a total of $4.9 billion, and also includes tiered royalties.

Affimed is licensing its ROCK (Redirected Optimized Cell Killing) platform. This platform allows production of NK cell and T-cell-engaging tetravalent antibodies. Roche plans to use the platform to create NK cell engagers, which create antibody-dependent cell-mediated cytotoxicity (ADCC) responses.

The deal focuses on candidate products created from the ROCK platform, as well as multiple undisclosed solid and hematologic tumor targets. Affimed and Genentech, a subsidiary of Roche, will collaborate on the discovery, early research and late-stage research work. Genentech will handle clinical development and global commercialization efforts.

“We are incredibly excited to work with Genentech, a leader in oncology with a long history of excellence in the discovery and development of medicines to treat cancer,” said Adi Hoess, Affimed’s chief executive officer, in a statement. “This strategic partnership marks an important step on our path to leverage the full potential of innate immune cells in oncology.”

Terry Chrisomalis, writing for Seeking Alpha, notes, “In my opinion, the amount of cash given to Affimed pretty much validates its technology. This deal is expected to close by Q3 in 2018 customary to certain closing conditions. There have only been a few deals in the past that have amounted to a $5 billion milestone payment for a biotech. What that tells me is that Roche really wants to get its hands on Affimed’s Redirected Optimized Cell Killing (ROCK) platform.

The tech platform lets both NK cells and T-cells use both the innate and adaptive aspects of the immune system. The innate immune system recruits T-cells, which identify foreign elements in the patient’s body to be eliminated. The Adaptive immune system directs T-cells to attack cancer cells via antigen presentation. Antigen presentation is where the antigen presented on the surface of a targeted cell so the T-cell can identify and attack it.

The bottom line is the tech platform is likely to help make new immuno-oncology therapeutics and improve current immuno-oncology drugs.

Chrisomalis concludes, “The ability for the ROCK platform to adapt is probably a big reason why Roche was willing to create such a large deal for it. A host of big pharmaceutical companies are looking to improve their immunotherapy products. Such collaborations like this are ideal, because they don’t have to give up too much cash up front. However, if the drug ends up being successful then both companies will benefit. I believe this partnership is a step in the right direction for Affimed. For that reason, I believe that Affimed is a strong buy.”

“Our partnership with Affimed provides an opportunity to enhance our existing efforts to understand how the immune system can be activated to help people living with cancer,” stated James Sabry, Roche’s Global Head of Partnering.

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