Eli Lilly and Co. is expanding its January partnership with Zymeworks Inc., adding up to $375 million in milestones plus an equity investment to support development of several bispecific cancer immunotherapies.

The deal arrives on the heels of an oversubscribed private placement that's providing Zymeworks with more than C$17.3 million (US$15.5) to advance its own cancer candidate, ZW25, toward a planned investigational new drug application filing and a phase I trial in the first half of 2016.

The partners first began to collaborate in January 2014, at which time Zymeworks, of Vancouver, British Columbia, entered a licensing and collaboration agreement with Lilly's Imclone Systems. That deal covered the development of an undisclosed number of bispecific antibody oncology therapeutics using Zymeworks' Azymetric platform, as well as a global license to the platform itself.

"Having multiple cancer pathways and technology platforms will be critical in an era of combinations to ensure sustainability beyond any single asset," Sue Mahony, president of Lilly's oncology division told BioWorld Today. "We believe these novel bispecific immunotherapies could potentially provide a new approach for patients around the world, especially in combination with Lilly's current oncology portfolio of small molecules, antibodies, antibody drug conjugates and T-cell receptor-based biologics."

The expansion includes both development and commercial milestones, which make up the bulk of its potential pay, plus tiered sales royalties based on country-by-country intellectual property and sales. Lilly is also providing an undisclosed up front, undisclosed equity investment in Zymeworks. The deal focuses primarily on the U.S. and Japan.

Talk of enlarging the scope of the deal began in July before climaxing in a sleepless night of bi-hourly negotiations to hammer out the details earlier this week, Zymeworks CEO and president, Ali Tehrani, told BioWorld Today. Lilly's equity investment, he said, is a game-changer for the company, indicating its confidence in it at a key moment, when the company is pondering pursuit of a mezzanine financing or 2016 initial public offering.

Antibodies developed on the company's Azymetric platform resemble IgG1 antibodies, the class of antibody pharma best understands, has de-risked in the clinic, and is totally comfortable with, said Tehrani. "What we've done is stayed true to what they like while making the antibody bispecific."

INNOVATION FOR LILLY

Bets on new innovations are important to Lilly's future. The Indianapolis-based drugmaker saw earnings drop 58 percent from a year ago. It earned $500.6 million in the third quarter vs. $1.2 billion a year earlier, reflecting a long fall from late 2010, when generic competition to Gemzar (gemcitabine) first appeared, followed in rapid succession by the arrival of generics of its schizophrenia drug, Zyprexa (olanzapine), Cymbalta (duloxetine) and Evista (raloxifene).

Approvals for the type 2 diabetes drugs Jardiance (empagliflozin) and Trulicity (dulaglutide) have brightened Lilly's fiscal outlook some, but investors are expecting a lot from the company in years ahead, which CEO John Lechleiter told investors on a Thursday earnings call is beginning "to turn the corner with multiple new product launches over the course of this year and next."

In addition to Zymeworks' contribution, Lilly's immunotherapy research portfolio also includes contributions from Oxford, UK-based Immunocore Ltd., which inked a deal to leverage the company's Immtac T-cell receptor technology to develop new cancer therapies in July. (See BioWorld Today, July 17, 2014.)

Lilly shares (NYSE:LLY) lost 33 cents Thursday, to close at $64.35.

ON ITS OWN ROAD

In addition to deepening its work with Lilly and continuing to collaborate with Merck & Co. Inc. in a development partnership dating back to 2011, Zymeworks is also pursuing its own portfolio, led by a trio of therapies for both solid and liquid tumors. (See BioWorld Today, Aug. 30, 2011.)

The company will use most of the proceeds from its private placement, the investors in which were not disclosed, to continue the advancement of its bispecific pipeline candidates, which includes four disclosed candidates and seven undisclosed preclinical and discovery candidates.

Zymeworks most advanced program, ZW25, targets breast cancer, specifically focusing on treating what Tehrani said is the largely unmet need of HER2-positive patients whose tumors express low levels of the protein.

Zymeworks also is advancing ZW33, an antibody drug conjugate to treat patients whose tumors have become resistant or refractory to treatment with Kadcyla (ado-trastuzumab emtansine, Roche AG), as well as ZW34, a direct competitor to Amgen Inc.'s blinatumomab (AMG 103) with a much-improved delivery profile and longer half-life.