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Pieris rises on $1.23B Seattle Genetics immuno-oncology pact; $30M up front

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By Cormac Sheridan
Staff Writer

DUBLIN – Shares in Pieris Pharmaceuticals Inc. rose 20 percent Friday on news of an immuno-oncology deal with Seattle Genetics Inc., which brings in $30 million up front and potentially up to $1.2 billion more in milestones spread across three programs. Boston-based Pieris would also receive tiered royalties that could reach a low double-digit percentage of product sales. It is also retaining a co-commercialization option covering the U.S. for the alliance's second program.

The deal is the third sizeable transaction Pieris has entered of late, following pacts last year with Cambridge, U.K.-based Astrazeneca plc in respiratory disease and Suresnes, France-based Les Laboratoires Servier SAS in immuno-oncology. (See BioWorld Today, Jan. 6, 2017, and May 4, 2017.)

The present deal has more obvious parallels with the Servier agreement – each involves the development of bispecific anticalin-antibody fusion proteins, which will be designed for specific immuno-oncology settings.

Bothell, Wash.-based Seattle Genetics is an ideal partner, Pieris CEO Stephen Yoder told BioWorld, because of its long heritage in selecting tumor antigens to target with antibody-drug conjugates. This time round, however, the two companies do not aim to deliver a poisonous payload to the tumors. "We deliver education to the tumor microenvironment," he said.

Specifically, the companies plan to develop anticalin-antibody fusion proteins that combine an antibody-based tumor-targeting component with an agonistic anticalin that activates a co-stimulatory receptor to drive a T-cell response within the tumor microenvironment. Pieris is already in the clinic with that approach. Its lead immuno-oncology drug, PRS-343, to which it retains full rights, comprises a HER2-targeting antibody and an anticalin that activates CD137 (4-1BB), a T-cell co-stimulatory receptor.

The two companies are not divulging the targets they are pursuing, but the research agenda will be extensive. They are taking a matrix approach with three different anticalins and three different antibodies, which will generate nine fusions in total. Each will be extensively tested before the three best performers will be selected as development candidates.

The $30 million up-front payment from Seagen means that Pieris has banked about $130 million in cash since January last year. The total includes a $12.5 million Astrazeneca milestone during the fourth quarter, which was triggered by the entry into the clinic of PRS-060, an inhalable interleukin-4 receptor alpha (IL-4R alpha) inhibitor in development for asthma.

The company has about $120 million on its balance sheet at present. In share-price terms, it has enjoyed a solid run over the past year, during which the value of its stock has increased more than fourfold, albeit from a low level. Pieris is currently valued at almost $360 million.

"The deals represent a lot of validation of the platform," Yoder said. "It's not a substitute for clinical data, clearly."

That, too, is about to come. By the end of the year, the company expects to obtain read-outs from trials of three molecules, PRS-343, PRS-060 and PRS-080. The latter anticalin, which targets hepcidin, a peptide hormone that plays a key role in regulating levels of iron in the blood, is undergoing a phase IIa trial in anemic patients on dialysis for chronic kidney disease.

Tokyo-based Aska Pharmaceutical Co. Ltd. holds an option on rights in Japan. If the trial is successful, Pieris will look for partners to take it forward in other territories, as the indication is outside its two core areas of interest, immuno-oncology and respiratory disease. Retaining some product commercialization rights in the U.S. has been a common feature of its last three deals. When the time is ripe, the company aims to build out a commercialization arm in the U.S. and to participate in product marketing.

Pieris is still an early stage player, so a multibillion-dollar trade sale, such as Sanofi SA's recent acquisition of nanobody developer Ablynx NV is not on the cards at this point. But the company's anticalin technology, which is based on engineering lipocalins, a family of proteins that transport hydrophobic molecules such as vitamins, steroid hormones and secondary metabolites, is getting increasing levels of visibility in the biopharma industry.

"We view this collaboration and agreement as further validation of the anticalin platform and importantly, it expands the shots on goal and the opportunity to bring an anticalin-based therapeutic to market," HC Wainwright & Co. analysts Joseph Pantginis and Pete Stavropoulos wrote in a research note. They have a price target of $12 on the stock. Shares in Pieris (Nasdaq:PIRS) closed Friday at $8.59, a gain of $1.44 on the previous close.