BioWorld Today Correspondent

NovImmune SA secured CHF62.5 million (US$56.5 million) in what may well turn out to be the largest private equity deal completed by a European biotechnology firm this year.

NovImmune, based in Plan-Les-Ouates, Switzerland, is using part of the proceeds to regain control over NI-0401 and NI-0501, two fully human monoclonal antibodies it out-licensed to what was then Serono SA, of Geneva, in a deal potentially worth up to $122 million.

A strategic review, prompted by Serono's subsequent acquisition by Merck KGaA, of Darmstadt, Germany, determined that neither product would be part of the Merck-Serono portfolio. The merged entity had, in particular, decided to exit from diabetes, a key indication for NI-0401, the more advanced of the two compounds.

As part of the wind-down of the relationship between the two companies, Merck-Serono also is exiting from the equity position it gained as part of the original 2005 deal with NovImmune.

"A very small portion of this [investment] is for the buyout of the Merck-Serono shares," NovImmune CEO Jack Barbut told BioWorld Today.

Although he declined to disclose the cost of getting NI-0401 and NI-0501 back, the company has sufficient cash for the next 18 to 24 months even without gaining any additional income from potential partnering deals.

"By that time, we will have at least two compounds with solid Phase II data in hand, and two or three more with early Phase II or Phase I data," he said.

Moreover, the company is open to new deals, since it does not have the resources to develop its pipeline, which now comprises seven distinct antibodies, each of which has potential in several autoimmune conditions. "I would be very surprised if we go through the next 18 to 24 months without announcing any partnerships," Barbut said.

NI-0401, which targets the epsilon chain of the T-cell CD3 receptor, is the company's lead product, having undergone a Phase IIa trial in Crohn's disease and early stage studies in preventing transplant rejection. The company is planning a multicenter Phase II trial in Type I diabetes, which will commence in the current quarter.

The study will recruit between 100 and 200 patients. "It's a Phase III-enabling Phase II study," Barbut said. "The earliest we can expect a readout is the first half of 2011."

CD3 - which forms part of the T-cell receptor complex and plays a key role in T-cell activation - has long been considered a key immune target. During the 1980s, Johnson & Johnson, of New Brunswick, N.J., developed a murine monoclonal antibody called Orthoclone OKT3 (muromonab-CD3), but it is rarely used owing to severe side effects.

"The primary difficulty with that target has been the initial toxicity, which was linked to the potential benefit," Barbut said.

Anti-CD3 therapies can lead to cytokine release, as well as a transient reactivation of latent Epstein Barr virus infection. "I think the [understanding of the] biology has significantly advanced," he said.

NovImmune's fully human antibody has exhibited no signs so far of immunogenicity, while it also exhibits a low level of aggregation, and its Fc portion has been modified to reduce - but not eliminate - cytokine release.

Other companies targeting CD3 include Rockville, Md.-based MacroGenics Inc. and Cambridge, Mass.-based Tolerx Inc., which are running Phase II/III and Phase III trials of teplizumab and otelixizumab, respectively.

NovImmune's second clinical-stage antibody is NI-0801, which targets the chemokine IP-10 (or CXCL10), which is involved in immune cell recruitment and is associated with multiple autoimmune conditions.

The second re-addition to NovImmune's portfolio, NI-0501, targets interferon-gamma, and also has potential in multiple autoimmune and inflammatory conditions. It will enter the clinic next year.

An anti-RANTES antibody also is in preclinical development, while antibodies that target Toll-like receptor 4 (TLR-4), Interleukin-17 (IL-17) and IL-6Rc are at an earlier stage of development.

The new financing, which was led by existing investor BZ Bank AG, of Wilen, Switzerland, takes NovImmune's total investment to CHF154 million.

The company went out to the market last year, in advance of the recent financial "catastrophe," Barbut said. "It would probably have been a lot tougher had we tried to go out now."

Published  May 12, 2009