Just months after hitting an all-time low, shares of Immune Design Corp. (NASDAQ:IMDZ) rocketed 310 percent higher Thursday to $5.82 as Merck & Co. Inc. moved to buy the immunotherapy developer for $5.85 cash per share, or about $300 million. The deal focuses on a portfolio of approaches to cancer immunization, adjuvant systems and technologies designed to enhance the ability of a vaccine to protect against infection, said Roger Perlmutter, president of Merck Research Laboratories.
The agreement provides Immune Design shareholders, predominantly venture capitalists and hedge funds, a happy ending to a challenging chapter for the company in which it had to scrap phase III testing for one of its two lead cancer vaccine candidates in October. Lauded by analysts at the time, that move put the focus on the San Diego company's other top bet, the intratumoral TLR4 agonist G-100, but it hurt company shares. That setback was followed by a termination in December of Sanofi SA's 2014 exclusive license to use Immune Design's Glucopyranosyl Lipid A Adjuvant Systems (GLAAS) platform for R&D of potential products to treat peanut allergy. (See BioWorld, Oct. 15, 2018)
"We believe this represents the successful evolution of a successful collaboration with Merck and a 'proof-of-concept' scenario for companies collaborating with Merck," said H.C. Wainwright analyst Joseph Pantginis, who notes that Immune Design ended the third quarter with about $107.4 million in cash.
Shares of Merck (NYSE:MRK) rose 0.5 percent to $79.83 on Thursday.
Merck, which has collaborated with Immune Design since summer of 2015, has tested two separate combinations of the company's candidates – both G-100 and the dendritic cell-targeted lentiviral vector vaccine LV-305 – with its anti-PD-1 Keytruda (pembrolizumab). Early clinical studies in non-Hodgkin lymphoma and melanoma are still underway.
G-100 is designed "to leverage the range of endogenous antigens found in the tumor microenvironment to create a systemic antitumor immune response from local injection," according to the company. During last year's American Society of Hematology conference in San Diego, it reported that phase II data showed overall response rates of 46 percent and 23 percent in patients receiving G-100 with low-dose radiation, with or without pembrolizumab, respectively. Disease control was shown in 92 percent and 85 percent of patients, respectively. Overall progression-free survival was 11.1 months or 7.4 months, respectively.
"The high response rates, favorable durability and excellent safety profile we're seeing for G-100 has prompted us to embark on a potentially pivotal clinical trial in the relapsed refractory setting, as well as pursue additional trials in earlier lines of therapy in follicular lymphoma and other malignancies," Immune Design CEO Carlos Paya said at the time. Neither Paya nor Merck accepted requests for interviews about the acquisition on Thursday.
The company has said little about LV-305 lately, other than to note that under a license agreement regarding lentiviral vector technologies it reached with Theravectys SA, it would in certain cases be obliged to make a commercial milestone payment for each product incorporating the technology.
In addition to Immune Design's GLAAS platform, Merck would also get its Zvex discovery platform, which generates candidates designed to create cytotoxic T cells in vivo. The only asset listed in Immune Design's pipeline from the platform today is ZVex-IL12, a "next-generation intratumoral" therapy intended to deliver IL-12 locally for a systemic immune response.
Future of partnerships unclear
Expected to close early in the second quarter, it's unclear how Merck's acquisition of Immune Design will affect ongoing license and collaboration agreements with Sanofi and Astrazeneca plc's biologics arm, Medimmune. Even as it terminated its peanut allergy deal late last year, Sanofi made of point of noting that a collaboration on the development of a herpes simplex virus immune therapy with Immune Design "remains active and is ongoing."
And two separate license agreements Immune Design inked with Medimmune in October 2010 provide the latter with a worldwide, sublicensable, exclusive license to use Glucopyranosyl Lipid A (GLA) to develop and sell vaccines in two different infectious disease indications. Under each agreement, Medimmune would be obligated to aggregate payments of $62.9 million to $72.5 million, depending on indication and the achievement of certain milestones. But at least one of the programs, a vaccine consisting of the RSV postfusion F protein with GLA in a stable emulsion, failed to meet the endpoint of a phase IIb trial in 2018, so is unlikely to move ahead.
"We will evaluate all of Immune Design's partnerships following closing," Merck spokeswoman Pamela Eisele told BioWorld.
Beyond the cork-popping and sighs of relief likely to be heard around San Diego as Merck's tender offer unfolds within the next two weeks, rejoicing is likely around the San Francisco headquarters of The Column Group, Ecor1 Capital and BVF Partners — all had built up stakes of more than 10 percent in the company — as well as New York-based Topspin Partners, which held 11.8 percent of Immune Design's thinly traded shares.
Credit Suisse acted as financial advisor to Merck in the transaction and Gibson, Dunn & Crutcher LLP as its legal advisor. Lazard acted as financial advisor to Immune Design and Cooley LLP as its legal advisor.