Flexus Biosciences Inc., which takes its name from the Latin for "inflection," reached a major via the potential $1.25 billion takeover agreement with Bristol-Myers Squibb Co. (BMS), as the pharma giant disclosed a separate, stock-stimulating deal – also focused on cancer – with Rigel Pharmaceuticals Inc., valued as high as around $340 million.

Shares of South San Francisco-based Rigel (NASDAQ:RIGL) closed Monday at $3.23, up 68 cents, or 26.7 percent on word of the deal, taking aim at transforming growth factor (TGF)-beta receptor kinase inhibitors.

Rigel gets $30 million up front plus the promise of development and regulatory milestone rewards that could mean more than $309 million for a successful compound approved in multiple indications, along with tiered royalties. Rigel has "hundreds" of orally bioavailable candidate with proven preclinical efficacy, CEO Raul Rodriguez told BioWorld Today. "Right now, we're doing [work with] a large number of different types of tumor models, and it's not clear which ones BMS will want to go forward with."

But the show stealer was privately held Flexus, of San Carlos, Calif., which raised its first money in October 2013 and drew $800 million up front and as much as $450 million more in milestone payments, granting New York-based BMS full rights to the firm's indoleamine 2,3-dioxygenase 1 (IDO1)/tryptophan 2,3-dioxygenase (TDO) discovery program, which includes IDO-selective, IDO/TDO dual and TDO-selective compound libraries. From the platform, the lead preclinical small molecule IDO1 F001287 is expected to become the subject of an investigational new drug (IND) application in the second half of this year.

"It's an acquisition of a program, in the end," Flexus' CEO Terry Rosen told BioWorld Today. BMS will fully take on the IDO/TDO program, and "everything else that was within Flexus goes back into a new company. The day after that, Flexus looks essentially the same, minus that really good program. It's an efficient structure, in my mind, to move the program from Flexus to BMS," and ensure that Flexus "continues seamlessly forward."

Although "you can imagine any number of ways of structuring buying a program," this method allows for hefty shareholder value, Rosen said, adding that the milestones are "very achievable within three years." Flexus will retain all non-IDO/TDO assets, including those related to Flexus' phase I FLT3 and CDK4/6 inhibitor and its earlier stage small-molecule Treg cancer immunotherapy programs, as well as the current personnel and facilities.

Farthest along with an IDO1 therapy is Incyte Corp., of Wilmington, Del., with INCB024360, which has reached the proof-of-concept stage and shown "promising activity with checkpoint inhibitors," Rosen said. The Rigel deal, too, is intended to develop a new class of therapeutics aimed at increasing the immune system's activity against various cancers either as monotherapy or in combination with checkpoint inhibitors, such as BMS' melanoma drugs Opdivo (nivolumab) and Yervoy (ipilimumab).

"One doesn't know how this is going to play out," Rosen said, but the mechanisms of TGF-betas and IDO1s are "similar, in that they're both on the side of reversing that immunosuppressive nature of the T-regulatory cells." Although "there's nothing wrong with the idea" of pairing them, "we tend to think more about an IDO inhibitor in combination with something that's doing the other thing, boosting the immune system." Rodriguez said they "might very well be" experimented with together, because so many combinations are being tried in early stage work.

'JUST THE START'

The TGF-beta program was "a bit under the radar," Rodriguez said. "Immune thrombocytopenic purpura [ITP] is still the driver of long-term value for the company," with a phase III trial underway and data expected in the first quarter of next year. BMS' up-front payment is "a pretty good number for us" and "extends the runway yet farther from the post-ITP readout," giving Rigel cash into 2017. Following London-based Astrazeneca plc's decision to return fostamatinib rights to Rigel in 2013, the company pushed ahead with twin phase III studies of the oral spleen tyrosine kinase inhibitor in patients with the bleeding disorder. (See BioWorld Today, Oct. 25, 2013, and July 17, 2014.)

In TGF-beta, Eli Lilly and Co., of Indianapolis, has a candidate in phase II/III development for solid tumors and myelodysplastic syndromes. Wells Fargo analyst Brian Abrahams said "data are limited, but the drug seemed to show an acceptable toxicity profile in hepatocellular carcinoma [low rates of neutropenia, fatigue, and anemia, no medically significant cardiotoxicity], perhaps endorsing the potential of the target, though efficacy was difficult to assess [93-week overall survival amongst patients with alpha-fetoprotein reductions] as a monotherapy."

Abrahams wrote in a research report that he remains "cautious on the commercial prospects of Rigel's lead ITP program, we believe this new deal capitalizes on the company's productive and often overlooked R&D engine. Even though TGF-beta remains an unproven mechanism and the candidates are still preclinical, we think the mechanism makes sense to explore, and with reasonable terms and a good immuno-oncology partner some bounceback from the company's depressed valuations seems warranted."

Flexus' Rosen, for his part, said the as-yet-unnamed new company aims to generate one investigational new drug application candidate per year. In-licensed from Thousand Oaks, Calif.-based Amgen was FLX925, a dual-inhibitor that targets FLT-3 (including FLT-3 mutations) and CDK4/6 for the treatment of cancer, that is "about to enter clinical trials," he said, and the company is "on track to select a preclinical development candidate in the later part of this year" from its Agents for Reversal of Tumor Immunosuppression platform. "We're doing all the work that will lead to a similar selection in 2016," he said. "We view this as just the start."

BMS' stock (NYSE:BMY) closed Monday at $61.29, up 77 cents.