DUBLIN – Morphosys AG is taking a first step into bispecific antibody development by licensing ex-North American rights to Emergent Biosolutions Inc.'s cancer immunotherapeutic ES414, in return for $20 million up front and milestones totaling $163 million.

The compound, which Morphosys has designated MOR209, is in preclinical development in prostate cancer, but it would need to gain approval across several indications before Emergent would receive all of the milestones on offer. For now, however, the focus of the program is on prostate cancer, particularly castration-resistant prostate cancer (CRPC).

The two companies have agreed a 64 percent/36 percent split on development costs, the larger burden of which Martinsried, Germany-based Morphosys will shoulder. It will, however, do better on the back end: Morphosys will receive tiered royalties, from mid-single-digits up to 20 percent on sales in Emergent's territories, whereas the latter firm will receive a flat low-single-digit royalty on Morphosys' sales of the product.

Morphosys CEO Simon Moroney played down any suggestions that the up-front payment was over the odds. "We don't see it really as being that generous," he told BioWorld Today. "Deal values have definitely gone up over the last couple of years, driven by the fact that biotechnology companies have a lot of alternative financing options available to them."

MOR209, which is based on Cambridge, Mass.-based Emergent's Adaptir modular protein technology, targets the T-cell activation co-receptor CD3 and prostate-specific membrane antigen (PSMA), a membrane glycoprotein which is overexpressed in about 90 percent of prostate cancers and on the tumor-associated neovasculature of multiple solid tumors. It acts by stimulating cytotoxic T-cell killing of PSMA-expressing prostate cancer cells and by directing a broad T-cell response against the tumor.

The molecule (formerly T-Scorp) has its roots in the Scorpion antibody engineering technology Emergent picked up through its acquisition of Seattle-based Trubion Pharmaceuticals for $96.8 million up front, plus $38.7 million in milestones. (See BioWorld Today, Aug. 16, 2010.)

"It's an artificial construct, but all of it is antibody-derived," Moroney said. Morphosys had carried out lab research, but it had not embarked on a bispecific antibody development program before now. Bringing in an external program offers savings in terms of time and technical risk. "This is the opportunity to add a compound at or close to IND," he said.

The drug inhibited tumor growth and increased survival in a subcutaneous xenograft model. It showed an acceptable safety profile in a nonhuman primate toxicology model, with limited cytokine release. Emergent has also developed a manufacturing process that can support a full clinical development program. It will produce the molecule at its Baltimore plant.

Emergent will sponsor the first trial of the drug, in patients with metastatic CRPC, which is expected to get under way in about six months. That will trigger the first milestone payment of the collaboration. Morphosys will call the shots on the clinical development strategy after that initial study.

A high percentage of patients – 35 percent to 75 percent, depending on their stage – eventually relapse after anti-androgen treatment, according to Morphosys. Existing therapies offer metastatic patients an overall survival benefit of just 2.5 months to four months.

Leverkusen, Germany-based Bayer AG already is conducting an open-label phase I dose-escalation trial in CRPC patients with BAY 2010112, a PSMA- and CD3-directed bispecific T-cell engager (BITE) antibody it in-licensed from Micromet Inc. in 2009. Thousand Oaks, Calif.-based Amgen Inc. inherited that relationship when it acquired Micromet in 2011.

Although some ways behind, MOR209's larger size – its molecular weight is slightly larger than that of an antibody, whereas BITE constructs are about 54 kilodaltons – converts into a longer half-life. "The half-life looks to be fivefold different," Moroney said. "It's a massive issue," he added. "Things like half-life translate into definite advantages in the final product." Blinatumomab, Amgen's CD19-directed BITE antibody requires continuous infusion over a four-week treatment cycle, whereas MOR209 could be dosed around every two days.

For Emergent, the deal is "an incremental positive," wrote JP Morgan analyst Cory Kasimov in a research note, as "it represents monetization of a preclinical pipeline product." The welcome is qualified, however; "given the amount of competition and rapidly changing treatment landscape in mCRPC (and because the product is preclinical) we will await more clarity on the product profile before assigning value to the program."

Shares of Emergent (NYSE:EBS) closed Wednesday at $23.43, down 1 cent.