Anaptysbio Inc.’s SHM-XEL antibody-making platform that replicates somatic hypermutation in vitro drew yet another partner, this time Tesaro Inc., which agreed to pay $17 million up front for rights to three cancer antibody programs and could fork over as much as $108 million per target as Tesaro makes progress beyond the preclinical stage with each.

“It’s the biggest and most strategic deal we’ve done,” said Hamza Suria, president and CEO of San Diego-based Anaptysbio, which has chalked up agreements with the likes of Roche AG, Merck & Co. Inc., Novartis AG, Celgene Corp., Gilead Sciences Inc. and Momenta Pharmaceuticals Inc.

“The other relationships were more about our platform technology,” Suria told BioWorld Today. But in the deal with Tesaro, of Waltham, Mass., “we’ve already developed a number of the antibodies involved in the transaction,” he said. “They were in our portfolio.”

The antibodies target programmed death-1 (PD-1), T-cell immunoglobulin mucin-3 (TIM-3) and lymphocyte activation gene-3 (LAG-3), and the programs include not only monospecific but also dual reactive candidates, in which, “as opposed to combining two different antibodies to treat a patient, a single antibody is designed where it hits both targets,” said Tesaro CEO Lonnie Moulder. Such an approach could bring better efficacy and safety at lower cost, Moulder said, calling the method “quite unique.”

Anaptysbio and Tesaro will handle preclinical matters together, with Tesaro taking the ball from there, paying all development costs. If products reach the market, Anaptysbio will get tiered, single-digit royalties. The potential milestone payments break down as $18 million per program in R&D and $90 million related to submissions and approvals, inside and outside the U.S.

Though anti-PD-1 candidates have generated plenty of clinical data, “with the TIM-3 target, we would be at the front of the pack,” Moulder said. “There is only one LAG-3 antibody in the clinic, and that trial just started in the fall, so we would not be that far behind.” New York-based Bristol-Myers Squibb Co. is now enrolling patients in the phase I trial with its LAG-3 candidate.

Antibodies to immune checkpoint receptors have shown promise in melanoma, kidney tumors and non-small-cell lung cancer, disease types that seem particularly good at sneaking around the receptors, as does “any tumor that’s highly mutated,” Moulder said, such as triple-negative and BRCA-positive breast cancers.

By blocking the interaction of PD-1, TIM-3 and LAG-3 with their ligands, the antibodies at the center of the Anaptysbio/Tesaro arrangement could restore immune function, and might be used in combination with Tesaro’s internal pipeline, which includes a poly ADP-ribose polymerase inhibitor and an anaplastic lymphoma kinase inhibitor. They could work with other anticancer agents, too. Such is the hope, at least.

IMMUNOTHERAPY BOOSTER

Tesaro finished 2013 with $130 million in cash, and in February raised $95 million. “We’re positioned well, from a capital standpoint,” Moulder told BioWorld Today. “The first year or so of expenses are not substantial, and with the rolapitant phase III program now complete, our R&D expenses associated with that will decline.” Rolapitant, the neurokinin-1 receptor antagonist for chemotherapy-induced nausea and vomiting, reported phase III data late last year. (See BioWorld Today, Dec. 24, 2013.)

Moulder said the anti-PD-1 program will enter the clinic first, around mid-2015, followed every three months by TIM-3, LAG-3 and the two dual reactive antibodies. With the deal, Tesaro takes its place in “a revolution that’s under way in cancer therapy,” he said.

Believers in the Anaptysbio platform abound. Alloy Ventures, Avalon Ventures, Frazier Healthcare Ventures and Novo A/S have invested in the firm. “We’ve had over two dozen successful therapeutic antibody programs that have been generated with the platform,” Suria said. About two years ago, Anaptysbio started investing in its internal pipeline. The firm found “three or four key therapeutic areas where we saw opportunities for us to create novel products,” including cancer immunotherapy – now partnered with Tesaro – and inflammation.

In January, the firm disclosed work with ANB020, first-in-class antibody to interleukin-33, which could treat diseases mediated by type 2 helper T cells, such as atopic dermatitis, asthma, allergic rhinitis and food allergies.

“We’ve had a lot of partner interest, because we’re the first to generate it, and we’re certainly having those conversations,” Suria said. The company intends to “hang on to [ANB020] and continue creating value,” but “you have to be entrepreneurial and adjust to opportunities. Never say never in biotech.”

In the earlier collaborations, “a number of programs are moving through the pipelines,” Suria said. “I’m not able to say exactly where they are, but we’ll make those announcements over time, when those products move through the clinic in the next year or so.”

Shares of Tesaro (NASDAQ:TSRO) closed Thursday at $38.86, up $8.38, or 27.5 percent. Wall Street’s enthusiasm could augur well for such firms as South San Francisco-based Five Prime Therapeutics Inc., which went public in the fall of 2013. The firm’s platform, which has yielded most of its funding, includes a library of more than 5,600 human extracellular proteins. (See BioWorld Today, Sept. 19, 2013.)

Wells Fargo analyst Brian Abrahams, in a research report on Five Prime, wrote that the reaction to Tesaro’s deal suggests the “upside [that] smaller-cap companies can generate upon positive progress with early immuno-oncology programs, given the promise of the field.” Based on talks with the firm, Abrahams said he believes Five Prime “may be close to finalizing a collaboration deal with a pharma company.”