Allogene Therapeutics Inc., a South San Francisco-based company developing off-the-shelf allogeneic T-cell therapies for cancer, is taking a 25% stake in Notch Therapeutics Inc., paying the Canadian startup $10 million up front in an exclusive deal to research and develop new induced pluripotent stem cell (IPSC)-based CAR T therapies. The partners will initially focus on developing next-generation treatments for non-Hodgkin lymphoma (NHL), leukemia and multiple myeloma.
The collaboration "is part of our broader long-term strategy to think beyond what can be achieved with currently available technologies underlying the first- and second-generation CAR T therapies," said Allogene's president, CEO and co-founder, David Chang.
"Repeatedly, people in the field have shown that the T cells are what kill target cells most efficiently," Chang told BioWorld. "We are very interested in having access to a technology that allows an efficient differentiation of IPSCs into functional T cells," an area in which Notch's founders are pioneers, he said.
Allogene, a company created in 2018 with a $300 million series A financing and a portfolio of assets from Pfizer Inc., is already advancing its lead asset, an allogeneic CD19-targeted CAR T, in development for use in relapsed/refractory aggressive NHL. It closed a $372.6 million financing not long after in October 2018. During its quarterly earnings report Tuesday, the company said that patient accrual for a phase I trial of the candidate, ALLO-501, is ongoing, with data expected in the first half of 2020. It has also initiated a phase I trial of another asset, ALLO-715, in patients with relapsed/refractory multiple myeloma. (See BioWorld, April 4, 2018.)
The company's deal with Notch, though, is less about that work and more about the longer term, Chang said. "This is really looking at the long-term perspective, how we see the field, and how we, as one of the leaders in the allogeneic CAR T space," must have a stake in that, he said.
Notch, a Toronto-based company, was created in 2018 to commercialize technology that creates allogeneic gene-edited T cells from stem cells on an industrial scale. It's based on nearly 10 years of research out of the labs of University of Toronto scientists Juan Carlos Zùñiga-Pflücker and Peter Zandstra and University of British Columbia scientist Michael Smith. The company is developing a next-generation approach to differentiating mature immune cells from iPSCs and a Engineered Thymic Niche (ETN) platform that Allogene said offers potential flexibility and scalability for the production of stem cell-derived immune cell therapies.
"Master cell banks of genetically modified, induced pluripotent stem cells could provide an inexhaustible source of cell therapies that may improve outcomes and expand applicability to new areas," said Notch's Zùñiga-Pflücker.
The collaboration could hold significant long-term benefits for both the deal's partners. For Allogene, it delivers technology "that promises to both improve the cell engineering process and decrease manufacturing costs," said Cowen & Co. analyst Marc Frahm. "By using a pluripotent cell source, Allogene has the ability to engineer cells with 100% transduction efficiency (vs. the 70-80% efficiency with the existing, multistep engineering process of cells derived from peripheral blood), creating a more homogeneous and consistent cell product," he said.
For Notch, it could provide not just technological validation, but also millions of dollars from Allogene in potential milestone payments and royalties should any commercial products emerge from the collaboration. In addition to the up-front and $5 million equity stake, Notch is eligible to receive up to $7.25 million on reaching certain agreed R&D milestones, up to $4 million per exclusive target for hitting certain preclinical development milestones, and up to $283 million per target and cell type for meeting certain clinical, regulatory and commercial milestones. Royalties, if paid, would be in the mid to high single digits, tiered and based on net sales.
Allogene, which reported its third-quarter earnings Tuesday, said it had $601.9 million in cash, cash equivalents and investments as of Sept. 30. It logged $40 million in R&D expenses for the third quarter vs. $10.9 million for the third quarter of 2018, and booked a quarterly net loss of $50.7 million vs. $43.5 million for the third quarter of 2018.
Including expenses associated with the Notch transaction, Allogene projects a full-year 2019 net loss of between $200 million and $210 million. Shares in the company (NASDAQ:ALLO) fell 4.4% to $27.66 on Tuesday, marking a 2.7% rise year-to-date.