Arqule Inc. CEO Paolo Pucci said the firm was “limited in what we can comment [on] for the time being” in connection with Merck & Co. Inc.’s deal to pay about $2.7 billion in cash for the company. “There is no better model for bringing a drug faster into the hands of patients and caregivers than the example of Keytruda. I will leave it at that.” Merck’s Keytruda (pembrolizumab), a human PD-1-blocking antibody was first approved in September 2014 for advanced melanoma. The label has been widely expanded since.
Kenilworth, N.J.-based Merck is paying $20 per share for Arqule, of Burlington, Mass., as the phase II dose-expansion study continues with Bruton tyrosine kinase (BTK) inhibitor ARQ-531 for B-cell malignancies. Shares of Arqule (NASDAQ:ARQL) closed at $19.70, up $10.04, or 104%.
In June, Arqule unveiled data showing that ARQ-531, achieved partial responses in four of six heavily pretreated people with relapsed/refractory chronic lymphocytic leukemia (CLL) during the then-ongoing phase I trial. A partial response also turned up in a patient with an especially aggressive lymphoma, Richter's transformation. The results, presented at the 24th Congress of the European Hematology Association in Amsterdam, were the first to demonstrate regression in CLL using the drug's mechanism of action.
All patients with B-cell non-Hodgkin lymphomas in the study had received at least two prior lines of systemic therapy. Final data rolled out at the American Society of Hematology (ASH) annual meeting in Orlando, Fla., and among those impressed was SVB Leerink analyst Jonathan Chang. “Importantly, the data highlighted that five of five evaluable C481Sm CLL patients from cohort seven (65 mg once per day, the recommended starting phase II dose) that received a third scan (cycle nine) are still on treatment and responding, which we view as a winning scenario for durability,” he wrote in a report. During a conference call with investors from the ASH meeting, analyst Chang called the data “phenomenal” and asked whether the company has spoken with other bidders, but Pucci held his ground, declining to answer. He wouldn’t talk about the timeline of how the deal came together, either. “The filings that will be coming, eventually, will shed some light on the past but we have to race forward for our patients,” he said, adding that the impressive data unveiling was “not an unforeseen event,” as findings have gotten “consistently better” with more experiments.
Arqule gained a boost for the flagship candidate last week when competitor Sunesis Pharmaceuticals Inc., of South San Francisco – spurred by “an unauthorized disclosure of the ASH poster on social media” Thursday – made public phase I data with BTK inhibitor vecabrutinib that were followed by the official release Sunday at ASH. Vecabrutinib is being evaluated in a phase Ib/II study in patients with CLL and other B-cell malignancies. The updated findings offered in Sunesis’ press release showed that no responses were observed in the five patients treated at the high-dose 300-mg cohort. Shares of Sunesis (NASDAQ:SNSS) closed today at 38 cents, up 6 cents, or 19%.
Aptose BTK player promising
Under the takeover terms, Kenilworth, N.J.-based Merck through a subsidiary will start a tender offer to acquire all outstanding shares of Arqule, based in Burlington, Mass. Closing, which is expected in the first quarter of next year, is subject to conditions that include the tender of shares representing at least a majority of the total number of Arqule’s outstanding stock, along with the usual expiration of Hart-Scott-Rodino rules. Once the knot is tied, Merck’s acquisition subsidiary will be merged into Arqule, and any remaining shares of common stock of Arqule will be canceled and converted into the right to receive the same $20 per share price as in the tender offer.
Wainwright analyst Joseph Pantginis took the opportunity to talk up San Diego-based Aptose Biosciences Inc.’s “truly differentiated” BTK/FLT3 inhibitor, CG-806, albeit at an earlier stage. At ASH, the company presented posters elucidating CG-806’s mechanism of action in targeting CLL cells and its inhibitory effect on mantle cell lymphoma cells resistant to ibrutinib (Imbruvica, Pharmacyclics LLC/Johnson & Johnson). “As the kinase targeting field has been developed over the last two decades, there has been the proverbial see-saw effect of specificity and broader targeting,” he wrote in a report. “In the end, the field points to hitting the right branches of the kinome tree, while avoiding the branches leading to unwanted toxicities.” CG-806 is “mutation-agnostic, hitting all wild-type and mutant forms of FLT3 and BTK” and bears a “robust safety profile to date by not being the proverbial dirty kinase” drug, since it avoids safety-related kinases. What’s more, he said, the candidate “inhibits clusters of driver kinases that are active in hematological tumors.” Shares of Aptose (NASDAQ:APTO) ended today at $3.54, up 98 cents, or 38%.
Also closely watched at ASH was Indianapolis-based Eli Lilly and Co.’s BTK inhibitor, LOXO-305. Phase I data with the compound in pretreated B-cell malignancies were presented. Overall, the results “suggest the drug could be competitive,” in Chang’s view, though they “deteriorated vs. initial data in the ASH abstract both on efficacy and safety.” LOXO-305 turned up an overall response rate (ORR) of 77% (10/13) in CLL (including BTK-naïve patients), although an ORR of only 55% (6/11) was achieved in patients with prior BTK inhibitor progression and an ORR of 67% (2/3) was achieved in C481Sm CLL patients. Two grade 3 treatment-related adverse events were disclosed in the presentation that were not disclosed in the abstract, he noted. At the start of this year, Lilly took over Loxo Oncology Inc., of Stamford, Conn., for $235 per share in cash, or $8 billion, to bring aboard targeted cancer assets that included approved Vitrakvi (larotrectinib) along with a varied pipeline of promising candidates such as LOXO-305.
Bofa Securities acted as financial advisor to Merck in the Arqule transaction, with Covington & Burling LLP as legal advisor. Centerview Partners served as exclusive financial advisor to Arqule, with Skadden, Arps, Slate, Meagher & Flom LLP as counsel.