In a deal that could be worth more than $1.6 billion, Cytomx Therapeutics Inc. and Astellas Pharma Inc. are teaming to develop T-cell engaging bispecific antibodies targeting CD3 and tumor cell surface antigens in cancer, with the latter making an $80 million up-front payment.

Shares of Cytomx (NASDAQ:CTMX) were trading premarket at $6.95, up $2.02, or 41%.

The arrangement will deploy South San Francisco-based Cytomx’s Probody bispecific technology, which yields therapeutics designed to stay inactive until spurred by proteases in the tumor microenvironment, so they bind selectively to tumors and leave healthy tissue alone.

Several initial programs are lined up wherein Cytomx leads research and discovery activities, up to clinical candidate selection, funded by Astellas. Cytomx is eligible for preclinical, clinical and commercial milestone payments that would bring the bigger money. Tiered royalties on global net sales are included, too, ranging from high-single digits to midteens.

Astellas, of Tokyo, is hardly the first big partner drawn to the table by the Probody platform. Thousand Oaks, Calif.-based Amgen Inc. signed up in October 2017, pledging $40 million up front and as much as $455 million in milestone-based rewards to access as many as four T-cell engaging bispecific antibodies. North Chicago-based Abbvie Inc. came aboard in April 2016. In May 2014, Bristol Myers Squibb Co. (BMS), of New York, paid $50 million for rights to use Probody in the discovery and development of four immunotherapies for cancer, including one targeting CTLA4, the same receptor targeted by BMS’ approved melanoma drug, Yervoy (ipilimumab).

Wainwright analyst Robert Burns called the Astellas deal “incrementally positive” for Cytomx, noting in a report that the firm has been trading “at a negative enterprise value, with an operational runway into 2022 based on pro forma cash.” The latest tie-up again “demonstrates the degree to which Cytomx’s technology platform continues to attract interest from established pharmaceutical firms” and “should also reinforce confidence among investors that the Cytomx Probody approach remains capable of generating additional shots on goal.” He called the firm “a deep value opportunity in biotech” worth considering “even in the context of the challenging macro environment,” and reiterated his buy rating with a $14 12-month price target.

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