DUBLIN – Merck & Co. Inc. is going large on Ablynx NV's Nanobody single-domain fragment antibody platform, adding as much as 12 more immuno-oncology programs to the existing five that it previously signed up for. At up to €340 million (US$372 million) per program in research and milestone payments, the total potential deal size has ballooned from €1.7 billion to €5.78 billion, plus sales royalties on whatever products may reach the market.

The Ghent, Belgium-based firm is getting just €13 million initially, however. "The €13 million up front is very nice for us," Ablynx CEO Edwin Moses told BioWorld Today. "The big dollars come later." The first milestones are linked to the generation of positive preclinical in vivo proof-of-concept data, a point that takes about 18 months to reach from a standing start. Payments associated with the initial five batches of programs should start to flow toward the end of this year.

"That work has progressed very nicely," Moses said. "We are ahead of all our targets." The first clinical trials should follow one to two years later.

For Ablynx, the deal is a "further endorsement of its underappreciated Nanobody platform," Jefferies analyst Peter Welford wrote in a research note. "We believe this alliance offers further validation of Ablynx's platform technology and underscores management's ability to crystallize its value."

The two companies are keeping the identities of the targets under wraps for now, but given Merck's big focus on inhibiting programmed cell death 1 (PD-1) – its PD-1 inhibitor Keytruda (pembrolizumab) is one of just two approved antibodies in this class – finding molecules that combine with that mechanism will be an important theme. (See BioWorld Today, Sept. 5, 2014.)

"The initial focus will be on T cells," Moses said. That does not preclude the two companies from looking at targets expressed by other cell types, including those of the innate immune system, such as natural killer cells or macrophages. The recent $1.275 billion pact between Innate Pharma SA and London-based Astrazeneca plc on the NK-cell-activating antibody IPH2201 exemplifies their increasing prominence in immuno-oncology research. (See BioWorld Today, April 27, 2015.)

For the most part, Ablynx will develop multivalent molecules, which will hit several targets with a single construct comprising two or more nanobodies, joined by a peptide linker. The company has learned how to tune the affinities of different nanobodies, to take account of the varying expression levels of their cognate targets, Moses said. Hitting a specific target two or three times produces highly synergistic, rather than additive, effects, he added. "That's a trick we've found again and again and again."

Kenilworth, N.J.-based Merck, along with New York-based Bristol-Myers Squibb Co. (BMS), has made much of the early running in immuno-oncology. Merck currently has more than 100 trials of Keytruda under way in more than 30 different cancer types. More than 40 combination studies are either planned or are under way, many of them in partnership with collaborators.

SO MUCH TO LEARN, SO MUCH UNKNOWN

Moses said the flood of data Merck is generating from this work will feed into rather than compete with the development alliance. "There is so much to learn in this area, so much that's not known," he said.

Merck's upscaling of the immuno-oncology alliance represents its third piece of business with Ablynx. An earlier pact targeting ion channels for pain indications is still ongoing. (See BioWorld Today, Oct. 3, 2012.)

It has also entered multiple alliances with Darmstadt, Germany-based Merck KgaA. Its most advanced partnered program is ALX-0061, an anti-interleukin-6 (IL-6) nanobody, which North Chicago-based Abbvie Inc., is testing in phase II trials in rheumatoid arthritis and systemic lupus erythematosus.

The company's proprietary lead drug candidate, caplacizumab, which targets the blood glycoprotein von Willebrand factor, is due to enter a phase III trial patients with a rare blood-clotting disorder called thrombotic thrombocytopenic purpura later this year. Data are due in late 2017, although the company aims to file for conditional marketing authorization in Europe before completion of the study. A biologics license application filing in the U.S. is penciled in for 2018. Welford assigns $400 million in peak worldwide sales to the program.

Unlike many of its European peers, Ablynx has, so far, resisted the attractions of Wall Street. It recently raised €100 million in a heavily oversubscribed convertible bond issue – it was able to close the book on the issue after half an hour. But it continues to maintain a watchful eye on European stock issues on Nasdaq. About one-third of its institutional shareholders are American already. "It's not as if the U.S. doesn't know us," Moses said.

Shares in Ablynx (BRUSSELS:ABLX) closed Wednesday at €13.97, up 9 percent.