DUBLIN – Merus NV is banking $40 million up front, plus an equity investment of $20 million, under a research collaboration and license agreement with Eli Lilly and Co.’s Loxo Oncology arm to develop up to three CD3-directed bispecific T-cell engager antibodies. Each program also has up to $540 million attached in development and commercialization milestones, taking the total potential value of the deal to $1.68 billion. Merus would also receive tiered royalties on any product sales, ranging, in percentage terms, from mid-single-digits to low-double-digits.

The agreement marries Merus’s Biclonics bispecific antibody platform, which generates full-length human bispecific antibodies, with Loxo Oncology’s rational drug design and oncology expertise. The companies have not yet disclosed the disease-specific antigens they plan to target.

Merus has invested a considerable amount of cash in building up a capability for generating and identifying CD3-directed T-cell engagers with the appropriate properties for specific tasks. It has “one of the largest if not the largest panel of CD3 T-cell engagers,” CEO Bill Lundberg told BioWorld. It has, in total, 175 CD3-directed antibodies, which are distributed across eight broad family clusters. “These have different binding characteristics on CD3,” Lundberg said. “Within a family, the sequences are quite similar.” But the broad diversity of CD3 binders enables Merus to mix and match CD3 binding affinities and CD3 binding locations, both of which influence biological and clinical parameters, such as levels of T-cell activation, T-cell-mediated killing of cancer cells and cytokine release.

Bill Lundberg, president and CEO, Merus

The agreement is larger in scale and scope than a recent immuno-oncology pact on T-cell engagers between Merck & Co. Inc., of Kenilworth, N.J., and Janux Therapeutics Inc., of San Diego. Those two firms agreed to a two-product deal, priced at up to $500.5 million per program, including up-front and milestone payments, to develop next-generation T-cell engager immunotherapies based on Janux’s Tumor Activated T Cell Engager (Tractr) technology.

The scale of the agreement is smaller, however, than an alliance Merus, of Utrecht, the Netherlands, entered with Incyte Corp., of Wilmington, Del., back in 2016, which involved $120 million up front and another $80 million in equity investment for up to 11 programs The per-program milestones in the current deal are more generous, though, as the Incyte pact involves up $350 million in milestones per product.

So far, that agreement has yielded one clinical-stage program, involving MCLA-145, which targets PD-L1 and the co-stimulatory T-cell receptor 4-1BB (CD137). The molecule is currently undergoing a phase I trial in patients with advanced or metastatic solid tumors or B-cell malignancies.

The improved terms reflect the considerable progress bispecific antibody developers have made in recent years. A large chasing pack now aims to build on the initial success that Amgen Inc., of Thousand Oaks, Calif., achieved with the first approved CD3-directed bispecific T-cell engager, Blincyto (blinatumomab), which gained FDA approval for treating Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia back in December 2014. The drug has considerable shortcomings. Blincyto, which also targets the B-cell antigen CD19, lacks an Fc domain. Comprising two linked single-chain variable fragments only, it has a short half-life and requires daily dosing.

Innovations in antibody engineering have enabled some developers to produce full-length bispecific antibodies that have monoclonal antibody-like pharmacokinetics and manufacturability, while being able to target two distinct antigens simultaneously. In immuno-oncology settings, CD3-directed bispecifics have become a de facto industry standard. At least a dozen such molecules are in clinical development, with disease-associated targets including: CD20, for B-cell malignancies; B-cell maturation antigen, for multiple myeloma; CD123 for acute myeloid leukemia; and prostate-specific membrane antigen, for prostate cancer.

The ambition is to match the kind of deep and curative responses seen with chimeric antigen receptor T-cell (CAR T) therapies, without all of the attendant expense and complexity. “We know that CAR Ts can kill cancer and cure patients,” Lundberg said. “They are complicated medicines.” Bispecific antibodies are more readily manufactured and more readily administered – they do not have the same complex logistical requirements as autologous cell therapies, in particular.

A bispecific antibody is a very different proposition to a classical monoclonal antibody, however, because of the emergent properties associated with engaging two different targets simultaneously, as well as the basic property of having two activities instead of one. “We are learning about the complexity of these molecules,” Lundberg said. Much of the learning comes from clinical trials – failures and successes.

But the broad immuno-oncology field is still at a relatively early stage in learning about what works – and what does not work – in solid tumors. “The real opportunity is not in hematological malignancies,” Lundberg said. Regardless of the modality being pursued, few developers have posted unequivocal evidence of deep and durable responses in advanced solid tumor indications.