Lured by what Amgen Inc. CEO Bob Bradway called a "compelling opportunity" to strengthen the Thousand Oaks, Calif.-based company's oncology portfolio and support its international expansion strategy, Amgen on March 4 moved to buy South San Francisco-based Five Prime Therapeutics Inc. for $38 per share, or about $1.9 billion.

The deal centers on Five Prime's lead asset, bemarituzumab, a phase III-ready anti-fibroblast growth factor 2b receptor (FGFR2b) antibody being studied for the treatment of gastric cancer that the company said will be complementary to its own internal gastric cancer programs, which include AMG-199 and AMG-910, both antibodies from its bispecific T-cell engager platform.

An analysis of Five Prime's phase II gastric cancer trial showed "a positive correlation between efficacy and expression of FGFR2b on tumor cells," Amgen said, confirming both the target's import and bemarituzumab's activity against it. That evidence suggests that FGFR2b could also play a role in other epithelial cancers, including lung, breast, ovarian and other cancers, it said.

The deal's value ranks third among Amgen's outright acquisitions, a roster topped by its recent $13.4 billion purchase of Otezla (apremilast) from Celgene Corp. and its $9.69 billion purchase of Onyx Pharmaceuticals Inc. in 2013.

In particular, Amgen's chief financial officer, Peter Griffith, said Thursday the transaction "advances our strategic imperative to grow our business internationally, and in Asia Pacific in particular, where gastric cancer is highly prevalent and where we previously stated we expect to generate roughly 25% of our revenue growth over the next 10 years."

Gastric cancer is the third leading cause of cancer death globally, with more than 1 million new cases diagnosed annually, and it is particularly prevalent in the Asia-Pacific region, where Amgen expects to generate significant volume growth in the coming years, it said.

"For context, annually, there are nearly as many cases of gastric cancer in China, Japan and Korea as there are all major solid tumors in the United States," said Amgen R&D chief Dave Reese.

Growing reach in Asia

Folding Five Prime into the mix will extend Amgen's Asia reach into greater China, where Five Prime has a substantial bemarituzumab-focused deal with Zai Lab Ltd. As part of the transaction, Amgen will receive a royalty percentage on future net sales in China ranging from the high teens to the low twenties from a pre-existing co-development and commercialization agreement between Five Prime and Zai Lab.

Murdo Gordon, Amgen's head of global commercial operations, said the company has also been "applying a lot of investment" in Japan. Most visibly on that front, Amgen bought out joint venture partner Astellas Pharma Inc. to take full ownership of Amgen Astellas Biopharma, which is now known as Amgen K.K. Amgen is also "expanding in South Korea and Taiwan with broader public reimbursement of our portfolio there," he said. Regarding bema, Gordon said, "the royalty revenue on China is also not insignificant."

Amgen already, of course, has a substantial tie-up with Beijing-based Beigene Ltd. aimed at expanding its oncology presence in China.

Addressing challenges

Bemarituzumab, sometimes called bema, is an antibody against FGFR2b. It works by blocking FGFR growth factors, which stimulate cancer cells to grow, and is also engineered to help enhance antibody-dependent cell-mediated cytotoxicity, a mechanism that helps natural killer cells to directly kill cancer cells.

Five Prime garnered significant attention for the drug when announcing top-line results of the phase II FIGHT (FGFR2b Inhibition in Gastric and Gastroesophageal Junction Cancer Treatment) trial in November 2020. The phase II readout, from a front-line population of patients with advanced gastric or gastroesophageal junction cancer, showed that adding the candidate to standard chemotherapy helped those whose cancers have a particular genetic signature achieve a statistically significant increase in median overall survival vs. chemotherapy alone.

The phase III trial is expected to look like an expanded version of the FIGHT study, since Amgen's team believes that "chemotherapy in much of the globe will remain a standard of care in advanced gastric cancer and is an appropriate comparator," Reese said.

Acknowledging that "there will be the introduction of checkpoint inhibitors" for gastric cancers though, he said Amgen "will also plan as part of the development program, for example, exploring triplet combinations, which would be standard chemotherapy with a PD-1 inhibitor and bemarituzumab."

Despite the positive data from FIGHT, a "considerable discontinuation rate" of 34%, largely driven by ocular toxicity "do give reasons for pause, in our view,” wrote J.P. Morgan analyst Eric Joseph on Jan. 15, adding that it’s clear that more work is needed to understand and optimize the candidate’s risk/benefit profile.

Addressing that matter, Reese noted that there was no prophylaxis in the FIGHT trial based on the biology of the FGFR2b receptor in the corneum. "We believe there's probably a disruption of the normal – normal physiology and that things like hyperviscous eye drops can help restore that normal – normal physiologic background and hopefully greatly mitigate the toxicity," he said.

One other issue limiting the bema development program to date has been clinical drug supply. Amgen's biologics, process development and manufacturing expertise, centered in part in its new South San Francisco facility, a short walk from Five Prime HQ, could help with that, Amgen's Griffith said.

"Amgen has been fairly transparently 'clearing the decks' for significant M&A in recent months, and the deal makes strategic sense in the context of AMGN’s oncology pipeline," SVB Leerink analyst Geoffrey Porges wrote, calling the premium paid for Five Prime's shares "reasonable" given its late stage of development.

Shares of Amgen (NASDAQ:AMGN) fell about 1% to $221.91 on March 4. Shares of Five Prime (NASDAQ:FPRX) rose 78.7% to $38.

Major shareholders in Five Prime representing those who will presumably benefit from the deal include RA Capital Management, BVF Partners, Rock Springs Capital Management, Blackrock and RTW Investments.

The transaction is expected to close by the end of the second quarter.