For Latest Combo, Merck Bets $394M on Viralytics, Cancer-Fighting Viruses

Xconomy New York — 

The immuno-oncology combination frenzy continues. Merck this morning agreed to pay $394 million for Viralytics, an Australian developer of oncolytic viruses, which could help boost the power of the pharma giant’s cancer immunotherapy pembrolizumab (Keytruda).

The deal gives Kenilworth, NJ-based Merck (NYSE: MRK) rights to CVA21 (Cavatak), an experimental oncolytic virus therapy in multiple early- and mid-stage trials of its effectiveness attacking several cancers.

Oncolytic viruses are engineered to get into tumor cells, replicate, and cause them to explode, in the process activating the immune system to destroy any remaining cancer. Viralytics’s therapy, for instance, is an engineered form of Coxsackievirus that infects cells with specific types of receptors on their surfaces. Those receptors, according to Viralytics, are seen on multiple tumor types.

Oncolytic viruses are one of several emerging cancer immunotherapy tools, like checkpoint inhibitors, which help reveal tumors to the immune system, or “CAR-T” cellular immunotherapy, which modifies patients’ own immune cells to help fight their disease. Amgen (NASDAQ: AMGN) won FDA approval of the first oncolytic virus treatment, talimogene laherparepvec (Imlygic), for melanoma, in October 2015. It acquired that program by paying $1 billion for BioVex in 2011, when current Merck R&D chief Roger Perlmutter was Amgen’s head of research.

Multiple checkpoint inhibitors are now approved for cancers of the skin, lung, bladder, and more, and several others are in clinical development. Yet limitations remain. Only a fraction of patients respond to drugs like Merck’s pembrolizumab or Bristol-Myers Squibb’s (NYSE: BMY) nivolumab (Opdivo), and the race is on to boost those numbers with a variety of combinations. Checkpoint inhibitors are being combined with chemotherapy, other immunotherapies, or other experimental treatments, hoping to broaden the reach of immunotherapy and help more patients respond. More than 1,000 combination trials are under way. At a conference last week on the state of cancer immunotherapy, a panelist noted that this year, 21 Phase 3 clinical trials involving combinations of immunotherapies will produce data.

An oncolytic virus combination is among those set to show results this year. A Phase 3 trial testing pembrolizumab with or without Amgen’s talimogene laherparepvec in melanoma patients, a trial called Keynote-034, is ongoing, and data are expected later this year, according to And Merck has been working with Viralytics since 2015, when the two cut a deal to test CVA21 with pembrolizumab in skin, prostate, lung, and bladder cancers. (Viralytics’s drug is also being studied in several combinations with nivolumab as well.)

“This is a nice tuck-in for Merck for <$400 million and fits very well in [its immunotherapy] strategy,” wrote Evercore ISI analyst Umer Raffat in a note Wednesday morning.

In addition to Viralytics, oncolytic virus developers like U.K.-based PsiOxus Therapeutics, Alameda, CA-based IGNITE Immunotherapy, and Oncorus, of Cambridge, MA, have either garnered investments from immunotherapy players or inked other types of deals with them. Here’s more on oncolytic viruses and their use as cancer fighters.