Shattuck Labs Nabs $118M for Cancer Drugs Like Keytruda, But Better

Xconomy Raleigh-Durham — 

Checkpoint inhibitors do one thing: release the molecular brake that keeps immune cells from recognizing and targeting tumors. This cancer immunotherapy approach has saved countless lives and turned drugs from Merck and Bristol Myers Squibb into blockbuster products.

But what if a single drug could block checkpoint proteins while simultaneously sparking an anti-tumor response? That’s what Shattuck Labs aims to do. Its lead asset is in development under a partnership with Takeda Pharmaceutical (NYSE: TAK), and now the biotech has $118 million more to advance additional compounds to human testing. The Series B round of financing announced this week was led by Redmile Group.

Shattuck first disclosed raising money in 2018, a $46.6 million round that was completed with little fanfare and few details about the company’s plans. Other than the deal with Takeda—which revealed no financial information—the biotech has mostly maintained radio silence. Things are different now.

From operations in Research Triangle Park, NC, and Austin, TX, Shattuck is developing drugs intended to offer a multi-pronged approach to cancer, CEO Taylor Schreiber says. In addition to blocking checkpoint proteins the way that Merck (NYSE: MRK) drug pembrolizumab (Keytruda) does, Shattuck aims to stimulate the tumor necrosis factor (TNF) superfamily, proteins that play a role in immune response. The goal of this dual approach is to address cancers that don’t respond to checkpoint inhibition alone. But achieving both functions in a single drug has been difficult to do with antibodies.

Shattuck’s drugs are fusion proteins. Schreiber says his company designs its drugs using proprietary technology called Agonist Redirected Checkpoint (ARC). The drugs it produces have six costimulatory domains, which are the parts of the drug that activate an immune response.

“These drugs have a structure that can match a target in a way that antibodies never can,” Schreiber says.

Shattuck’s most advanced program, SL-279252, is currently in Phase 1 testing under a partnership with Takeda that began in 2017. In addition to blocking PD1 checkpoint proteins, the drug stimulates OX40, a member of the TNF receptor superfamily. In preclinical studies, Shattuck reports that this combination enhanced the proliferation of T cells and the increased the production of signaling molecules that play a role in the immune response to cancer. This dual approach offers a way to overcome a tumor’s mechanism for suppressing the immune system, Schreiber says.

The most advanced internal Shattuck program, SL-172154, is a fusion protein that blocks CD47 and also stimulates CD40. The former is a protein on the surface of tumors that sends out a “don’t eat me” signal to macrophages, a type of immune cell. By blocking this protein, CD47 drugs are intended to clear the way for macrophages to gobble up tumors. That’s how the cancer treatments developed by Menlo Park, CA-based Forty Seven (NASDAQ: FTSV) work. Early clinical trial results from that biotech’s lead drug were so encouraging that Gilead Sciences (NASDAQ: GILD) shelled out $4.9 billion to buy the company.

But Schreiber says it’s not enough to just get macrophages to eat tumor cells. These cells also need to display bits of the gobbled-up tumors so the immune system recognizes and responds to them—and another way to trigger that immune response is by stimulating CD40. Shattuck’s CD47/CD40 drug is being readied for clinical testing.

Shattuck is not the only company developing fusion protein cancer drugs. Last year, GlaxoSmithKline (NYSE: GSK) paid €300 million (about $336 million) up front to partner with EMD Serono on the German company’s clinical-stage drug bintrafusp alfa. The EMD Serono drug is designed to target the same checkpoint pathway that pembrolizumab blocks. But the fusion protein also targets another pathway that tumors use to evade detection by the immune system. One of the bintrafusp alfa clinical trials is testing it head-to-head against pembrolizumab.

Meanwhile, Alpine Immune Sciences (NASDAQ: ALPN) is developing a drug that blocks checkpoint proteins and also stimulates CD28, which is intended to increase the activation of T cells. The Seattle company has said this approach could address the tumors of patients who don’t respond to a checkpoint inhibitor alone. The Alpine drug, ALPN-202, is currently in Phase 1 testing.

Schreiber says Shattuck’s new cash will support continued development of two clinical-stage programs, which are expected to report preliminary data in mid-2021. The company will also advance two more programs to human testing, one with Takeda and the other wholly owned by Shattuck. The goal is to start those clinical trials in 2021.

“Now that the first compound is moving through the clinic and we’ve discharged a lot of the risks that come with a new biologics platform, the opportunity we think that is open to us as a company has broadened significantly,” Schreiber says.

That opportunity includes autoimmune diseases. Some of the currently available autoimmune medicines target TNF. Schreiber notes that one of them, the Amgen (NASDAQ: AMGN) drug etanercept (Enbrel), is a single-sided fusion protein.

“There’s many things you’d want to stick to the other side to extend its function,” he says, before clarifying that Shattuck intends to work only with drugs that come from its technology platform. Through that platform the company’s researchers have discovered more than 300 molecules, for potential applications in both cancer and autoimmune disorders. But in the near term, Shattuck will focus on developing cancer drugs.

The technology that forms the basis of Shattuck’s protein fusion research was licensed from Durham, NC-based Heat Biologics (NASDAQ: HTBX). In 2016, Shattuck paid Heat a $50,000 licensing fee, according to Heat’s securities filings. Schreiber says that at the time of the deal, the Heat technology was a patent application and the vast majority of Shattuck’s intellectual property was developed in-house. But if Shattuck is able to successfully develop and commercialize new drugs, it would owe Heat milestone payments and royalties from sales.

Besides Redmile Group, other new investors participating in Shattuck’s latest financing include Janus Henderson Investors, Fidelity Management & Research Company, EcoR1 Capital, Hatteras Venture Partners, hedge fund Avidity Partners, Partner Fund Management, Laurene Powell Jobs’s Emerson Collective, and Piper Sandler (NYSE: PIPR). Some of these firms are so-called crossover investors, firms that invest in both private and public companies. Crossover investment is viewed as an indicator that a company is preparing for an IPO.

Asked whether Shattuck is readying to tap the public markets, Schreiber says that many biotechs looking ahead to mid-stage clinical trials often consider doing so, “and that is certainly something on the roadmap.” He adds that the company is gratified to be backed by investors who provide capital today and offer “the ability to participate in an IPO when that’s appropriate.”

Image: iStock/Dennis Ludlow