Apparently Bristol-Myers Squibb liked what it saw when it teamed with Five Prime Therapeutics to co-develop some cancer drugs last year, because the big New York pharma company just plunked down a lot more cash to take at least one of them forward on its own.
South San Francisco-based Five Prime (NASDAQ: FPRX) said this morning that it’s scrapped its old drug development deal with Bristol-Myers (NYSE: BMY) for a new, potentially far more lucrative one. In this deal, Five Prime is getting a fat $350 million check up front, with at least $1.4 billion in potential payments down the road—what are known as “bio bucks,” amounts tied to clinical progress and sales. By comparison, the 2014 deal between the two was worth a total of $350 million combined, and more than $300 million of that was in downstream payments.
Shares of Five Prime soared 65 percent, to $28 apiece, in pre-market trading on Thursday.
Cancer immunotherapy has become all about drug combinations, with drugmakers frantically searching for the right tandems to test to improve the results of treatments that spur on the immune system to fight cancer in one way or another. That’s led to lots of deals—licensing accords, buyouts, and agreements to simply run combination trials—and Bristol has been among the most active looking for the right drug partners for its already approved nivolumab (Opdivo), a “checkpoint” inhibitor that helps the immune system recognize cancer. The company, for instance, agreed to pay $800 million up front to buy out a startup, Flexus Biosciences, just so it could grab hold of another combination prospect—a drug that blocks IDO-1, an enzyme produced by some tumor cells.
Five Prime is one of these partners for Bristol. In the initial agreement, signed in March 2014, Bristol tapped into Five Prime’s drug discovery platform to co-develop therapies targeting some undisclosed “immune checkpoint pathways” that help tumors evade an attack from the immune system. Through that deal, Bristol agreed to test its already approved checkpoint inhibitor, nivolumab (Opdivo), in tandem with a Five Prime antibody drug, FPA008, that homes in on a target called colony stimulating factor 1 receptor (CSF1R), against six tumor types. That trial is ongoing.
With its new investment, Bristol has tossed out the original deal and grabbed full rights to Five Prime’s drug—and any other CSF1R programs—while taking on all the costs of development. Five Prime can opt in to a share of U.S profits. And it still aims to test FPA008 in an inflammatory disease called pigmented villonodular synovitis, which causes pain and swelling in the joints and in cancer paired with its own drugs. Five Prime would pay the costs for those studies. (FPA008 is also in early testing for rheumatoid arthritis.)
Five Prime could get up to $1.05 billion in milestone payments for each CSF1R-blocking drug tested in cancer, and as much as $340 million if they progress in other diseases.
Bristol chief scientific officer Francis Cuss called CSF1R inhibition a “potentially important complementary immuno-oncology” tool to its other cancer immunotherapy drugs, and essentially another arrow in its quiver of combination regimens.