Amgen


 

Amgen, which is looking to bolster its cancer drug pipeline and build its presence in Asia, is acquiring Five Prime Therapeutics in a $1.9 billion deal that checks off both goals.

On Thursday, Amgen announced it has agreed to pay $38 cash for each share of Five Prime, a more than 70 percent premium to the company’s closing stock price on Wednesday. Five Prime develops immuno-oncology drugs and targeted cancer therapies. The jewel of the South San Francisco-based biotech’s pipeline is bemarituzumab (usually shortened to “bema”), an antibody ready to advance to Phase 3 testing in gastric cancer.

“This deal 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 revenue growth over the next 10 years,” Amgen Chief Financial Officer Peter Griffin said on a conference call.

For Five Prime, acquisition by the Thousand Oaks, California-based pharma giant represents a lifeline following a series of clinical and financial setbacks in recent years that left much of the biotech’s fortunes resting on its lead antibody drug.

Gastric cancer accounts for more than one million cancer diagnoses globally and is the third leading cause of cancer deaths worldwide, trailing only lung and colorectal cancers. Five Prime does not aim to address all gastric cancers. The company designed bema to target fibroblast growth factor receptor 2 (FGFR2), a tumor growth protein overexpressed in an estimated 10% of gastric cancer patients.

In 2019, with encouraging safety results from a small Phase 1 study, Five Prime set out to jump straight into Phase 3. The company began enrolling patients, while at the same time hunting for a partner that could execute the full clinical trial. According to Five Prime’s 2019 annual report, the plan was to conduct an early analysis to assess efficacy of the treatment. Depending on the outcome, the company could continue the trial as a Phase 3 test, stop the study, or amend the clinical trial design.

Five Prime noted in the report that even if it received clearance from the independent data monitoring committee to proceed with the Phase 3 plan, carrying out that study would require securing a pharma partner to pay for it. But potential partners told the company it was unlikely to land a collaborator without data from previously untreated patients with gastric or gastroesophogeal cancers. Last year, the company pivoted from its Phase 3 plan and instead began a randomized Phase 2 study.

The Phase 2 results came through last November, showing that the Five Prime drug, in combination with standard of care chemotherapy, met the study’s main goals compared to treatment with chemotherapy alone. But the results were not without problems. Inflammation of the cornea, as well as stomatitis, which is inflammation of the mouth and lips, were higher in the bema group. Also, more patients dropped out of the treatment group than the control arm.

David Reese, Amgen’s executive vice president of research and development, said corneal inflammation was not unexpected because the protein that bema targets is also expressed on corneal cells. That problem can be addressed in future studies with eye drops. Reese added that stomatitis was less of a driver in patients dropping out of the study. The inflammation is a known side effect of the chemotherapy, he said.

Amgen will proceed with a Phase 3 test of bema. Gastric cancer is the lead target, but Reese said the pharma giant will also explore other cancers driven by FGFR2b, such as squamous cell carcinoma of the lung, breast and ovarian cancers, and other solid tumors. Looking further down the road, Reese said Amgen would explore combinations with other types of cancer drugs, such as checkpoint inhibitors and tyrosine kinase inhibitors.

Acquisition by Amgen marks the latest twist in a long road for Five Prime. Founded in 2002 by Bay Area biotech veteran Lewis “Rusty” Williams, the company set out with drug discovery technology that identified proteins on cells that contribute to disease. The company used that technology to design protein drugs addressing those targets, leveraging the platform into partnerships with bigger companies including GlaxoSmithKline, UCB, and Bristol Myers Squibb.

In 2013, with drugs for inflammatory diseases and cancer in clinical testing, Williams took Five Prime public, raising $62.4 million in an IPO priced at $13 per share. Some of Five Prime’s drugs found their way into testing in combination with cancer therapies from its partners. Cabiralizumab, a Five Prime antibody developed to block a protein called colony-stimulating factor-1, was tested in combination with BMS’s nivolumab. But the drug disappointed in 2017 after data from an early-stage test showed higher than expected toxicity.

In early 2019, Five Prime restructured to save cash. Jobs in research, pathology, and manufacturing were eliminated. Later that year, the biotech restructured again and eliminated most of its workers involved in discovering drug targets and creating therapeutic proteins. According to a Five Prime securities filing, most of the company’s lab equipment was auctioned off last April.

Five Prime implemented the corporate shakeups to keep its focus on the cancer drugs that had already reached clinical testing. Cabiralizumab was still one of those drugs. But a little more than a year ago, the antibody failed a mid-stage study in pancreatic cancer. BMS had acquired rights to that drug as part of an alliance that started in 2015. After the Phase 2 failure, the pharma giant said it would not sponsor additional tests of that Five Prime antibody. At that point, shares of Five Prime were trading at around $4.50 each.

BMS remains a partner on two other Five Prime cancer programs. SeaGen is the company’s only other remaining collaborator, with an antibody drug conjugate in preclinical development for an undisclosed disease target. In 2017, Zai Labs licensed rights to develop and commercialize bema in China, Hong Kong, Macau, and Taiwan. The Shanghai-based company is responsible for developing and commercializing the drug in those markets. Amgen will inherit that agreement and will receive a royalty on Zai Lab’s future net sales.

Among Five Prime’s programs, partnered and internal, Bema was furthest along in clinical development. Amgen will evaluate Five Prime’s earlier-stage programs on an asset-by-asset basis, Reese said. Bema is set to join an Amgen pipeline that has gastric cancer drug candidates in early clinical development. AMG199 addresses gastric cancer that overexpresses the protein mucin-17. AMG910 is in development for gastric cancer that expresses the protein CLDN18.2. Reese said that the Five Prime drug is appropriate for Amgen’s strategy to develop targeted cancer therapies.

“One of our beliefs is that the future of oncology broadly is the marriage of immuno-oncology and precision medicine targeting specific molecular alterations, and I think this fits nicely within that broader strategic rubric in a complement to the other assets in our portfolio,” he said.

The boards of directors of both companies have approved the transaction, which is expected to close in the second quarter of this year. If Five Prime receives a superior offer, or if the company backs out of the agreement, it must pay Amgen a $76 million termination fee, according to terms of the merger agreement.

Photo: Patrick T. Fallon/Bloomberg, via Getty Images



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