Lilly leads off J.P. Morgan Healthcare meeting with $8 billion acquisition of Loxo Oncology

The annual J.P. Morgan Healthcare conference in San Francisco has started with a bang: Eli Lilly and Company announced this morning as the event was opening that it will pay $8 billion to acquire Loxo Oncology. The deal caps a flurry of cancer-focused partnerships that were unveiled in the run-up to the meeting.

With Loxo, Lilly gains a family of small molecules that address specific genetic drivers of cancer. The purchase includes the recently-approved treatment Vitrakvi, a TRK fusion inhibitor, which in November 2018 became the first small molecule to score US Food and Drug Administration approval for use based on the genetic profile of a person with cancer, rather than the location of their tumor. In addition to winning this so-called tissue agnostic approval, Vitrakvi is notable for its swift path to market—it went from first clinical trial to approval in just three and a half years.

With the deal, Lilly also gains several compounds well on their way to market, including a RET inhibitor that could get the FDA’s stamp next year, a BTK inhibitor in Phase I/II studies, and a follow-on TRK fusion inhibitor meant to address tumors that acquire resistance to Vitrakvi.

But even before most biotech executives had boarded their flights to San Francisco, companies were rolling out the deals that have become a hallmark of the annual industry event. The run-up to the meeting included a mega-merger and several sizable investments in new technologies and modalities.

On Thursday, Jan. 3, Bristol-Myers Squibb stole everyone’s thunder by announcing the $74 billion acquisition of Celgene. If the mega-merger closes, it will create a leader in oncology by combining BMS’ solid tumor-focused cancer portfolio with Celgene’s blood cancer portfolio.

On Friday, a number of other big drug companies joined the fray. Collectively, they committed nearly a billion dollars in near-term capital to access new modalities or technologies that could crack open difficult-to-drug cancer targets.

Genentech announced its first foray into cellular therapy. The company, part of Roche, is paying Adaptive Biotechnologies $300 million up front to jointly develop T-cell therapies that target a patient’s neoantigens, which are proteins made by tumors but not normal cells. Genentech will manufacture these highly personalized treatments.

Another large cancer deal came from Sanofi, which will increase its interest in messenger RNA (mRNA) therapies by investing $91.5 million in the German firm BioNTech. The duo will develop a cancer immunotherapy made up of mRNAs encoding for cytokines. It will be injected into tumors with the goal of provoking the immune system to spot and attack them. The partnership builds on a deal struck in 2015 in which BioNTech is developing up to five mRNA cancer immunotherapies and getting up to $300 million for each from Sanofi.

Meanwhile, Jazz Pharmaceuticals announced a collaboration with Codiak Biosciences to develop cancer therapies directed at five targets. Codiak, which will earn $56 million up front in the pact, is pioneering the use of exosomes, tiny vesicles naturally released from cells, as drug delivery vessels for cancer therapies.

In addition to licensing technologies, several companies forged cancer-focused partnerships with academic centers. For example, GE Healthcare and Vanderbilt University Medical Center will jointly develop diagnostic tools that could allow oncologists to choose the safest and most effective cancer immunotherapy for particular patients. In addition to analyzing data from Vanderbilt cancer patients that have undergone immunotherapy, the partners want to develop PET imaging tracers to monitor tumor responses to drugs.

And The University of Texas MD Anderson Cancer Center unveiled a five-year cancer drug development pact with Hong Kong-based Ascentage Pharma. MD Anderson’s leukemia researchers will help clinical studies of a slate of Ascentage’s apoptosis-targeted small molecules and tyrosine kinase inhibitors.

The deal-making wasn’t limited to cancer. Johnson & Johnson committed $20 million to the start-up Locus Biosciences, which is designing phage therapies to treat infections of the respiratory tract and other organ systems. Phage therapy uses natural bacteria-killing viruses called bacteriophages to fight infections. Locus is giving its bacteriophages a boost by engineering them to use the CRISPR-Cas3 system to chop up bacterial DNA.

And Biogen made two sizable investments in novel small-molecule approaches to addressing serious neurological conditions. In a deal potentially worth $415 million, Biogen and C4 Therapeutics will jointly develop protein degraders for neurological conditions, including Alzheimer’s and Parkinson’s diseases. While conventional small molecules typically inhibit protein function, degraders force bad-behaving proteins to be tagged for the cellular trash bin.

Separately, Biogen will work with Skyhawk Therapeutics to develop small molecules that modulate RNA splicing, or the way that stretches of RNA are pieced together to form the code for building a protein. Skyhawk gets $74 million up front to develop treatments for neurological diseases including multiple sclerosis and spinal muscular atrophy.