By Alex Philippidis
Eli Lilly (LLY) inked what one analyst called the third largest business development deal ever in the gene editing space on Tuesday, by agreeing to acquire opt-in rights held by Beam Therapeutics (BEAM) to base editing therapies being developed by Verve Therapeutics (VERV).
Lilly agreed to pay $250 million upfront for Beam’s opt-in rights to co-develop and co-commercialize four additional Verve base editing programs focused on three cardiovascular disease targets—PCSK9, ANGPTL3, and an undisclosed third target that was only described as “liver-mediated.”
As a result, Lilly now holds what was Beam’s right to opt-in to share 33% of worldwide development expenses, and jointly commercialize and share profits and expenses related to commercialization in the U.S. on a 50/50 basis. Verve still holds all product rights for the PCSK9 and ANGPTL3 programs outside the U.S., and retains control of the development and commercialization of all products covered by the collaboration. Lilly also agreed to pay Beam up to $350 million tied to achieving clinical, regulatory, and alliance milestones.
PCSK9 is the target in Verve’s sole clinical program indicated for heterozygous familial hypercholesterolemia (HeFH), VERVE-101, and VERVE-102, which is in the IND-enabling phase. ANGPTL3 is targeted by VERVE-201, being developed for both homozygous familial hypercholesterolemia (HoFH) and refractory hypercholesterolemia.
Lilly has also agreed to co-develop a base editing program for an undisclosed ASCVD. The pharma giant added to rights it acquired in June for up to $525 million-plus to co-develop Verve’s “LPA” program, indicated for atherosclerotic cardiovascular disease (ASCVD) with high lipoprotein a [Lp(a)] and using a novel editor.
Of Lilly’s upfront payment, $200 million will be cash and the other $50 million, an equity investment in which it will buy 2,004,811 shares of Beam common stock at $24.94 a share. That purchase will give Lilly a 2.5% stake in the total 79,199,501 common stock shares held as of August 1 by Beam, a developer of gene editing therapies that apply base editing, designed to engineer precise base substitutions while avoiding double-stranded DNA breaks (as occurs in CRISPR-Cas9 gene editing).
“Meaningful upfront capital”
“This deal provides meaningful upfront capital to advance our portfolio of clinical- and research-stage programs, with significant additional value achievable as the Verve programs advance through development,” Beam CEO John Evans said in a statement. “In parallel, it provides Verve with a world-class partner for the long term, given Lilly’s deep expertise and resources in the cardiovascular space.”
Lilly’s deal with Beam delivers the third highest upfront payment ever to a gene editing therapy developer, Sami Corwin, PhD, a healthcare analyst focused on biotechnology at William Blair, and colleagues observed in a research note.
The highest ever is the $900 million upfront that Vertex Pharmaceuticals (VRTX) agreed to pay CRISPR Therapeutics (CRSP) to lead development of the CRISPR-Cas9 gene-edited therapy now called exagamglogene autotemcel (exa-cel, formerly CTX001), under an expanded collaboration inked in April 2021.
The second highest upfront was the $300 million that Pfizer (PFE) paid Beam when the companies launched an up-to-$1.35 billion partnership last year to apply Beam’s in vivo delivery technologies toward base editing programs for rare genetic diseases of the liver, muscle, and central nervous system.
Change of thinking
The Pfizer alliance, and now the Lilly collaboration, mark an apparent change of thinking for Beam and Evans. Speaking on GEN’s “Close to the Edge” interview series in 2021, Evans highlighted that up to then, Beam had not embraced partnerships like CRISPR-Vertex: “We actually prefer to keep things wholly owned, if we’re going to drive them within our core pipeline.”
Corwin and colleagues were among four groups of analysts praising the Lilly-Beam agreement in notes to investors Tuesday.
“We view the transaction with Lily positively as it provides substantial nondilutive capital, enabling the company to realize assured, near-term monetization of its collaboration with Verve and extend Beam’s cash runway into the second half of 2026, allowing the company to achieve meaningful milestones across its pipeline,” Corwin and colleagues wrote.
Michael Yee, equity analyst with Jefferies, and colleagues said the Lilly-Beam deal comes days before Verve is set to present interim data from its ongoing first-in-human Phase Ib heart-1 trial (NCT05398029) assessing VERVE-101 for patients with high-risk HeFH at the American Heart Association (AHA)’s Scientific Sessions 2023 conference in Philadelphia on November 12.
Yee called the timing of the Lilly-Beam collaboration interesting, suggesting that Lilly is confident that Verve’s base editing approach can work against cardio-metabolic disease. He also noted that the deal came nearly two weeks after Beam announced a restructuring and reprioritization of its pipeline of base editing therapies that will include elimination of about 100 jobs—some 20% of its workforce.
Beam said it was overhauling its pipeline strategy to prioritize development of its ex vivo and in vivo sickle cell disease programs—including BEAM-101, which applies the company’s Engineered Stem Cell Antibody Paired Evasion (ESCAPE) non-genotoxic conditioning strategy, and in vivo delivery to hematopoietic stem cells (HSCs).
“Additionally, as Beam continues to execute on the in-house programs with a more efficient structure, the deal should help Beam refocus the resources on the pipeline and more rapidly achieve proof-of-concept,” Yee and colleagues wrote.
Another Jefferies equity analyst, Eun Yang, PhD, and colleagues wrote that the collaboration benefits Verve as well as Beam: “Now w/ LLY, VERV sees an increased probability of getting products to patients quickly & successfully.”
The Verve-Lilly partnership “further de-risks safety & efficacy of VERVE-101,” Yang and colleagues wrote, as does the FDA’s recent clearance of Verve’s IND application allowing U.S. patient recruiting in the company’s Phase I trial of VERVE-101.
Mani Foroohar, MD, a senior research analyst at Leerink Partners focused on genetic medicines, and colleagues praised the Lilly-Beam agreement as delivering “a meaningful improvement in Beam’s balance sheet” by eliminating the company’s need to issue new stock for the short and medium term.
“In our view, LLY is an excellent steward for these rights, with cardiovascular and metabolic drug development expertise and an existing collaboration on VERV’s Lp(a) program,” Foroohar and colleagues wrote.
Yet Foroohar and colleagues also trimmed their firm’s 12-month price target on Beam shares, from $20 to $19, reflecting their removing from their revenue model potential royalties from Verve’s cardiovascular franchise that will now go to Lilly.
Investors took a mixed view of the collaboration, depending which company’s stock they own. Verve investors responded with a buying surge that sent the company’s shares soaring 28%, from $9.41 at yesterday’s close to $12.04.
As of the same time, Beam investors sent shares rising 11%, from $19.11 to $21.14. Beam investors were happy to hear Evans and the company emphasize that the deal with Lilly will extend Bean’s cash “runway” into the second half of 2026—compared with the first half after the restructuring, and 2025 as of the company’s second quarter earnings results in August.
Lilly shares, however, fell 2% from $565.71 to $553.93.
Lilly’s deal with Beam should not have surprised investors, since the pharma giant is months into its partnership with Verve to advance Verve’s preclinical in vivo gene editing program targeting Lp(a).
Verve agreed to advance R&D of the Lp(a) program through the completion of Phase I, with Lilly agreeing to oversee subsequent development, manufacturing, and commercialization. Lilly agreed to pay Verve $60 million, up to $465 million in payments tied to achieving research, development, and commercial milestones, as well as tiered royalties on global net sales.
Lilly has committed itself in recent years to building a portfolio of genetic medicines, as well as stepping up R&D in the specialty. Lilly is developing a $700 million genetic medicine institute in Boston set to open next year and employ 700 staffers, well above initial plans for up to 250. Last year, Lilly added to its genetic medicines portfolio when it agreed to acquire Akouos for up to $610 million, adding that company’s gene therapies focused on treating inner ear disorders.
“This agreement expands the scope of Lilly’s ongoing relationship with Verve and gives us exposure to the full breadth of potential with Beam’s base editing platform,” stated Ruth Gimeno, PhD, group vice president, diabetes, obesity and cardiometabolic research at Lilly. “We believe that single-course gene editing treatments could be a compelling new therapeutic option for patients at risk of cardiovascular disease, and we look forward to working with Verve toward that goal.”
Alex Philippidis is Senior Business Editor of GEN.