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May 10, 2018

Lilly to Acquire Armo BioSciences for $1.6B

  • Eli Lilly plans to acquire Armo BioSciences for approximately $1.6 billion, the companies said today, in a deal that builds the buyer’s immuno-oncology pipeline with a Phase III pancreatic cancer candidate that is also being developed to treat other solid tumors.

    AM0010 (pegilodecakin), a long-acting form of recombinant human interleukin 10 (IL-10) linked to polyethylene glycol (PEG), is now under study in the Phase III Sequoia trial (NCT02923921), designed to compare the treatment’s efficacy in combination with the chemotherapy drug combination FOLFOX (oxaliplatin with fluorouracil and folinic acid) versus FOLFOX alone in patients with metastatic pancreatic cancer as measured by overall survival (OS).

    The Sequoia trial has an estimated enrollment of 566 participants and was recruiting patients as of April 26, with an estimated primary completion date of January 2019, according to ClinicalTrials.gov.

    AM0010 is also in a pair of Phase II clinical studies, each comparing it in combination with a different anti-programmed death cell death protein 1 (PD-1) checkpoint inhibitor versus that checkpoint inhibitor alone in patients with metastatic non-small-cell lung cancer as measured by objective response rate. Cypress 1 combines AM0010 with Merck & Co.’s marketed cancer immunotherapy Keytruda® (pembrolizumab) (NCT03382899), while Cypress 2 combines AM0010 with Bristol-Myers Squibb’s Opdivo® (nivolumab) (NCT03382912).

    According to Armo, AM0010 has demonstrated clinical benefit as a single agent and in combination with both chemotherapy and checkpoint inhibitor therapy. In a Phase I/Ib clinical trial in 350 cancer patients across more than 14 different types of cancer (NCT02009449), Armo said, AM0010 showed the ability to increase the number of activated CD8+ T cells in the blood and tumors of patients and achieve objective tumor responses, including partial and complete responses, in patients treated with AM0010 as a single agent or in combination with chemotherapeutic drugs or anti-PD-1 checkpoint inhibitors.

    “The acquisition of Armo BioSciences adds a promising next-generation clinical immunotherapy asset to Lilly's portfolio of innovative oncology medicines,” Sue Mahony, Ph.D., Lilly SVP and president of Lilly Oncology, said in a statement.

    Added Levi Garraway, M.D., Ph.D., SVP, global development and medical affairs, Lilly Oncology: “As we develop our immuno-oncology portfolio, Lilly will pursue medicines that use the body's immune system in new ways to treat cancer.”

  • Doubling Down on Oncology

    Lilly’s acquisition of Armo is the buyer’s latest action aimed at strengthening its oncology pipeline, which the pharma giant committed to overhauling last year—and doubled down on early last week. On April 30, Lilly announced the appointment of Leena Gandhi, M.D., Ph.D., to lead Lilly Oncology’s immuno-oncology development efforts, effective June 25. Dr. Ghandi is now director of thoracic medical oncology and an associate professor of medicine at New York University (NYU) School of Medicine.

    Earlier this year, Lilly launched the breast cancer treatment VerzenioTM (abemaciclib) following FDA approval. Verzenio is indicated in combination with an aromatase inhibitor as initial endocrine-based therapy to treat postmenopausal women with hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2) advanced or metastatic breast cancer. Verzenio generated $29.7 million in revenue during the first quarter.

    In October 2017, Lilly launched an up-to-$1.795 billion-plus collaboration with CureVac to develop and commercialize up to five cancer vaccines based on CureVac's RNActive® technology. Earlier last year, Lilly partnered with Cancer Research UK on a Phase I trial for the cell division cycle 7 kinase inhibitor LY3143921 hydrate.

    And in December at the European Society for Medical Oncology (ESMO) Immuno-Oncology Congress 2017, Armo presented positive Phase I data showing that in patients with metastatic renal cell carcinoma AM0010 induced durable objective tumor responses as a monotherapy with an overall response rate (ORR) of 25% (4 of 16 patients), and achieved an ORR of 41% (14 of 34 patients) when used in combination with Keytruda and Opdivo, with no significant increase in the adverse event profile over either agent as a monotherapy.  

    Armo also reported a median progression free survival (PFS) of 16.7 months in eight later-stage metastatic renal cell carcinoma (mRCC) patients treated with AM0010 plus Keytruda, but said median progression-free survival (PFS) had not been reached for the 29 patients treated with AM0010 plus Opdivo. Median OS had not yet been reached for either cohort after median follow-up times of 29.4 months and 13.8 months, respectively.

    AM0010 has received orphan drug designations from the FDA and European Commission, as well as the FDA’s Fast Track designation in combination with FOLFOX as a second-line therapy in pancreatic cancer patients.

  • Preclinical Pipeline

    Armo’s immune-oncology pipeline also includes several preclinical candidates—AM0001, an anti-PD-1 monoclonal antibody; AM0003, an anti-LAG-3 checkpoint inhibitor; AM0015, a form of recombinant human interleukin-15 (IL-15); and AM0012, a form of recombinant human interleukin-12 (IL-12).  

    “Armo is proud of the work we have done to advance the study of immunotherapies and of the development of pegilodecakin to-date,” stated Peter Van Vlasselaer, Ph.D., Armo’s president and CEO. “Given the resources that Lilly, a leader in oncology R&D, can bring to bear to maximize the value of pegilodecakin and the rest of the Armo pipeline, we believe it is in the best interest of Armo, our stockholders, and the patients we serve to execute this transaction.”

    Lilly has agreed to “promptly” commence a tender offer, the companies said, to acquire all shares of Armo for $50 per share in cash—a 68% premium over the company’s closing stock price yesterday of $29.82 on the NASDAQ Global Select Market. Since then, shares of Armo surged 67% in premarket trading, to $49.71 as of 9:14 a.m.

    Based in Redwood City, CA, Armo rang out 2017 by filing for an initial public offering. The company went public on January 26, generating net proceeds of approximately $133.2 million, after deducting underwriting discounts and commissions and estimated offering expenses.

    The transaction is expected to close by the end of the second quarter of 2018, Lilly and Armo said, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of Armo’s common stock. Lilly said it will acquire “very shortly after the closing of the tender offer” any shares of Armo that are not tendered into the tender offer through a second-step merger at the tender offer price.

    Lilly said it will not change its 2018 non-GAAP earnings per share (EPS) guidance as a result of the Armo acquisition. Lilly raised its 2018 guidance to investors on April 24 after reporting what it termed strong first-quarter results, increasing its non-GAAP EPS forecast range to between $5.10 to $5.20 per share, from $4.81 to $4.91.

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