Amgen said today it plans to acquire Nuevolution, its partner in a nearly three-year-old cancer and neuroscience treatment collaboration, for approximately SEK 1.610 billion (approximately $167 million).

The deal is designed to bolster the buyer’s small-molecule drug discovery efforts with the Danish biotech’s Chemetics®, a patent protected DNA-encoded library drug discovery platform—upon which Nuevolution has launched the Amgen collaboration and 14 additional partnerships with biopharma partners.

“Our vision for Amgen’s research organization is to improve the health of patients and societies around the world by discovering, developing, and delivering transformative medicines. To achieve our vision, we will need to embrace compelling opportunities, like this one, which will significantly expand Amgen’s ability to discover novel small molecules against difficult-to-drug targets and with greater speed and efficiency,” Raymond Deshaies, PhD, senior vice president of global research at Amgen, said in a statement.

Headquartered in Copenhagen, Nuevolution focuses on treatments for cancer as well as severe inflammatory diseases. The company was founded in 2001, and has a preclinical pipeline led by a RORγt Inhibitor indicated for dermatology and psoriatic arthritis and co-developed with Almirall; and internal programs based on targets within inflammation, oncology, and immuno-oncology.

In cancer, Amgen and Nuevolution launched their collaboration in October 2016, with the goal of developing and commercializing novel oncology and neuroscience therapies discovered through Chemetics. The companies have said their collaboration could generate up to $410 million per target identified in research, development, and commercial milestones, plus royalties—but have not said how many targets they plan to identify beyond referring to their “multiple target” partnership.

In November 2018, Amgen opted to develop a second cancer candidate discovered through the Nuevolution collaboration, giving Nuevolution a $10 million licensing fee and eligibility for a second up-to-$410 million in milestone payments from Amgen, which agreed to assume all further research and development costs. Amgen exercised an option right to the companies’ first Chemetics-discovered candidate four months earlier in July 2018.

Progressing “positively”

“The two cancer programs with Amgen Opt-In continue to progress positively,” Nuevolution said today in a separate announcement of its first-quarter results.

Nuevolution finished Q1 with a net loss of SEK 12 million ($1.2 million), improved from the SEK 21.3 million ($2.2 million) net loss of the first three months of 2018. Revenue from contracts with customers rose about 70% year-over-year, to SEK 14.1 million (about $1.5 million) from SEK 8.3 million (about $861,000) in Q1 2018.

In 2018, Nuevolution reported a net loss of SEK 99.7 million ($10.3 million), improved from a SEK 117.6 million ($12.2 million) net loss in 2017, despite a year-over-year 9.8% decline in revenue from customers to SEK 11 million ($1.1 million), from SEK 12.2 million (about $1.3 million).

Nuevolution’s Chemetics platform is designed to enable efficient discovery of novel small molecule, tablet-based drug candidates, using a three-phase process to discover targets.

During the synthesis phase, a collection of drug-like molecules is synthesized as a mixture typically consisting of hundreds of millions to billions and even trillions of molecules. Each molecule within the mixture consists of the screening molecule (typically a small molecule), a DNA-sequence (code) (or another type of oligonucleotide), and a linker, which allows the DNA-code, and the small molecule to be physically attached to each other. The DNA-code holds the information for the structure of the small molecule.

During the screening phase, inactive compounds are eliminated and active compounds are isolated for optimization. Nuevolution says its combined small molecules for screening exceed the number of compounds applied by a typical biopharma by a factor of 1,000 to one million.

In the final phase, hit to lead optimization (H2L), compounds are synthesized to further improve their properties. The company says its platform is designed to increase the productivity of compounds by 10- to 100-fold, while lowering the cost for production of each of these by 10- to 50-fold compared to conventional techniques used by biopharmas.

Retaining full-time employees

Amgen said it will offer all full-time employees of Nuevolution a retention arrangement. The company had 47 employees as of February 28.

“Amgen values the skills and talents of Nuevolution’s management and employees, and intends to continue to safeguard the excellent relationship that Nuevolution has with its employees,” Amgen stated. “Given Amgen’s current knowledge of Nuevolution and in light of current market conditions, Amgen does not intend to change the composition of the management team and key employees following the implementation of the Offer, nor does Amgen currently intend to alter the operations of Nuevolution or locations where Nuevolution conducts business.”

Amgen also plans to pay sign-on compensation totaling approximately $8.5 million to people who remain employed by Nuevolution, to consist of cash payments for up to three years after closing of the deal, plus Restricted Stock Units (RSUs) linked to Amgen’s shares listed on NASDAQ in the U.S.

Amgen has offered SEK 32.50 ($3.37) cash per share of Nuevolution—a premium of 169% over the SEK 12.10 ($1.26) closing price of Nuevolution’s shares on Nasdaq Stockholm yesterday, the last trading day prior to the announcement of Amgen’s offer.

Nuevolution said its three largest shareholders totaling 59% of its shares have agreed to accept Amgen’s offer: Sunstone, which owns approximately 21% of Nuevolution shares; Skandinaviska Enskilda Banken AB, approximately 20%; and Industrifonden, approximately 18%.

The deal is set to close in July.

Amgen is one of Nuevolution’s 15 collaboration partners. They include biopharma giants such as Novartis, Johnson & Johnson’s Janssen Biotech, Boehringer Ingelheim, GlaxoSmithKline, and Merck & Co.; as well as research institutions such as Cancer Research Technology and Institute of Cancer Research.

“We highly value our collaboration of the past three years with Nuevolution and are excited to incorporate their expertise and DNA-encoded library discovery platform technology more holistically into Amgen’s research moving forward,” Deshaies added.

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