Amgen has agreed to acquire Five Prime Therapeutics for approximately $1.9 billion in cash, the companies said today, in a deal intended to strengthen the buyer’s oncology pipeline by adding Five Prime’s Phase III-ready gastric cancer candidate bemarituzumab.
The deal comes more than a month after Five Prime announced positive clinical data for its lead pipeline candidate bemarituzumab, a first-in-class antibody designed to slow cancer progression by blocking fibroblast growth factors (FGFs) from binding and activating FGF receptor 2b (FGFR2b), inhibiting several downstream pro-tumor signaling pathways. Bemarituzumab is being developed as a targeted therapy for tumors that overexpress FGFR2b in advanced gastric and gastroesophageal junction (GEJ) cancer.
In January, Five Prime announced that bemarituzumab met all three efficacy endpoints of the Phase II FIGHT trial (NCT03694522) showing statistically significant and clinically meaningful improvements in the primary endpoint of progression-free survival (PFS), as well as the trial’s secondary endpoints of overall survival (OS) and overall response rate (ORR).
Patients randomized to bemarituzumab plus chemotherapy (mFOLFOX6) showed a median PFS of 9.5 months compared with 7.4 months for control-arm patients treated with placebo and mFOLFOX6, Five Prime said on January 15, during a late-breaking oral presentation at the 2021 American Society of Clinical Oncology (ASCO) Gastrointestinal Cancers Virtual Annual Symposium.
The FIGHT trial compared bemarituzumab plus mFOLFOX6 to placebo plus chemotherapy in patients with FGFR2b-positive (FGFR2b+), non HER2 positive frontline advanced gastric or GEJ cancer. The trial enrolled 155 patients in 15 countries across Asia, the European Union, and the United States, with 77 patients randomized to the bemarituzumab arm and 78 patients to the placebo arm.
Additional analysis of FIGHT trial results showed a positive correlation between benefit and the percentage of FGFR2b+ tumor cells, which according to Amgen and Five Prime suggests that FGFR2b could play a role in other epithelial cancers, including lung, breast, ovarian, and other cancers.
Investors rallied to Five Prime’s shares, which surged 78% in early trading this morning, to $37.01 as of 10:17 a.m. from yesterday’s close of $21.26.
“We believe the acquisition makes sense for FPRX investors as it ultimately unlocks value with bemarituzumab as it places the drug in the hands of a larger player who can help navigate future development in an evolving 1L [first-line] gastric cancer landscape as well as expand development of bemarituzumab across a broad range of solid tumors beyond gastric cancer,” Jonathan Chang, PhD, CFA, a senior research analyst at SVB Leerink covering emerging oncology companies, wrote this morning in a research note.
Amgen said it was also attracted to Five Prime by the potential it sees for the rest of its pipeline, which includes one wholly-owned clinical candidate—FPT155, a Phase I soluble CD80 fusion protein being studied for the treatment of solid tumors. FPT155 is under study in a Phase Ia/Ib clinical trial (NCT04074759) in Australia and South Korea that is evaluating FPT155 as a monothearpy as well as in combination with Merck & Co.’s blockbuster checkpoint inhibitor Keytruda® (pembrolizumab).
Five Prime is also partnering with Bristol-Myers Squibb (BMS) on another clinical candidate, BMS-986258, a T-cell immunoglobulin and mucin domain-3 (TIM-3) antibody now in a Phase I/II trial (NCT03446040) as a single agent and in combination with BMS’ Opdivo® (nivolumab).
Five Prime’s remaining pipeline candidates are all preclinical. They include FPA157, an anti-CCR8 antibody engineered to enhance antibody-dependent cell-mediated cytotoxicity (ADCC) to preferentially eliminate CCR8+ T regulatory (Treg) cells in the tumor microenvironment—as well as several immune-oncology antibodies partnered with BMS, and several antibody-drug conjugates partnered with Seagen (formerly Seattle Genetics), targeting undisclosed targets.
Amgen said its acquisition of Five Prime is also intended to support its international expansion strategy, given the prevalence of gastric cancer in the Asia-Pacific region, where Amgen expects to generate significant volume growth in the coming years.
To that end, Amgen vowed today to leverage its presence in Japan and other Asia-Pacific markets to maximize bemarituzumab’s potential. Amgen will also receive a royalty percentage on future net sales of bemarituzumab in Greater China ranging from the high teens to the low twenties based on a pre-existing co-development and commercialization agreement between Five Prime and Zai Lab (Shanghai) Co., Ltd.
“We note the opportunity is even bigger in China where gastric cancer incidence is 680k and ~28x greater than the US (~25k). We view the China gastric cancer opportunity to be >$1B and is one of the key value drivers for ZLAB,” Michael Yee, equity analyst with Jefferies, observed in a research note, using Zai Lab’s stock ticker symbol.
Yee also noted that Zai Lab in-licensed bemarituzumab from Five Prime in 2017 based on encouraging Phase I monotherapy data, shelling out only $5 million upfront and about $40 million in milestones.
“The $1.9B acquisition of FPRX by AMGN is a great datapoint for ZLAB and indicative of the company’s internal ability to identify high-quality assets early and with high promise. Indeed,” Yee wrote, using the stock ticker symbols for Five Prime and Amgen. “AMGN is acquiring FPRX at a more de-risked stage and after the very good data and for which it is a very good tuck-in and good use of capital for AMGN.”
“The acquisition of Five Prime offers a compelling opportunity for Amgen to strengthen our oncology portfolio with a promising late-stage, first-in-class global asset to treat gastric cancer,” Robert A. Bradway, Amgen’s chairman and CEO, said in a statement. “We look forward to welcoming the Five Prime team to Amgen and working with them to leverage our best-in-class monoclonal antibody manufacturing capabilities to supply additional clinical materials, as well as expanded production quantities, to realize the full potential of bemarituzumab for even more patients around the world as quickly as possible.”
Amgen said it will commence a tender offer to acquire all outstanding shares of Five Prime’s common stock for $38 per share cash. Upon completion of the tender offer, a wholly-owned subsidiary of Amgen will merge with Five Prime and shares of Five Prime that have not been tendered and purchased in the tender offer will be converted into the right to receive the same price per share in cash as paid in the tender offer (other than shares held by stockholders who properly demand and perfect appraisal rights under Delaware law).
The acquisition deal is expected to close by the end of the second quarter and is subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Five Prime’s common stock and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Amgen said the deal will not affect its investor guidance for 2021, which it reaffirmed by restating its revenue guidance of $25.8 billion to $26.6 billion, and non-GAAP earnings guidance of $16 to $17 per share.
“We see tremendous complementarity between the two companies,” added Tom Civik, Five Prime’s president and CEO. “Amgen has global reach, world-class resources, and they share our deep passion for science and commitment to patients. I have full confidence that Amgen is the right company to work with us to bring our innovative cancer treatments to patients and to achieve our mission to rewrite cancer.”