Bristol-Myers Squibb (BMS) will partner with Nektar Therapeutics on a combination cancer immunotherapy collaboration that could generate up to $3.6 billion-plus for Nektar—potentially the second-most-valuable immuno-onoclogy partnership ever launched.

The companies agreed to co-develop Nektar’s lead immuno-oncology program NKTR-214 in combination with BMS’ marketed cancer immunotherapy Opdivo® (nivolumab), as well as a combination of NKTR-214 with both Opdivo and BMS’ other marketed cancer immunotherapy blockbuster drug, Yervoy® (ipilimumab), in more than 20 indications across nine tumor types.

Those tumor types include melanoma, renal cell carcinoma, non-small-cell lung cancer, bladder cancer, and triple-negative breast cancer. Pivotal studies in renal cell carcinoma and melanoma are expected to be initiated in mid-2018, the companies said.

BMS and Nektar said they also agreed to study additional combination therapies with other anticancer agents originating from either company, and/or third parties.

“With this commitment to the development of NKTR-214, an investigational therapy designed with a unique approach to harnessing the full potential of the interleukin-2 pathway, we now have a third validated immuno-onoclogy mechanism that has demonstrated a clinical benefit in patients, and holds significant potential to expand the benefits that these immuno-oncology agents can bring to patients with cancer,” BMS chairman and CEO Giovanni Caforio, M.D., said in a statement.

The partnership holds potential as the second-most-valuable collaboration launched in immuno-oncology, surpassing the previous number-two deal announced last year, which also involved BMS. The pharma giant and CytomX expanded a 2014 alliance by agreeing to discover up to eight additional targets—six oncology targets, two nononcology—using CytomX’s Probody™ drug discovery platform. The oncology portion could generate up to $2.888 billion for CytomX, including $200 million upfront.

The top immuno-onocology collaboration, as ranked by GEN last year, remains the €5.78 billion ($7.1 billion) partnership by Merck & Co. and Ablynx, launched in 2014 and expanded in 2015 to include discovery and development of up to 12 additional cancer drugs based on single-domain antibody fragments, or Nanobodies®

$1.8B Upfront

BMS agreed to pay Nektar $1.8 billion upfront, consisting of $1 billion cash and an equity investment of $850 million, consisting of 8,284,600 shares of Nektar’s common stock at $102.60 per share. BMS has agreed to lockup, standstill, and voting provisions on its ownership of those shares for five years, subject to specified exceptions.

In addition, BMS agreed to pay Nektar up to $1.43 billion in payments tied to achieving development and regulatory milestones, and up to $250 million in sales milestones. Nektar agreed to book revenue for worldwide sales of NKTR-214, in return for the companies splitting global profits for NKTR-214, with Nektar receiving 65% and BMS 35%. BMS will retain 100% of product revenues for its own medicines.

“This strategic collaboration allows us to very quickly develop NKTR-214 with the leading approved programmed cell death protein 1 (PD-1) immune checkpoint inhibitor in numerous registrational trials,” added Nektar president and CEO Howard Robin. We look forward to our continued relationship with Bristol-Myers Squibb as we work together to advance cancer treatment for patients around the world.”

The companies agreed to split costs of trials for the NKTR-214/Opdivo combination, with 67.5% allocated to BMS and 32.5% to Nektar. For trials assessing NKTR-214 with Opdivo and Yervoy, BMS will pay 78% of development costs, with Nektar shelling out the remaining 22%.

BMS and Nektar also agreed to not commence development with overlapping mechanisms of action in the same indications as those included in the joint clinical development plan for a set period of time—but can otherwise develop NKTR-214 with their own pipeline assets and/or any other third-party compounds. The companies agreed to launch registration studies within 14 months of the effective date of the agreement, subject to “allowable” delays.

Both parties will jointly commercialize NKTR-214 globally, with BMS leading global commercialization activities for combination of the Nektar treatment with BMS drugs, and Nektar co-commercializing such combinations in the U.S., major EU markets, and Japan. Nektar will lead global commercialization activities for NKTR-214 combinations with either Nektar medicines and/or other third-party medicines.

2016 Partnership Yields First Data

The new collaboration builds on a partnership launched by the companies in 2016, when they announced plans to assess the combination of Opdivo plus NKTR-214 in five tumor types. The value of that initial partnership was not disclosed at the time.

The partnership showed success late last year, when Nektar and BMS presented its first data from the PIVOT-02 Phase I/II study assessing the Opdivo/NKTR-214 combination. At the 2017 Society for Immunotherapy of Cancer (SITC) Annual Meeting, the companies said they generated:

  • Two complete responses and five partial responses in a total 7 of 11 patients (63%) with advanced treatment-naïve 1L melanoma (Stage IV).
  • One complete response and five partial responses in a total 6 of 13 advanced treatment-naïve 1L renal cell carcinoma (Stage IV) patients with one or more baseline scans; as well as one complete response, five partial responses, two stable disease results in 10 patients with two or more scans available.
  • One partial response among seven advanced 2L renal cell carcinoma patients (Stage IV, immuno-onoclogy naïve) with one or more baseline scans, though all seven patients showed disease control response (the other six showed stable disease).
  • One complete response and two partial responses in 3 of 4 advanced 2L programmed death-ligand 1 (PD-L1)- negative non-small-cell lung cancer patients (Stage IV, immuno-oncology treatment naïve)

PIVOT is still ongoing in over 350 patients with melanoma, kidney, non-small-cell lung cancer, bladder cancer, and triple-negative breast cancers, the companies said.

NKTR-214 is designed to target CD122-specific receptors found on the surface of cancer-killing immune cells, known as CD8+ effector T cells and natural killer (NK) cells, and increase PD-1 expression on those immune cells.

Opdivo is a PD-1 immune checkpoint inhibitor that is designed to uniquely harness the body’s own immune system to help restore antitumor immune response. Yervoy is a recombinant human monoclonal antibody designed to work by binding to cytotoxic T-lymphocyte-associated antigen-4 (CTLA-4) and blocking the interaction of CTLA-4 with its ligands, CD80/CD86.

BMS said the new collaboration is expected to lower the company’s non-GAAP earnings per share by $0.02 this year and $0.10 in 2019. Nektar and BMS expect to complete the transaction during the second quarter, subject to the expiration or termination of applicable waiting periods under all applicable U.S. antitrust laws and the satisfaction of customary closing conditions.

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