Medivir said it has agreed to buy two clinical-stage cancer candidates and their related development programs from Tetralogic Pharmaceuticals for up to $238 million in an acquisition the buyer said will enhance its oncology pipeline.

The deal, disclosed yesterday, consists of the skin-directed histone deacetylase (HDAC) inhibitor remetinostat, the bivalent second mitochondrial activator of caspases (SMAC) mimetic birinapant, and all intellectual property and data related to their clinical programs.

Medivir said it plans to launch a Phase III trial in the second half of next year for remetinostat, a topical HDAC inhibitor that the company said is strongly linked to its existing expertise in protease inhibition. Remetinostat is now under study in a late Phase II program designed to treat early-stage cutaneous T-cell lymphoma (CTCL)—a potential market that Medivir said has been estimated at approximately $900 million a year.

Remetinostat has been designed to inhibit HDACs effectively within cutaneous lesions, yet rapidly break down in the bloodstream, thus preventing side effects associated with systemically administered HDAC inhibitors, Medivir said.

Birinapant is designed to bind cellular inhibitor of apoptosis proteins (cIAPs) and induces their degradation, complementing the company’s modulators of protein ubiquitination.

Medivir said it plans to start two different clinical studies with birinapant. One is a Phase II trial in collaboration with UCLA assessing birinapant in combination with platinum-based chemotherapy in patients with high-grade serous carcinomas, including ovarian cancer.

The other is a Phase I study in combination with Merck & Co.’s marketed programmed cell death protein 1 (PD-1) inhibitor Keytruda™ (pembrolizumab) in patients with solid tumors. The study is aimed at assessing the safety of the combination and birinapant’s potential to enhance response rates seen with Keytruda alone. That study is subject to transfer of a Tetralogic–Merck clinical trial agreement to Medivir, announced in April 2015, and receipt of Keytruda™ supply.

Medivir has agreed to pay Tetralogic $12 million upfront, up to $20 million tied to remetinostat achieving development milestones through regulatory filings; up to $45 million tied to remetinostat winning regulatory approval milestones; and up to $31 million tied to achieving additional commercialization milestones, primarily related to sales. Medivir has also agreed to pay tiered royalties capped at an aggregate of 13% on remetinostat sales.

For binirapant, Medivir agreed to pay up to $20 million tied to development milestones and research support; up to $110 million based on additional commercialization milestones, primarily sales-related; and tiered royalties capped at an aggregate of 10%.

Medivir said it expects to deal to close by year’s end, subject to confirmation by Merck that its Keytruda clinical trial agreement with Tetralogic has been transferred, as well as consent by Tetralogic senior noteholders, approval of Tetralogic shareholders, and other customary closing conditions.

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