Merck & Co. has agreed to acquire VelosBio for $2.75 billion cash, the companies said today, in a deal that bolsters the buyer’s growing oncology pipeline with a clinical-phase antibody-drug conjugate being evaluated for solid tumors and blood-based cancers.

Based in San Diego, privately-held VelosBio last month dosed its first patient in a Phase II trial (NCT04504916) of VLS-101, designed to evaluate the ADC in patients with solid tumors that include triple-negative breast cancer (TNBC), hormone receptor-positive and/or HER2-positive breast cancer, and non-squamous non-small-cell lung cancer (NSCLC).

VLS-101 is designed to target cancers that commonly express receptor tyrosine kinase-like orphan receptor 1 (ROR1). VLS-101 consists of a humanized monoclonal antibody targeting ROR1, a proteolytically cleavable linker, and monomethyl auristatin E (MMAE), an anti-microtubule cytotoxin. The linker-toxin combination (known as vedotin) is already used in available ADCs that target other tumor antigens.

VLS-101 is designed to bind to ROR1-expressing tumor cells, resulting in internalization of the ADC-ROR1 complex. Within these tumor cells, lysosomal enzymes release MMAE. According to VelosBio, binding of MMAE to tubulin disrupts the microtubule network within the tumor cell, subsequently inducing cell-cycle arrest and apoptotic tumor cell death.

VLS-101 showed early signs of anti-tumor activity as well as a manageable safety profile, early in its clinical development.

In a Phase I trial (NCT03833180), VLS-101 generated objective clinical responses, including complete responses, in 7 of 15 patients (47%) with mantle cell lymphoma (MCL) and four of five patients (80%) with diffuse large B-cell lymphoma (DLBCL). Patients in the trial had cancers that either failed to respond to other anticancer medications, or relapsed following initial responses to treatment.

VelosBio plans to present those and other results from the trial virtually at the 62nd American Society of Hematology Annual Meeting, set for December 5–8.

The Phase I trial evaluated patients with MCL, DLBCL, and 10 other hematological cancers: chronic lymphocytic leukemia, follicular lymphoma, marginal zone lymphoma, Richter transformation lymphoma, Burkitt lymphoma, lymphoplasmacytoid lymphoma, T-cell non-Hodgkin lymphoma, acute lymphoid leukemia, acute myeloid leukemia, and Waldenstrom macroglobulinemia.

“Pioneering work by VelosBio scientists has yielded VLS-101, which in early studies has provided notable evidence of activity in heavily pretreated patients with refractory hematological malignancies, including mantel cell lymphoma and diffuse large B-cell lymphoma,” Roger M. Perlmutter, MD, PhD, president, Merck Research Laboratories, said in a statement.

Cancer powerhouse

The VelosBio acquisition is Merck’s latest move toward both positioning itself as a cancer powerhouse, in part through significant investment in ADCs. Just in September, Merck committed up to $4.2 billion toward a pair of oncology partnerships with Seattle Genetics as well as an equity stake in the Bothell, WA, company.

Not all of Merck’s cancer moves have been based on ADCs, however. At the start of 2020, Merck finalized another big-money cancer collaboration when it partnered with Taiho Pharmaceutical and Astex Pharmaceuticals, a wholly-owned subsidiary of Otsuka Pharmaceutical, to develop small molecule inhibitors against the KRAS oncogene and several other drug targets under study as potential cancer treatments. The collaboration could generate more than $2.5 billion for Taiho and Astex.

As for VelosBio, it received the FDA’s Fast Track and Orphan Drug designations in August for VLS-101 for the treatment of MCL.

A month earlier on July 8, VelosBio completed an oversubscribed Series B financing of $137 million, with proceeds set to be used toward advancing clinical development of VLS-101, and continued expansion of its preclinical pipeline. In addition to VLS-101, VelosBio has developed a preclinical pipeline that includes two next-generation ADCs and ROR1-targeting bispecific antibodies (BiAbs) designed to harness the immune system to kill tumors.

The next-generation ADCs consist of multiple combinations of stable conjugations, cleavable linkers, and payloads. VelosBio has sought to develop ROR1-targeted ADCs that complement VLS-101 by offering alternative methods of potential tumor cell killing—and that are broadly active and well tolerated.

The anti-ROR1 BiAbs have been generated in multiple formats that bind to CD3 receptors on T cells or CD16 receptors on natural killer cells, thereby attracting these immune cells to destroy the cancer, according to VelosBio.

$202M Raised

The Series B financing brought the company’s total capital raised to $202 million in gross proceeds from private financings since its founding in 2017.

The financing was led by Matrix Capital Management and Surveyor Capital (a Citadel company). New investors participating in the round included Adage Capital Management LP, Cormorant Asset Management, Farallon, Foresite Capital, Janus Henderson Investors, Logos Capital, OrbiMed, funds and accounts advised by T. Rowe Price Associates, Inc., Venrock Healthcare Capital Partners, Viking Global Investors, and Wellington Management Company. They joined existing investors Arix Bioscience, Decheng Capital, Pappas Capital, Sofinnova Ventures, and Takeda Ventures.

The acquisition deal is expected to close by the end of 2020, subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

“Merck is a recognized leader in oncology, and this acquisition reflects the hard work and commitment of all the employees at VelosBio in advancing the science of ROR1,” stated Dave Johnson, VelosBio’s founder and CEO. “We are very pleased that Merck has recognized the value of our first-in-class ROR1-directed investigational therapeutics. As part of Merck’s oncology pipeline, our lead product candidate, VLS-101, is now well positioned to achieve its maximum potential to benefit appropriate cancer patients in need.”

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