Merck & Co. said today it has agreed to acquire Immune Design for approximately $300 million, in a deal designed to boost the buyer’s vaccine pipeline and tech capabilities through a company that eliminated 18% of its workforce and named a new lead candidate late last year after its previous lead failed a clinical trial.

Merck’s acquisition comes four months after Immune Design halted a Phase III trial assessing its cancer vaccine CMB305 and the cancer immunotherapy Tecentriq® (atezolizumab), marketed by Roche and its Genentech subsidiary, following disappointing Phase II results in synovial sarcoma.

Administered by injection, CMB305 is designed to generate an anti-NY-ESO-1 immune response by activating a participant’s antigen-presenting dendritic cells. Following CMB305’s failure in the Phase III SYNOVATE trial (NCT03520959), Immune Design eliminated 18% of its workforce in October 2018—”primarily those focused on advancing the CMB305 program,” Immune Design stated in its most recent Form 10-Q quarterly report covering the third quarter of 2018, filed November 6.

“We plan to seek external collaborators to explore the continued development of CMB305 in sarcoma,” Immune Design said in the Form 10-Q.

Immune Design didn’t say how many CMB305-focused employees were laid off. The company began 2018 with 55 full-time and one part-time employee, according to its most recent Form 10-K annual filing for 2017, filed March 14, 2018.

Immune Design also reprioritized its pipeline by accelerating and expanding development of its next-furthest along candidate, the intratumoral TLR4 agonist G100.

G100 is the company’s first product candidate solely generated from the Glucopyranosyl Lipid A Adjuvant Systems (GLAAS) platform. The discovery platform is based on Glucopyranosyl Lipid A (GLA), which is designed to selectively bind to the TLR4 receptor to cause potent activation of dendritic cells. The company says G100 is designed to leverage the range of neoantigens and other endogenous antigens found in the tumor microenvironment to create a systemic antitumor immune response from local injection.

Based in Seattle with additional offices in South San Francisco, CA, Immune Design is a developer of immunotherapy vaccines focused on immuno-oncology as well as infectious and allergic diseases.

In addition to G100 and CMB305, Immune Design’s pipeline includes:

  • ZVEX-IL12, a preclinical candidate that uses the company’s Using the ZVex platform to deliver interleukin-12 (IL12) locally for a systemic immune response
  • A Phase II immunotherapy vaccine designed to treat respiratory syncytial virus, or RSV, and partnered with MedImmune, now being absorbed into parent AstraZeneca.
  • A Phase I peanut allergy vaccine being developed with Sanofi and using the GLAAS platform.
  • G103, a preclinical trivalent vaccine product candidate being developed as an immune therapy for herpes simplex virus 2 (HSV-2) in collaboration with Sanofi Pasteur, the vaccines division of Sanofi. The partners agreed to explore various combinations, as well as leveraging the GLAAS platform.

“Scientists at Immune Design have established a unique portfolio of approaches to cancer immunization and adjuvant systems designed to enhance the ability of a vaccine to protect against infection, which could meaningfully improve vaccine development,” Roger M. Perlmutter, MD, PhD, president, Merck Research Laboratories, said in a statement. “This acquisition builds upon Merck’s industry-leading programs that harness the power of the immune system to prevent and treat disease.”

Through a subsidiary, Merck said, it plans to launch a tender offer to acquire all outstanding shares of Immune Design at $5.85 per share cash—more than four times the company’s closing share price yesterday of $1.42.

Shares of Immune Design zoomed to $5.82 in early market trading as of 10:28 a.m.

Merck said the closing of the tender offer will be subject to conditions that include the tender of shares representing at least a majority of the total number of Immune Design’s outstanding shares, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary conditions.

Upon the successful completion of the tender offer, Merck will acquire all shares not acquired in the tender through a second-step merger. The transaction is expected to close early in the second quarter of 2019, Merck added.

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