Merck & Co. has agreed to acquire Rigontec for up to €464 million (about $554 million), in a deal that will expand the cancer immunotherapy franchise of the Keytruda® (pembrolizumab) developer with a three-year-old Bonn University spinout whose technology targets the retinoic acid-inducible gene I (RIG-I) pathway.

Rigontec says its proprietary agonists are designed to activate RIG-I in order to induce both immediate and long-term antitumor immunity. The technology, Rigontec says, can be used for developing bifunctional RNA molecules for the treatment of infectious and inflammatory diseases in addition to cancer.

The company’s lead candidate, RGT100, is now in Phase I development evaluating treatment in patients with various tumors. In May, the company dosed its first patient in a Phase I/II study in which RGT100 will be administered intratumorally and intralesionally in solid tumors and lymphoma. The development of RGT100 is being overseen by CMO Eugen Leo, M.D., Ph.D., MBA, who was appointed in May.

“Rigontec’s immuno-oncology approach of engaging the innate immune system to safely eliminate cancer cells complements our strategy and our current pipeline,” Eric Rubin, M.D., vp of early-stage development, clinical oncology, Merck Research Laboratories, said in a statement. “We are eager to build upon Rigontec’s science as we continue our efforts in bringing forward meaningful advances for patients with cancer.”

Merck has agreed to shell out €115 million ($137 million) in up-front cash and up to €349 million ($416 million) in payments tied to achieving clinical, development, regulatory, and commercial milestones. The deal is subject to closing conditions, Merck said.

15 Times Series A Proceeds

The value of the deal is more than 15 times the €29.25 million ($34.9 million) that Rigontec raised in its recent Series A financing round—including €15 million ($17.9 million) raised in the third and final closing of the round a year ago this month.

That funding was intended to advance the ongoing development of Rigontec’s RIG-I agonist platform targeting cancer as well as anti-infective and inflammatory indications, and also advance the development of RGT100.

Rigontec has attracted investors that include Boehringer Ingelheim Venture Fund, Forbion Capital Partners, High-Tech Gründerfonds, MP Healthcare Venture Management, NRW.BANK, Sunstone Capital, and Wellington Partners Life Sciences.

Keytruda is a humanized monoclonal antibody that works by blocking the interaction between the programmed cell death protein 1 (PD-1) and its receptor ligands, PD-L1 and PD-L2, thus increasing the immune system’s ability to fight cancer. Keytruda is a blockbuster drug, having generated $1.402 billion in revenue last year (148% above 2015) and $1.465 billion in the first half of this year (up 160% from $563 million in January–June 2016).

Keytruda is the anchor of a cancer immunotherapy research effort that, according to Merck, now includes more than 550 clinical trials evaluating the anti-PD-1 therapy across more than 30 tumor types. Merck said it also looks to grow its immuno-oncology portfolio through acquisitions and by prioritizing the development of several promising cancer immunotherapy candidates.

The FDA approved Keytruda in 2014 as the first PD-1 inhibitor indicated to treat unresectable or metastatic melanoma following treatment with Bristol-Myers Squibb’s marketed cancer immunotherapy Yervoy® (ipilimumab).

Since then, Keytruda has won approval for additional indications in non-small-cell lung cancer, head and neck squamous cell cancer, classical Hodgkin's lymphoma, urothelial carcinoma—and, in May, pediatric and adult patients with unresectable or metastatic microsatellite instability-high or mismatch repair solid tumors, for which Merck won accelerated FDA approval.

Most recently yesterday, the European Commission approved a new indication for Keytruda, monotherapy for adults with locally advanced or metastatic urothelial carcinoma (UC) who have received prior platinum-based chemo or adult UC patients who are ineligible for cisplatin-containing chemotherapy.

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