Charlie Adams and Adrian Toutoungi dig into the stand-out June 2024 biopharma deals which caught their eye. I&I and CNS featured heavily, but with the focus moving to preclinical assets. Other themes for the month included: (i) continued interest among big biopharma in in-licensing innovative assets from China biotechs; and (ii) several discovery-stage deals in next-generation antibody-drug conjugate (ADC) modalities, building on trends our life science team has been discussing elsewhere.

Deal of the month

• AbbVie has invested $150 million in upfront and near-term royalty payments for an exclusive global licence to develop, manufacture and commercialize FutureGen Biopharmaceutical's pre-clinical TL1A antibody candidate, FG-M701, which is being developed for inflammatory bowel disease (IBD). AbbVie's FG-M701 is presented as a "next-generation" therapy with hopes of superior efficacy and less frequent dosing compared to existing treatments. In addition, FutureGen could receive up to $1.56 billion in clinical development, regulatory and commercialization milestones and tiered royalties up to low double-digits on net sales.
• The interest in TL1A reflects its role in modulating inflammation and fibrosis, offering potential for treating IBD and possibly Crohn's disease among other conditions.
• IBD is a crowded landscape, with over a dozen late-stage assets in development for both Crohn’s disease and ulcerative colitis, spanning multiple new mechanisms of action, eg, JAK, TYK2, S1P1, IL-23, TL1A and more, with several products likely to enter the market in each class. This will create complexity and fragment the treatment landscape which is currently dominated by several anti-TNFs and their biosimilars, an integrin (Entyvio) and an IL-12/23 inhibitor (Stelara).
• AbbVie’s in-licence deal is the latest in a wave of interest in TL1A as a target:
  (i) Roche acquired Telavant for $7.1 billion in December 2023. Telavant's lead asset was a phase-3 ready novel antibody targeting TL1A (RVT-3101);
  (ii) Merck (MSD) acquired Prometheus in June 2023 for $11 billion. Prometheus' lead asset is a humanized monoclonal antibody directed at TL1A. The acquisition followed positive phase 2 data for trials in moderate-to-severe ulcerative colitis and moderate-to-severe Crohn's disease. 
  (iii) Sanofi and Teva entered into a collaboration in November 2023 to co-develop and co-commercialise Teva's TEV-574 human IgG1 monoclonal antibody directed at TL1A. Teva received $500m up front and up to $1 billion in development and launch milestones. Each company will share equally in the development costs and net profits and losses in major markets, with other markets subject to royalty arrangements. 
• All these deals related to later-stage (phase 3-ready) clinical assets, not preclinical candidates. So the FutureGen deal may be a sign of a shortage of clinical-stage assets targeting TL1A that are still available for partnering.
• AbbVie is growing its own IBD portfolio vigorously:
  (i)It entered into an exclusive discovery-stage deal with Parvus Therapeutics (South San Francisco) in March 2024 to develop and commercialise novel therapies for IBD.
  (ii)It entered into a strategic partnership with OSE Immunotherapeutics (Nantes, France) in February 2024 to develop a novel monoclonal antibody to resolve chronic/sever inflammation for patients living with inflammatory disease. 
• This deal reflects another current trend: continued interest among big biopharma in in-licensing innovative assets from China biotechs. Interestingly, unlike many such deals, this was a global deal rather than just for ex-China rights, and with no co-commercialisation right in China for FutureGen. 

Other biopharma deals which caught our eye included:

• In the CNS segment, Eli Lilly has expanded its neurodegenerative disease portfolio by acquiring the global rights to Cambridge (MA)-based QurAlis's QRL-204, a preclinical treatment for amyotrophic lateral sclerosis (ALS) and frontotemporal dementia. QRL-204 is a splice-switching antisense oligonucleotide aimed at restoring function to the UNC13A gene, a variant of which is implicated in both diseases. Lilly paid $45 million upfront, plus an additional equity investment. QurAlis is also eligible for future milestone payments of up to $577 million and tiered royalties on net sales. The agreement also includes a research and development (R&D) collaboration to identify and develop additional candidates targeting UNC13A, leveraging QurAlis’ proprietary FlexASO™ Splice Modulator Platform. 
• Rehovot-based Biolojic Design has entered into a discovery-stage collaboration with Merck KGaA to utilise its AI platform for the discovery of new multi-specific antibodies in the fields of oncology and immunology. The collaboration focuses on antibody-drug conjugates (ADCs) intended to inhibit tumour escape mechanisms and address patient and tumour diversity, enhancing safety and therapeutic effectiveness. Exact details of the deal terms are slim, but Biolojic will receive an upfront payment of just over $12 million plus research funding from Merck, milestones payments (drug discovery, development, regulatory and commercial milestones) that could reach $374 million, plus tiered royalties on net sales. This caught our attention because Biolojic already has what it claims is the first AI-designed antibody to enter the clinic: AU-007, a selective effector cell agonist for cancer.
• Day One Biopharmaceuticals, the Bay-Area biotech focused on paediatric oncology, has entered the ADC market through a licensing agreement with Shanghai-based MabCare Therapeutics for an early-stage asset (now-called DAY301). DAY301 is a preclinical ADC targeting protein-tyrosine kinase 7 (PTK7), which is overexpressed in solid tumours in adults and children, including oesophageal, ovarian, lung and endometrial cancers among adults, as well as in neuroblastoma, rhabdomyosarcoma and osteosarcoma in children. Day One paid $55 million upfront for global development and commercialisation rights excluding the Greater China area. MabCare is entitled to an additional $1.15 billion in development and commercial milestones, plus single-digit royalties. We have discussed elsewhere in our JPM reports and monthly biopharma M&A updates the current acquisition/partnering trend for ADCs as a modality, and this I just the latest example. However, all is not necessarily rosy in the ADC field, and PTK-7 is a controversial target. Pfizer and Abbvie discontinued their clinical-stage joint development programme for cofetuzumab pelidotin, a PTK7-targeting ADC in phase 1 last year. The only similarly acting clinical-stage asset still in development is understood to be Genmab’s PRO1107, gained via the $1.8 billion acquisition of ProfoundBio. Day One has commented that it believes that the linker-payload technology in DAY301 will overcome limitations of earlier PTK7-targeted ADCs.