Reflecting the trend in May's life sciences M&A round-up from Ross McNaughton and Sarah Cole, May 2024 was also a busy month for biopharma partnering transactions. Below Charlie Adams and Adrian Toutoungi dig into the stand-out May 2024 deals which caught their eye. Alongside developments in oncology, it was good see further action in radiopharma, CNS and I&I, building on themes our life science team has been discussing elsewhere. The growing impact of the anti-trust "killer acquisition" theory on early-stage and mid-stage deals is another theme.

• Maze Therapeutics granted an exclusive worldwide licence to Shionogi for the rights to MZE001, a Phase 2-ready oral GYS1 inhibitor that aims to address the rare inherited disorder Pompe disease by limiting glycogen buildup. In addition to an upfront fee of $150 million, Maze will be eligible for undisclosed milestone payments and tiered royalties on net sales. Maze had previously announced a licensing deal for this asset with Sanofi. That deal fell apart in December 2023 when challenged controversially by the FTC on the grounds that Sanofi already had a Pompe treatment in the form of enzyme replacement therapy Nexviazyme. The FTC saw this as a potential "killer transaction", allowing Sanofi to eliminate a nascent competitor. Shionogi agreed to pay the same upfront as Sanofi, but milestones were undisclosed so it is unclear if they also match the $605 million agreed with Sanofi.
• In an interesting development stage royalty-financing deal, ImmuNext sold its entitlement to royalties and milestones on frexalimab to Royalty Pharma for approximately $525 million in cash. Frexalimab is currently partnered with Sanofi and is in phase 3 clinical studies for the treatment of multiple sclerosis. Under the terms of ImmuNext’s licensing agreement with Sanofi back in 2017, ImmuNext was entitled to $500 million in milestones and an upward tiering net royalty ranging from a high-single digit to low-double digit percentage of worldwide net sales. Royalty Pharma will receive 100% of net royalties on annual worldwide net sales of frexalimab of up to $2.0 billion and share a minority (i.e. sub-50%) of the royalties above this threshold. Sanofi estimates peak net sales for frexalimab of over $5 billion, and that it will generated royalties until 2041. Royalty Pharma is best know for its current portfolio of royalties on more than 35 commercial products but increased competition in the royalty financing space from rivals such as Sagard Partners, Health Royalty Partners and private equity houses has increased competition for commercial-stage asset royalties, and driven a trend towards development-stage product candidates.
• In CNS, Gilgamesh Pharmaceuticals and AbbVie have agreed a collaboration and option agreement relating to the research and development of a portfolio of next-generation therapeutics for psychiatric disorders. On exercise of the option, AbbVie will lead development and commercialization activities. Gilgamesh will receive an upfront payment of $65 million from AbbVie and is eligible to receive up to $1.95 billion in aggregate option fees and milestones, as well as tiered royalties from "mid-single to low-double digits" on net sales. This follows Abbvie's purchase of CNS-focused biotech Cerevel for $8.4 billion in December 2023 and indicates a doubling-down on CNS therapies. In other CNS news, AC Immune entered into an exclusive option and licence agreement with Takeda relating to AC Immune’s active immunotherapies targeting toxic forms of amyloid beta, including ACI-24.060 for the treatment of Alzheimer’s disease. AC Immune will receive an upfront payment of $100 million and be eligible to receive an option exercise fee and additional potential milestones of up to approximately $2.1 billion, with tiered double-digit royalties on worldwide net sales.
• Aktis Oncology entered into a strategic discovery-stage collaboration with Eli Lilly focused on the use of Aktis' miniprotein discovery platform to generate novel solid tumour-targeting radiopharmaceuticals. Aktis will be responsible for the discovery of the new ligands / molecule-targetting moiety, which will be combined with its linker and alpha-emitting radionucleotide. Lilly taking over for clinical development and commercialisation from phase 1 onwards. As well as an equity investment, Aktis will receive a $60 million upfront, with the potential for milestones of $1.1 billion and ongoing royalties. This follows Lilly's purchase of radiopharma-focused biotech Point Biopharma for $1.2 billion in October 2023 and demonstrates the continued high levels of interest in the radiopharma space which we have covered elsewhere.

In other May partnering-related news:

• Nektar Therapeutics' claim against Eli Lilly in the Northern District of California continues. The claim is for breach of the Commercially Reasonable Efforts obligation in the licence and development agreement entered into between Nektar and Lilly relating to rezpegaldesleukin to treat atopic dermatitis (eczema) and psoriasis (amongst other grounds). REZPEG was touted as a potential competitor for Sanofi/Regeneron's mega-blockbuster Dupixent. Following poor results in a Phase 1b trial, Lilly terminated the collaboration and handed back the asset. However, Nektar alleges that the poor trial efficacy results were due to botched analysis of the underlying trial data by Lilly, and that Lilly was looking for a reason to hand back the asset following its purchase of Derminra Inc in January b2020 for $1.1 billion (at the time, Dermira had developed and was in the process of seeking approval fot its antibody lebrikizumab to treat eczema). This cautionary tale highlights the risk in any biopartnering deal of one of the partners being acquired or going through M&A which results in change of strategy, and the need for robust termination/hand-back clauses to manage this risk.
• The European Commission (EC) launched a formal investigation under its abuse of dominance rules into US life sciences company Zoetis in the area of novel veterinary medicines. The case centres on Zoetis’s conduct after it acquired an Irish biotech company, Nextvet, in 2017 for $85 million. NextVet had a late-stage asset ranevetmab, a novel monoclonal antibody (mAb) indicated for chronic osteoarthritis pain in dogs. Ranevetmab targeted the same indication as Zoetis’s own late-stage pipeline product, bedinvetmab. When acquired, ranevetmab was subject to a preexisting partnering agreement granting commercialisation (but not development) rights to Virbac, a French company specialising in animal health. About two years after the acquisition, Zoetis terminated the development of ranevetmab. Virbac tried to acquire the ranevetmab programme 

We are following both these cases, and will keep you posted in future updates. As ever, if you have reflections or comments, or just want to talk about biopharma partnering, get in touch!