Interesting article

Merck’s Roger Perlmutter pays $300M to scoop up a battered Immune Design for its I/O work


by john carroll — on February 21, 2019 07:10 AM EST



Just months after Immune Design triggered an exodus of investors with news of a Phase II setback on its leading immuno-oncology work, Merck has stepped up to buy the company and plug it into its immunology group.
The stock was battered down last fall when the biotech acknowledged that its Phase II combo study using their drug CMB305 in combination with Roche’s PD-L1 Tecentriq was a bust. The stock lost half its value and never recovered, closing yesterday at $1.42.
Merck is scooping it up for $300 million in cash, paying $5.85 a share — close to the stock’s peak value. Shares of Immune Design $IMDZ immediately rocketed up.
Merck R&D chief Roger Perlmutter clearly never lost his appreciation of the company, even after the setback. Immune Design has a platform tech that is designed to spur antigen-specific cytotoxic immune cells to go after cancer or other targets. That kind of enhanced immune response lies at the heart of its work on Keytruda, the dominant checkpoint player that now commands a multibillion dollar market.
Jonathan Chang at SVB Leerink outlined how the platform tech works:
IMDZ’s ZVex platform “primes” the immune system by in vivo targeting of dendritic cells that leads to optimal antigen presentation and production of cytotoxic T lymphocytes (CTLs). IMDZ’s second platform, GLAAS, can further “boost” the immune response by expanding and enhancing the function of CTLs. Recall IMDZ’s lead program G100 is derived from the GLAAS platform, which is based on a small molecule called glucopyranosyl lipid A (GLA) that selectively binds to the TLR4 receptor. G100 has been evaluated in a Phase I/II follicular lymphoma study with local radiation alone or in combination with Keytruda (anti-PD-1) as part of a clinical collaboration with MRK.
“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,” Perlmutter noted in a prepared statement.
Three hundred million dollars ranks on the small end of the deal scale in big pharma, but it reflects Perlmutter’s appreciation for new tech that can be had at a bargain price. And that goes double for anything that can assist Keytruda, which remains the central program at Merck, now pointed in hundreds of directions.
The stock market has played havoc with a number of biotech stocks, setting up deals like this as well as GSK’s $5 billion acquisition of Tesaro, which found out the hard way just how tough commercialization work can be. Those tumbling stocks now offer an opportunity for buyers who have been waiting to beef up their pipelines. And it’s one reason why many analysts expect M&A to be a dominant theme in biopharma this year.