Heat Biologics has struck a deal to buy a controlling stake in Pelican Therapeutics. The agreement will give Heat control of a preclinical immuno-oncology R&D program that is set to move an asset into phase 1 using some of the $15.2 million in grant funding Pelican secured last year.
Austin, Texas-based Pelican landed the grant and attracted the interest of Heat on the strength of its research into agonists of TNFRSF25, a costimulator linked to the expansion of regulatory T cells and the proliferation of CD8+ cytotoxic T cells. Pelican’s lead asset, PTX-25, is a monoclonal antibody designed to stimulate production of CD8+ T cells, a mechanism of action the drug developer and its incoming owner think will complement existing immuno-oncology therapies.
“Pelican’s PTX-25 has the potential to dramatically improve the durability of antigen-specific immune responses due to its preferential specificity for stimulating the production of ‘memory’ CD8+ T cells,” Heat CSO and senior VP of preclinical development Jeff Hutchins said in a statement. “We look forward to advancing these new product candidates with synergistic combinations including Heat’s existing T cell-activating platform technologies, ImPACT and ComPACT.”
Heat, a Durham, North Carolina-based biotech with a market cap of $22 million, will pay up to $500,000 upfront to Pelican stockholders as part of a deal to give it an 80% controlling interest in the firm. The company will also issue 1.3 million shares of its stock, which closed at $0.83 a share the day before news of the Pelican deal broke. Heat and Pelican have also built milestones, sublicensing income payments and loans into the terms of the deal.
The deal follows a tough few years for Heat. Having raised $25 million in an IPO in 2013, Heat has seen its stock price sink by 90% as it suffered setbacks including the failure of bladder cancer vaccine candidate HS-410 to beat placebo in a phase 2 trial. Heat laid off 22% of its staff in April in a bid to keep going past key readouts, including the aforementioned data from the phase 2 bladder cancer trial.
HS-410 and HS-110, a follow-up asset Heat tested in combination with Bristol-Myers Squibb’s Opdivo in non-small cell lung cancer last year, both use the ImPACT technology Hutchins sees meshing well with Pelican’s pipeline. ImPACT is a cell line engineered to express gp96, a heat shock protein Heat thinks turns the immune system against tumors.
Through buying Pelican, Heat gains control of an R&D operation that is set to advance a candidate into a 70-person phase 1 program using grant funding.
Shares in Heat rose 18% in premarket trading.