UPDATED: Bristol-Myers bags IDO immunotherapy in $1.25B buyout of fledgling Flexus

Bristol-Myers Squibb ($BMY) is gambling $800 million upfront to gain control of a preclinical IDO1 immunotherapy that shows promise in treating cancer, buying out San Carlos, CA-based Flexus with another $450 million set aside for milestones. Once the deal is completed, the startup group at Flexus will take all their non-IDO assets and start a new company. And a busy Bristol-Myers, looking to aggressively expand its immuno-oncology work past the pioneering Yervoy and Opdivo, also inked a $339 million partnership with Rigel.

The object of Bristol's $1.25 billion deal on Flexus is a drug program that is still in its pre-IND infancy, an example of just how much early-stage biotech assets have mushroomed over the past two years--particularly in the field of immunotherapies. This therapy also has potential as a key ingredient to future cancer combination drugs, a trend Bristol-Myers has focused on carefully.

"These are phenomenal upfront terms for a preclinical asset," Flexus CEO Terry Rosen acknowledged in an interview with FierceBiotech. "There's a certain intrinsic value to the program, but it was a competitive process."

"We had a data set that suggested it has the potential to be best-in-class, with the ability for a partner to combine it with many other assets. If you look at any company working in oncology, it can potentially increase the value of a whole portfolio of assets. It could be multiplicative and that creates a big valuation," he added.

Rosen said that the deal milestones are early, with the potential to be achievable within the next three years.

The deal to acquire Flexus' IDO work was announced simultaneously with a new immuno-oncology partnership with Rigel. Bristol-Myers is paying Rigel $30 million upfront and up to $309 million in milestones for the chance to collaborate on Rigel's portfolio of small molecule TGF beta receptor kinase inhibitors. Bristol-Myers is betting that they can develop a new class of therapies by focusing on TGF beta, which "can promote tumor growth, broadly suppress the immune system and increase the ability of tumors to spread in the body."

Terry Rosen

Flexus jumped into sight just two months ago after gaining just $38 million in venture backing from Celgene, The Column Group and Kleiner Perkins. Rosen said the December FierceBiotech article on Flexus that brought the startup out of stealth mode helped spark a number of potential partners to reach out to the fledgling company; in addition Flexus reached out to some parties. Discussions with a number of potential partners began in earnest at this year's J.P. Morgan Healthcare conference in January.

Rosen and R&D chief Juan Jaen knew each other very well from their days together at Tularik, which was acquired by Amgen for $1.3 billion back in 2004. Rosen would go on to stay at Amgen for a decade.

Rather than jump into the already crowded checkpoint inhibitor arena, Rosen opted to focus on regulatory T cells, which also blunt an immune response to cancer. As Stacy Lawrence noted in her story on Flexus, Treg cells keep the immune response to foreign antigens in check. And the accumulation of Treg cells typically correlates with a poor prognosis for cancer patients, particularly those with melanoma, lung, ovarian and breast cancers.

Rosen and crew are still very much in business. The team will take Flexus' Phase I FLT3 and CDK4/6 inhibitor (FLX925), its earlier stage small-molecule Treg cancer immunotherapy programs, and its current personnel and facilities.

"We're very close to dosing our first patient in the FLX925 trial; it could be within weeks," Rosen said. "We expect to identify another preclinical candidate by the end of the year. And we'll line up the program that will be preclinical in 2016."

He anticipates that the prior Flexus investor syndicate, particularly Kleiner Perkins Caufield & Byers and The Column Group, will continue as investors in the new company.

As for BMS, "With the addition of a potentially best-in-class IDO1 inhibitor and the broad IDO/TDO programs, Bristol-Myers Squibb will accelerate its ability to explore numerous immunotherapeutic approaches across tumor types, including combinations with our biologic checkpoint and co-stimulatory agents that target different and complementary pathways," says R&D chief Francis Cuss.

- here's the release
- here's the release on the Rigel deal

Stacy Lawrence contributed to this report.

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