Merck turns to tiny Agenus in hunt for new immunotherapies

Merck ($MRK) is looking to Lexington, MA-based Agenus to give the pharma giant an edge in the race to develop new immuno-oncology drugs.

The biotech has signed on to discover antibodies that can work against a pair of undisclosed checkpoint targets from Merck. Agenus can earn up to $100 million in milestones for its work, which capitalizes on its buyout of 4-Antibody AG and its antibody platform technology earlier this year.

Merck has been pushing hard on its late-stage program for a PD-1 immune checkpoint inhibitor, PD-3475, after posting some jaw-dropping data from an early study. In recent months the pharma giant has been lining up a lengthy number of collaborations with other cancer therapies in the clinic. This new deal demonstrates a major league commitment to quickly build on its early success as rivals like Bristol-Myers Squibb ($BMY) and Roche ($RHHBY) accelerate their own efforts.

Agenus says it already has multiple preclinical checkpoint modulator programs in development--including GITR and OX40 agonists and antagonists of TIM-3, LAG-3, PD-1 and CTLA-4. It's working on these programs in a collaboration with Ludwig Cancer Research. Shares of the biotech (AGEN)--which have been damaged in the wake of the big MAGE-A3 failure at GSK, which relied on their adjuvant--jumped 17% this morning.

"We are delighted to be working with Merck, who is a leader in the rapidly developing immuno-oncology space," said Bob Stein, the CSO of Agenus. "We believe our Retrocyte Display technology has significant advantages for creation of high quality antibody development candidates. This collaboration broadens our efforts in immuno-oncology beyond our previously disclosed checkpoint programs with a world-class research and development partner."

- here's the release