BMS hands Zenas a quick win, paying $50M for regional rights to ex-Xencor autoimmune drug

Zenas BioPharma has flipped regional rights to its bifunctional monoclonal antibody obexelimab. Bristol Myers Squibb has taken the other side of the deal, paying $50 million upfront for certain Asian rights to an asset that Zenas picked up from Xencor in return for a stake in its business less than two years ago.

Obexelimab targets CD19 and FcγRIIb to inhibit B-cell function, mimicking the action of antigen-antibody complexes to treat autoimmune diseases. The candidate was a high priority for Xencor until a failure in lupus in 2018 prompted it to pull plans to run a phase 3 trial in another indication and seek a partner. More than three years after the lupus flop, Zenas acquired the asset in return for equity and milestones. 

Since then, Zenas, a biotech set up by Tesaro co-founder Lonnie Moulder, has published phase 2 data on the antibody in IgG4-related disease and begun a late-stage clinical trial in the same setting. The progress has caught the eye of BMS.

The Big Pharma is paying Zenas $50 million upfront in cash in return for the exclusive right to develop and commercialize obexelimab for autoimmune diseases in Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia. BMS is also making an equity investment in Zenas and committing to milestones and royalties. Neither party has disclosed the size of the investment nor potential milestone payments. 

The deal represents a quick return for Zenas, which secured global rights to obexelimab from Xencor in exchange for a warrant to buy additional equity with a fair value of $14.9 million. Zenas also committed up to $470 million in milestones to land the deal with Xencor. Less than two years later, Zenas has pocketed $50 million, plus the equity investment, in return for rights to obexelimab in a handful of markets. 

Zenas sold the regional rights to BMS after successfully kick-starting development of a candidate that had stalled at Xencor. Building on a midphase study that Xencor ran in 2016 and 2017, Zenas moved the drug candidate into a phase 3 trial in IgG4-related disease last year. A phase 2/3 study in warm autoimmune hemolytic anemia got underway earlier this year.

BMS has a prior interest in IgG4-related disease. The Big Pharma previously worked with Massachusetts General Hospital to study abatacept, the molecule it sells as Orencia, in the indication, and is currently collaborating with the National Institute of Allergy and Infectious Diseases to test elotuzumab, which it sells as Empliciti, in the setting. No drugs are currently approved for use in the indication.