Bristol-Myers drops option to buy HER2 cancer biotech

Bristol-Myers Squibb building
Bristol-Myers gained the option to acquire F-star Alpha and its HER2 therapy in 2014.

Bristol-Myers Squibb has dropped its option to buy single-asset cancer biotech F-star Alpha. The Big Pharma snagged an option to buy the F-star spinout and its human epidermal growth factor receptor 2 (HER2)-targeted therapy for up to $475 million (€434 million) in 2014 but has backed out of the deal partway through phase 1.

F-star attributed Bristol-Myers’ decision to the “prioritization of opportunities across its oncology portfolio.” Bristol-Myers has disclosed little about its motivations, simply saying it had discontinued development of anti-HER2 antibody fragment FS102 and won’t be exercising its option to acquire F-star Alpha.

The most revealing comment came from F-star CEO John Haurum, who flagged up the level of competition in the HER2 space when discussing Bristol-Myers’ decision and the future of the asset.

“We appreciate the challenges of developing therapeutics in the highly-competitive HER2 space, which we are factoring into our assessment of how to best proceed with the FS102 program,” Haurum said in a statement. When Bristol-Myers first picked up the option on the drug, it thought it may overcome resistance to other HER2 drugs. FS102 was designed to bind to a unique site on HER2 and then induce programmed cell death.

Haurum described the data generated to date on FS102 as showing a “favorable pharmacokinetic profile comparable to traditional antibodies” and “supporting the low immunogenic potential” of F-star’s Fc-domains with antigen binding sites. If the low immunogenic potential translates into a favorable safety profile, FS102 may emerge from the phase 1 backed by solid data. But whether that will be enough to warrant pushing ahead in a competitive niche is another question.

Bristol-Myers has decided that, for itself at least, the answer is no. The company slipped the news into its first-quarter results, the first set of financials it has posted since Thomas Lynch replaced Francis Cuss as CSO.

Cuss struck the deal with F-star during his tenure as CSO. The deal gave Bristol-Myers control of the development of the asset and an option to acquire it outright if it decided to move into phase 2b. Bristol-Myers paid F-star Alpha $50 million shortly after striking the deal. The payment covered fees for the acquisition option and certain rights, plus a milestone triggered by the start of phase 1.

Bristol-Myers submitted its phase 1 trial plans to within days of unveiling the deal. The open-label study looked the safety and pharmacokinetics of intravenous administrations of FS102 in 28 patients with relapsed or refractory breast or gastric cancer that overexpressed HER2. Bristol-Myers got as far as completing enrollment but cut and run before the trial finished treating patients. The study will finish as planned, beyond which the future of FS102 is uncertain.

For F-star, Bristol-Myers’ decision closes off one of the ways it envisaged returning money to its shareholders. The creation of the single-asset biotech F-star Alpha was intended to provide a more direct, near-term way for investors to receive a return on their outlay. Instead of all of the deal fees going back into the parent company F-star, investors would receive a cut.

F-star liked the model so much it set up F-star Beta and F-star Gamma, which have agreements with AbbVie and Denali Therapeutics, respectively. The near-term future of those vehicles is clear. The same cannot be said for F-star Alpha.