Bristol-Myers Squibb is paying Nektar Therapeutics $1 billion to develop NKTR-214 in combination with Opdivo and Yervoy. All told, Bristol-Myers is committing $3.6 billion to a deal that gives Nektar the lion’s share of NKTR-214 profits and leaves it some freedom to develop the drug in combination with other assets.
Nektar demonstrated the potential of combining immunostimulatory therapy NKTR-214 with Opdivo in November. A phase 1/2 trial of the combination reported objective response rates spanning from 46% to 75% in a range of advanced tumor types, including renal cell carcinoma, melanoma and PD-L1 negative non-small cell lung cancer. The data validated the idea that NKTR-214 boosts the efficacy of checkpoint inhibitors such as Opdivo by expanding NK and T cells and boosting PD-1 expression.
With Bristol-Myers searching for an edge over Merck’s Keytruda and other rival checkpoint inhibitors, the early data have proven compelling enough to encourage it to strike a deal for the asset. Bristol-Myers is paying $1 billion upfront and buying $850 million in Nektar stock at a 36% premium. The Big Pharma will also hand over up to $1.8 billion more in milestones, 80% of which are tied to clinical and regulatory events. The remaining 20% are more distant sales milestones.
The deal is a record-breaker, being the largest biotech licensing fee in history.
Those payments have secured Bristol-Myers the right to work with Nektar on a broad development program. The plan is to test NKTR-214 in combination with Opdivo, plus CTLA-4 drug Yervoy in some cases, in more than 20 indications across nine types of tumor. Bristol-Myers will pay between 67.5% and 78% of the development costs, depending on whether the trials feature one or two of its drugs.
The deal doesn’t give Bristol-Myers full control of NKTR-214, though. Bristol-Myers will lead global commercialization efforts for combinations featuring NKTR-214—with Nektar helping out in the U.S.—but will only pocket 35% of profits from the immunostimulatory therapy. The big pharma also stands to profit if NKTR-214 combinations drive up sales of Opdivo and Yervoy.
Nektar is retaining some freedom to develop NKTR-214 in combination with other assets. Crucially though, the terms prohibit development of combinations with overlapping mechanisms of action in the indications covered by the R&D plan created by Bristol-Myers and Nektar. Those restrictions will last for a “specified period of time.”
The stipulation gives Bristol-Myers a window of developmental exclusivity for combinations featuring NKTR-214 and PD-1 checkpoint inhibitors. If NKTR-214 lives up to expectations, that could enable the big pharma to establish combinations based on Opdivo and Yervoy as go-to treatments for a range of cancers. Pivotal trials in renal cell carcinoma and melanoma are slated to start around the middle of the year.
The success of those trials will go some way to dictating whether the biggest bet to date of CSO Thomas Lynch, M.D., pays off. Lynch was hired by Bristol-Myers 11 months ago with a brief to accelerate the advance of its immuno-oncology pipeline, which was then reeling from missteps in the expansion of Opdivo into new patient populations.
For Nektar, the deal appears to quash reports it is considering selling up. Bristol-Myers’ purchase of the biotech’s stock is tied to lock-up and standstill provisions that will last for five years.
Umer Raffat, at Evercore said in a note this morning: "I think BMY got a very good deal structure on this IO program. BMY was able to get 35% economics, and yet not bet $16B upfront … and there is a standstill provision. In addition, it enables BMY to remain the company with most IO-IO combinations in Ph 3."
But not all shared the sentiment, as Bristol was down by 1% pre-market, while Nektar was in the red by more than 4%, with some perhaps hoping for a bigger buyout deal.