Gilead pays $43.5M for early-phase IL-12 prospect from Xilio as biotech reduces head count

Gilead Sciences is bucking the trend in IL-12, handing Xilio Therapeutics $43.5 million upfront to get into the space after seeing rivals such as AstraZeneca and Bristol Myers Squibb retreat from the cytokine. Xilio shared the news alongside details of plans to pull back from another program and lay off 21% of its staff.

The Xilio deal gives Gilead a global license to develop and commercialize XTX301, Xilio’s tumor-activated IL-12. Like its sibling IL-2, the cytokine is a potentially potent immunotherapy, but efforts to realize that promise have repeatedly run into setbacks. Drug developers have come up with a range of ways to try to address the toxicity and half-life problems but are yet to deliver an approved IL-12 product.

Xilio’s attempt to crack the challenge rests on the addition of domains for masking and half-life extension to IL-12. Coupled to the domains, IL-12 could travel harmlessly around the body until it enters the tumor microenvironment, where an enzyme removes both add-ons and thereby activates the cytokine.

The biotech is putting that idea to the test in a phase 1 clinical trial. Patients with advanced solid tumors are receiving XTX301 every three weeks. In January, the biotech told investors the drug was generally well tolerated into the third dose level, with no dose-limiting toxicities, and committed to providing safety, pharmacokinetic and pharmacodynamic data in the second half of 2024. 

Gilead has made its move ahead of the data drop, handing Xilio $30 million in cash and investing $13.5 million in the biotech in return for an exclusive global license. Xilio is responsible for running the phase 1 trial through dose escalation. Once Gilead receives the data package, it can choose to pay $75 million to take responsibility for further development.

By the time Gilead makes that decision, Xilio could have received up to $29 million more from the Big Biotech in the form of additional equity investments and a development milestone payment. The fees are part of a package of milestones and investments worth up to $604 million. Shares in Xilio, which have languished below $1 this year, shot up by more than 200% in the wake of the update to exceed $2. 

The agreement moves Gilead into a space that some of its peers have entered and exited in recent years. Across two updates in 2022 and 2023, AstraZeneca dropped a Moderna-partnered mRNA prospect that encodes for IL-12 and axed an oncolytic viral agent engineered to include a transgene-encoding IL-12. In between those events, BMS returned the rights to Dragonfly Therapeutics’ IL-12 therapy.

Dragonfly is continuing to study its IL-12 candidate in a phase 1/2 trial, making it part of a pack of drug developers that have kept the faith in the cytokine. The pack includes Cullinan Oncology, Philogen, PDS Biotech, Sonnet BioTherapeutics and Xencor.

Gilead is poised to take the baton from Xilio and carry XTX301 through the rest of the race against those rivals. The transfer will leave Xilio focused on its CTLA-4 prospect XTX101, phase 2 data on which are due later this year. Xilio has a third clinical-phase asset, the IL-2 candidate XTX202, but it has decided to stop investing in monotherapy development.

Xilio disclosed the decision alongside new phase 2 data on XTX202 in patients with kidney cancer and melanoma. Stable disease continued to be the best response, leading the biotech to “explore strategic opportunities” for further development in combinations. With its focus narrowing, Xilio is parting ways with 15 employees, representing a 21% reduction of its workforce.