IL-2 player Neoleukin gets a leg up in reverse merger with Aquinox

People shaking hands across a desk that has computer and papers on it
Scientists at the university created a protein that looks like IL-2 using a computer program developed in the lab of biochemist David Baker. (rawpixel/Pixabay)

Last summer, Aquinox Pharmaceuticals dumped its lead asset after the inflammatory pain drug rosiptor failed to beat placebo in phase 3. A month later, it said it would cut half its staff in a bid to stay alive. Now, the Canadian biotech is buying University of Washington spinout Neoleukin, giving it an on-ramp to public financing that will push a computationally designed IL-2 drug. 

Seattle-based Neoleukin launched in January with a de novo protein—one designed from scratch—that mimics the action of the cytokine Interleukin-2 (IL-2). IL-2 was discovered decades ago and has been prescribed to treat certain cancers, but the naturally occurring has problems—such as toxic side effects and a short half-life—that have limited its use. 

Scientists at the university created a protein that looks like IL-2 using a computer program developed in the lab of biochemist David Baker. While natural IL-2 binds to three receptors, alpha, beta and gamma, Neoleukin’s protein binds only to the latter two, leading to anticancer activity. The UW team believe that skipping the alpha receptor will avoid immunosuppression and nasty side effects. The protein, dubbed NL-201, can also mimic the cytokine IL-15. 

RELATED: Nektar’s long-acting IL-2 NKTR-214 has 'zero value,' claims analyst 

Under the deal, the former shareholders of Aquinox will own 61.42% of the combined company, which will start trading on the Nasdaq by the end of the week. With $65 million in capitalization, the new Neoleukin will develop its de novo proteins for use in immuno-oncology, inflammation and autoimmunity, starting with NL-201. 

Since launching in January, the company has been pushing NL-201 toward IND-enabling studies, said Neoleukin CEO Jonathan Drachman, in a statement. 

"The merger with Aquinox is transformational for our company, providing additional capital to prepare an IND submission, generate clinical data, develop additional preclinical programs, and advance our computational technology. We believe that cytokine mimetics, or Neoleukins, have the potential to offer enhanced therapeutic effects with fewer toxic side effects,” Drachman said. 

RELATED: Preclinical biotech Synthorx wants a $100M IPO

Neoleukin isn’t alone in its quest to overhaul IL-2. Last year, Synthorx raised $63 million and then pulled off a $131 million IPO lead to move its synthetic cytokine Synthorin IL-2 into the clinic, while Alkermes is testing its ALKS 4230 both as a single agent and in combination with Merck’s Keytruda. 

But it hasn’t been smooth sailing for all IL-2 players. At ASCO 2018, Nektar put up “confusing” data for its long-acting IL-2 in combination with Bristol-Myers Squibb's Opdivo—the numbers suggested that response rates fell from an earlier readout. A report from Plainvew LLC, which acknowledged it had a short position in Nektar, declared that "NKTR-214 does not work," but the drug redeemed itself at ASCO this year with data showing a higher complete response rate. Though the overall response rate—the percentage of melanoma patients who saw their tumors shrink—remained around 50%, the ratio of patients whose tumors disappeared went up to 34%.

BMS and Nektar started a phase 3 study of the combination in untreated melanoma last year. If they can show a similar complete response rate to the smaller study, the data could establish NKTR-214 in the treatment of melanoma.