Merck inks $425M OncoImmune buyout to bag COVID-19 drug

Merck has struck a deal to buy OncoImmune for its COVID-19 treatment CD24Fc. The $425 million cash acquisition will give Merck control of a fusion protein linked to improvements in clinical status in a phase 3 trial of severe and critical COVID-19 patients.

OncoImmune began 2020 by presenting data on the effect of CD24Fc in allogeneic hematopoietic stem cell transplant patients. The use of CD24Fc in the population was underpinned by evidence that CD24 fusion proteins negatively regulate damage-associated molecular patterns, thereby countering a mechanism that may amplify graft-versus-host disease.

As evidence of the effect of SARS-CoV-2 accrued, OncoImmune spied an opportunity to use CD24Fc to treat the sickest COVID-19 patients. OncoImmune began a clinical trial in April to test the theory that CD24Fc fortifies an innate immune checkpoint against excessive inflammation.

With OncoImmune sharing interim phase 3 results to support the theory in September, Merck has agreed to pay $425 million upfront to buy the biotech. The deal is centered on CD24Fc. OncoImmune is spinning out other assets to form a new biotech owned by its existing shareholders. Merck is set to invest $50 million in the new biotech.

The deal, which features undisclosed regulatory milestones and sales-based payments, adds another element to Merck’s attack on COVID-19. Merck tasked a research group to the virus in late January but was slower than some of its peers to disclose efforts to combat COVID-19. The Big Pharma made its splash in the last week of May, when it disclosed three deals for vaccines and antivirals.

Merck now has two COVID-19 vaccines in the clinic, albeit at an earlier stage than rival candidates, and an antiviral in phase 2/3 development. Those programs cover assets that may prevent infection and treat patients with mild-to-moderate COVID-19. OncoImmune moves Merck into another area of the COVID-19 response. 

OncoImmune is testing CD24Fc in severe or critical COVID-19 patients. Participants in the phase 3 required supplemental oxygen support, noninvasive ventilation, high flow oxygen devices, invasive ventilation or extracorporeal membrane oxygenation.

An interim review took place once 146 patients in the placebo-controlled trial experienced clinical recovery. The review linked CD24Fc to a 60% higher probability of improvement in clinical status versus placebo and a more than 50% lower risk of death or respiratory failure. The median recovery time in the CD24Fc group was six days, compared to 10 days in the control cohort. 

The results suggest CD24Fc may help a population failed by multiple other drugs. The World Health Organization recommends against the use of remdesivir in hospitalized patients, anti-SARS-CoV-2 antibodies have failed in the population and efforts to repurpose existing inflammatory disease drugs floundered. Dexamethasone is a rare example of a drug that improved outcomes in severe patients. 

Some patients in the OncoImmune trial received drugs including dexamethasone and remdesivir. In patients who received corticosteroids, such as dexamethasone, median time to recovery was 15 days. Median recovery time in patients who received corticosteroids and CD24Fc was five days.