Merck KGaA retools F-star pact, walks away from lead PD-L1 drug

Eliot Forster
F-star CEO Eliot Forster (NHS Innovation Accelerator)

Merck KGaA has revised the bispecific immuno-oncology antibody agreement it struck with F-star in 2017. The Big Pharma exercised its option on a discovery program but walked away from phase 1 LAG-3 PD-L1 bispecific FS118.

In revising the deal, Merck has acquired one discovery-stage program and retained an option on a second. But the near-term focus of the original deal, FS118, will be owned and taken forward by F-star, which moved it into the clinic last year and expects to deliver data in 2020. Neither party has disclosed the terms of the revised agreement.

Preclinical data suggest FS118 may overcome resistance to PD-1/PD-L1 antibodies such as Keytruda, Opdivo and Merck KGaA’s own Bavencio by blocking a second checkpoint inhibitor receptor, LAG-3. Studies of PD-1 resistance suggest upregulation of LAG-3 contributes to the problem.


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The original deal gave Merck the option to acquire FS118 and four other programs in return for up to €115 million ($129 million) over the first two years of the agreement. Following its well-thumbed deal-making playbook, F-star bundled the programs up into an asset-centric vehicle, F-star Delta, to enable shareholders to benefit more directly from its business development activities.

That playbook looks set to play a smaller role in the future of F-star, which is evolving from being a source of drugs for Big Pharma into a biotech focused on its wholly owned portfolio. The pivot began under ex-CEO John Haurum but is gathering momentum under his successor, Eliot Forster.

Forster, who was CEO of Immunocore at the time of its 2015 mega-round, took over as head of F-star last year. At that time, preclinical CD137 PD-L1 and CD137 OX40 bispecifics FS-222 and FS-120 were the most advanced drugs in F-star’s internal pipeline. The new Merck deal changes that. 

“This new agreement reflects our pivot to building a wholly-owned pipeline, that allows for rapid progress into the clinic and secures greater long-term value from our products. With full rights to FS118, we have an opportunity to accelerate the development of this first-in-class medicine for a group of targeted cancer patients,” Forster said in a statement.

F-star is likely closing in on a fundraising. The biotech ticked along on single-digit private rounds for years, reflecting its ability to generate cash through business development deals. But F-star’s pivot will ramp up its cash requirements, suggesting a private round or mooted IPO is in its future.

Editor's note: An earlier version of this article used the wrong currency when stating the near-term value of the original deal. 

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