Merck signs a $605M deal to bulk up in cancer immunotherapy

Merck R&D chief Roger Perlmutter

Merck ($MRK), maker of the pioneering immuno-oncology treatment Keytruda, is investing in the next generation of cancer therapies that harness the body's natural defenses, agreeing to pay as much as $605 million for an Israeli biotech at work in the field.

The New Jersey pharma giant has agreed to spend $95 million up front on cCAM Biotherapeutics and its lead asset, an early-stage treatment similar to Keytruda. Under the agreement, the biotech's shareholders are due as much as $510 million more tied to clinical, regulatory and commercial milestones, Merck said.

With the deal, Merck brings in CM-24, an antibody designed to block the immune checkpoint CEACAM1, which functions as a sort of brake on the immune system. By inhibiting CEACAM1, CM-24 is designed to unblind the body to tumor cells previously undetected, galvanizing an immune attack on cancer.

The treatment is in the midst of a Phase I study testing its effect on recurrent malignancies, Merck said, including skin, lung, bladder and colorectal cancers.

The buyout "supports our objective to advance the care of patients with cancer by stimulating tumor-directed immune responses," Merck R&D chief Roger Perlmutter said in a statement. And it helps flesh out the company's pipeline in a field of growing importance.

Merck became the first drugmaker to win U.S approval for a checkpoint inhibitor when the PD-1-blocking Keytruda picked up a melanoma nod last year. Now, like its rivals Bristol-Myers Squibb ($BMY), Roche ($RHHBY) and AstraZeneca ($AZN), Merck is moving through dozens of trials designed to establish the potential of checkpoint blockers in a wide range of cancers, building the case for what analysts say could be a $35 billion market.

But beyond Keytruda, Merck's cancer pipeline is thin compared to its competitors, limited to a pair of oral treatments in Phase II development. Buying cCAM, the company figures, is an investment in the future of immuno-oncology.

Headquartered in Misgav, Israel, cCAM got off the ground in 2010 with the help of the Israeli Office of the Chief Scientist's incubators program, developing CM-24 based on research done at Sheba Academic Medical Center Hospital. The biotech's investor syndicate includes OrbiMed, Pontifax and Arkin Holdings.

- read the statement

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