UPDATED: Merck beefs up its cancer drug pipeline in $375M OncoEthix buyout

Further beefing up its rapidly growing pipeline for new cancer drugs, Merck ($MRK) has stepped in to buy out Switzerland's OncoEthix in a deal worth upward of $375 million. And the Big Pharma player is paying a hefty premium for a BET inhibitor that was in-licensed from Mitsubishi Tanabe just two years ago.

The pharma giant is paying $110 million upfront and $265 million in potential milestones for OTX015, an early-stage small molecule designed to trigger cancer cell death by targeting the BET bromodomain proteins 2/3/4. OncoEthix got this far on $30 million in funding from Index Ventures, SV Life Sciences, Endeavour Vision and Edmond de Rothschild Investment Partners.

BET inhibitors have potential in a range of cancers. OncoEthix boasted that OTX015 was the first drug in its class to demonstrate the potential of blocking MYC, which regulates the transcription of growth-promoting genes and cell cycle regulators. The approach has shown promise for acute myeloid leukemia, Burkitt's lymphoma, and multiple myeloma. And Merck won't be alone in the field. Soon after OncoEthix in-licensed its program Constellation Pharmaceuticals partnered with the Leukemia and Lymphoma Society on a BET inhibitor for blood, bone marrow or lymph-node-related cancers.

These kinds of bolt-on deals have become a favorite target of Big Pharmas in general. For Merck, which has been barreling ahead in immuno-oncology with Keytruda after a lengthy drought in the clinic, a reinvigorated drug development operation under Roger Perlmutter has been tailoring fast-paced studies looking at the potential of new combination therapies. OTX015 will fit easily into that landscape. 

In a related move, Merck also inked a tie-up today with Cambridge, MA-based Enumeral Biomedical, which has been developing immunotherapy tech, Enumeral recently did a reverse merger with a shell company to flip onto the OTC market (OTCQB: ENUM) and says it will now work with Merck to study the tumor microenvironment for colorectal cancer tissue to check on the cellular responses registered by immuno-oncology drugs. Enumeral is an academic spinoff with tech from MIT and Harvard. The terms of the deal were not disclosed.  

According to the company's website, OncoEthix was founded by Dr. Esteban Cvitkovic, Kay Noel, Yves Paternot, and Dr. Patrice Herait (all former associates at Cvitkovic & Associes Consultants SA) to develop a portfolio of three to 5 new cancer drugs. The basic idea was to advance drugs through proof-of-concept and then license them out to pharma partners, but Merck evidently found it more appetizing to bag the whole business.

Merck's Roy Baynes

"Oncology is a priority area of focus for Merck and the acquisition of OncoEthix supports our strategy to prioritize the development of innovative molecules with the potential to improve the treatment of advanced cancers," said Dr. Roy Baynes, senior vice president, global clinical development, Merck Research Laboratories. "The potential first-in-class oral BET inhibitor, OTX015, has demonstrated early promising activity in hematological cancers and strategically complements our broad immuno-oncology development program."

- here's the release