Amgen bets up to $1.7B on Xencor's antibody technology

Xencor CEO Bassil Dahiyat

Amgen ($AMGN) is teaming up with Xencor ($XNCR) through a heavily back-loaded deal worth as much as $1.7 billion, collaborating on 6 early-stage programs in immuno-oncology and inflammation.

Under the agreement, Amgen is paying its new partner $45 million up front to use its R&D technology on some preclinical antibodies designed to harness the body's natural defenses. Amgen is on the hook for a total of up to $1.7 billion more tied to regulatory and sales milestones, plus royalty payments on future sales. Xencor is due mid to high single-digit royalties on the Amgen-selected targets and high single- to low double-digit royalties on its internally developed candidate, a multiple myeloma treatment.

Each of the therapies will take advantage of Xencor's proprietary bispecific antibody technology, designed to home in on two biological targets at once and thus engage tumor-expressed antigens and the immune system's T cells at the same time, according to the company. The partnership marries Amgen's expertise in finding actionable targets with Xencor's development platform, a combination the companies say could breed some promising shots on goal.

For Amgen, the deal follows a string of clinical and regulatory successes with in-house bispecifics, including the recently approved acute lymphoblastic leukemia treatment Blincyto; the in-development acute myeloid leukemia therapy AMG 330; and the top-selling multiple myeloma drug Kyprolis, star of the company's $10 billion buyout of Onyx Pharmaceuticals.

Xencor is characterizing the deal as a major affirmation of its R&D pedigree: Amgen was swayed by the bispecific technology's "robustness, long half-life, and the plug-and-play ease of development of our platform," CEO Bassil Dahiyat said in a statement.

"This opportunity expands the reach of our technology with a partner that has proven experience in bispecifics and immuno-oncology," Dahiyat said. "Xencor will continue to focus on its internal programs including its immuno-oncology XmAb bispecifics, XmAb14045 in acute myeloid leukemia and XmAb13676 in B-cell malignancies, which are expected to enter clinical development in 2016."

The biotech's shares, halted for the news on Wednesday morning, shot up as much as 30% once trading resumed.

Xencor, which went public in 2013 on the strength of its platform, is collaborating with Novo Nordisk ($NVO), Merck ($MRK), MorphoSys and Boehringer Ingelheim and others on antibody projects directed at cancer, immunology and rare diseases.

- read the statement