Bayer aims at hot cancer immunotherapy race with $540M R&D deal

Shares of Israel's Compugen soared more than 60% this morning after the Israeli biotech signed on to a collaboration with Bayer to find new antibody-based cancer immunotherapies. The biotech--which specializes in computer-based discovery work--nailed a $10 million upfront, up to $30 million in preclinical milestones and another $500 million in long-term milestones for two programs.

For Bayer, the deal marks another step forward for a small but growing oncology business. The pharma company has added approvals for Stivarga with Onyx ($ONXX) and Xofigo (radium-223 chloride, allied with Algeta) this year, building on its Nexavar franchise. And it plans to take control of any new therapy that emerges out of the preclinical partnership with Compugen ($CGEN), while reserving a single-digit royalty stream for the biotech on any drug that makes it through to an approval.

This time, Bayer hopes to angle for a position in the hot cancer immunotherapy arena, which is seeing a host of drug developers pile in after the pioneering success of some leading programs, like the new PD-1 drugs from Merck ($MRK) and Bristol-Myers Squibb ($BMY) that stole the spotlight at ASCO this summer.

Professor Andreas Busch--Courtesy of Bayer HealthCare

"Antibody-based immunotherapies are promising approaches in oncology which can stimulate the body's own immune cells to fight cancer cells," says Andreas Busch, Bayer's head of drug development. "Immunotherapy is one of our focus areas in oncology research. We are looking forward to expanding our portfolio in this area through partnering with Compugen."

A little more than a year ago Compugen opened up an operation in the San Francisco biotech hub. As FierceBiotechIT Editor Ryan McBride explained in a recent article, Compugen relies on a computational platform to find new drugs. The platform involves computer algorithms that predict surface membrane proteins that could serve as targets for antibody drugs. Later in the discovery process, the company validates the computer-based findings in lab experiments.

- here's the press release
- get more from FierceBiotechIT

Editor's Corner: ASCO confab highlights immunotherapies, 'breakthrough' drugs and small victories

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