Genentech pays $150M upfront to partner on NewLink's immuno-oncology drug

Biotech powerhouse Genentech is going all in with Ames, IA-based NewLink Genetics, partnering on an early-stage cancer program which has been billed as an important example of a new class of checkpoint inhibitors. And Genentech says that it plans to build a portfolio of programs pairing this therapeutic with Roche's closely watched PD-L1 drug.

NewLink has been gaining a considerable amount of attention--both plaudits and pans--during the recent Ebola scare, advancing a vaccine that the company believes has potential in stopping the deadly West African epidemic. But this morning the market's attention shifted to cancer as NewLink outlined a rich $1 billion-plus pact. The smaller biotech is getting a hefty $150 million upfront along with more than $1 billion in potential milestones.

NewLink shares ($NLNK) shot up 30% this morning.

Genentech, a leader in the cancer field that will now share its considerable prestige with NewLink, was drawn by NLG919, an IDO pathway inhibitor. According to NewLink, the IDO pathway acts as an alternative to the PD-1 and PD-L1 checkpoint inhibitors, blocking an escape path that cancer cells use to steer clear of an immune system response. And Genentech will now explore how new combinations using NLG919 can be used to fight cancer.

In addition to the upfront and milestones, Genentech is funding R&D and manufacturing as well as providing research support directly to the company. NewLink is also hanging on to "certain" U.S. copromotion rights as well as the right to proceed with new in-house combos that match IDO inhibitors with TDO inhibitors.

Genentech's James Sabry

The deal marks another departure for Genentech from its traditionally low-key presence in the biotech deal-making field. Up until this year, the Roche subsidiary has executed only rare industry pacts, convinced that its own pipeline offers an abundance of new products and pairing opportunities. This year, though, Genentech also bought Seragon Pharmaceuticals in a rare $1.7 billion acquisition deal. And partnering chief James Sabry, once content with small add-on programs, appears to have raised his sights considerably in terms of total deal values.

This also isn't Genentech's first trip down the IDO pathway. Last summer Genentech followed Bristol-Myers and others which have partnered with Incyte, pairing its anti-PD-L1 drug MPDL3280A with the biotech's closely-watched IDO1 inhibitor, INCB24360.

"We are intrigued by the biology of the IDO and TDO compounds and are very interested in the potential to combine them with Genentech's portfolio of novel therapies," said Sabry in a statement. "We are delighted to have initiated this significant partnership with NewLink. We hope this collaboration will lead to new therapies for people with cancer."

- here's the release

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