UPDATED: Baxalta signs off on a $1.6B checkpoint pipeline deal as Shire buyout simmers

Even as word of a looming Shire ($SHPG) buyout continued to heat up over the weekend, Baxalta ($BXLT) was readying an announcement that it has struck a deal with Copenhagen-based Symphogen to collaborate on a new pipeline of checkpoint cancer therapies. And it's paying a hefty $175 million upfront, the sweetener to a package worth up to $1.6 billion.

Symphogen will take responsibility for all R&D through Phase I, leaving Baxalta with an option on 6 checkpoint targets, which weren't spelled out in the companies' statement.

Immuno-oncology has emerged as one of the hottest fields in drug R&D, with Bristol-Myers Squibb ($BMY) and Merck ($MRK) taking the lead and Roche ($RHHBY) following behind with a broad, late-stage effort of its own. The next wave includes programs at AstraZeneca ($AZN) and Merck KGaA/Pfizer ($PFE), which teamed up in a deal that included a record $850 million upfront payment.

Checkpoint therapies are designed to dismantle a cloaking mechanism cancer cells use to avoid detection by the immune system. By ramping up an attack on cancer, virtually every company with ambitions in oncology believe they can address a variety of cancers, with dozens of new combinations that should deliver more effective methods to fight cancer now in the works.

The timing of the deal, though, should generate considerable discussion. Over the weekend, Bloomberg reported that lengthy buyout talks with Shire were reaching a critical stage that could lead to a $32 billion merger pact as early as this week. Typically, a company about to be bought out puts their business development team on hold. A new commitment like this could easily be designed to fight off Shire, rather than entice them further.

The collaboration, though, fits in well with Baxalta's long-term plan to build a pipeline of cancer drugs. The biotech split off from Baxter last summer after striking a range of deals that included licensing pacts for Merrimack's pancreatic cancer treatment MM-398, CTI BioPharma's myelofibrosis drug pacritinib and Onconova's rigosertib.

About a year ago, Merck KGaA handed back a mid-stage cancer drug to Symphogen, booting a partnership as the German pharma company reorganized its pipeline efforts. At the time, the biotech opened a research facility in New Jersey and hired on Novo Nordisk ($NVO) veteran Esper Boel taking a lead role in developing new antibodies for immuno-oncology. Today's deal indicates Boel has been making some real progress on that front.

"This exciting partnership aligns well to Baxalta's strategy to invest in immuno-oncology and build an innovative portfolio of immunotherapies," said David Meek, executive vice president and president of oncology at Baxalta. "With the expertise Symphogen offers in this category and their broad portfolio of early-stage immuno-oncology programs, this collaboration allows us to actively advance one of the most innovative areas of this field. For Baxalta, this is just the beginning of our focus in building world-class capabilities in immuno-oncology."

- here's the release