- Eli Lilly's oncology division, Loxo Oncology at Lilly, has struck a deal with Merus NV to co-develop up to three bispecific antibody drugs for cancer.
- Lilly will pay Merus $40 million in cash and make a $20 million equity investment in the Dutch biotech to start the alliance, through which Merus will conduct discovery and early research work before handing the reins over to Loxo. The deal also includes up to $540 million in downstream payments per product — as much as $1.6 billion total — though that cash may never materialize.
- The move is the latest step in Lilly's efforts to rejuvenate its oncology research under the leadership of former Loxo executives. Lilly bought Loxo, a maker of targeted cancer medicines, in January 2019 and has since won one drug approval and made fast clinical progress with another. The Merus alliance adds the capability for Lilly to develop bispecific treatments, an increasingly competitive field of cancer research.
Lilly turned heads when it bought Loxo for $8 billion in 2019. The pharma paid a 68% premium for a company developing drugs for niche, genetically defined cancer types and did so despite the absence of any rival offers.
But Lilly envisioned its buyout of Loxo as more than just a deal for some experimental drugs. It placed Loxo's leadership team — which had just won a noteworthy approval of the cancer drug Vitrakvi — in charge of a newly branded oncology research division. Lilly also scrapped several of its own internal research programs and prioritized four compounds, two of which came from Loxo. (Vitrakvi is now owned by Bayer.)
Those decisions have already begun to pay off. The Food and Drug Administration last year approved one of those Loxo drugs, Retevmo, for lung and thyroid cancers driven by a particular genetic alteration. The other, LOXO-305, recently showed promise in multiple lymphoma types and this year will be tested head-to-head against the blockbuster blood cancer drug Imbruvica.
Now Loxo's team is adding new assets to the big drugmaker's pipeline. The alliance formed with Merus gives Lilly access to bispecific cancer treatments, a fast-moving area of oncology research involving antibodies that simultaneously latch on to both tumors and immune cells. These treatments are meant to be more convenient alternatives to cell therapies, which can be very effective for certain blood cancers but are limited by logistical and manufacturing challenges.
Lilly isn't alone. A number of top drugmakers, including Roche, Regeneron, Amgen and Johnson & Johnson, are developing bispecific antibody drugs for blood cancers like non-Hodgkin lymphoma and multiple myeloma. Several have shown potential, though it's proven challenging to develop treatments that are both potent and safe enough to be viable. Amgen's Blincyto is currently the only FDA-approved bispecific antibody drug for cancer.
Lilly is betting Merus's bispecific approach can stand out by creating drugs "with wider therapeutic indexes than those available today," said Loxo chief operating officer Jacob Van Naarden, in a statement. Van Naarden expects these types of drugs to become "an important component" of the company's biologics strategy.
Merus's platform, however, is unproven. The company shelved a leukemia drug last year after reporting "insufficient clinical responses" and its most advanced prospect, for certain genetically defined solid tumors, is in early-stage testing.
As with some other bispecifics in development, the drug candidates in the alliance target CD3, a surface protein on immune cells, and cancer surface proteins. Merus would get royalties on any product that reaches the market.