Lilly pledges $60M to German firm to form research partnership

In a bid to get into the white-hot market for drugs that use the body’s immune system, Eli Lilly and Co. will spend $60 million to form a research partnership with a German company focused on immuno-oncology.

Indianapolis-based Lilly also promised to pay up to $300 million for each drug BioNTech advances through key development milestones and royalties that could top 10 percent if any of those drugs hit the market. BioNTech will work with Lilly to help a patient’s T cells attack and kill cancer tumor cells.

Lilly’s upfront $60 million commitment consists of a $30 million signing fee and a $30 million investment stake in a BioNTech’s subsidiary, Cell & Gene Therapies GmbH.

"In the past few years, we've seen some amazing breakthroughs in immuno-oncology; however, we believe these are just the tip of the iceberg," said Dr. Greg Plowman, vice president of Lilly Oncology Research, in a prepared statement. "Lilly's partnership with BioNTech represents the next wave of cancer immunotherapy and is focused on the identification of functional T cell receptors that can be used to redirect a patient's natural immune system to fight cancer."

In January, Lilly signed development deals with New York-based Bristol-Myers Squib Co. and New Jersey-based Merck & Co. Inc. to see if their immune-oncology drugs would work in combination with Lilly’s existing or experimental cancer therapies.

Merck's Keytruda was approved by the FDA in September to treat melanoma. Bristol-Myers' Opdivo was approved by the U.S. Food and Drugs Administration in December, also to treat melanoma.

The two drugs had $83 million and $40 million in sales during the first quarter, respectively. But because the drugs continue to generate impressive results against multiple types of cancers, analysts expect both to be multibillion-dollar blockbusters.

A January report by Leerink Partners predicted the immuno-oncology drugs already in late-stages of testing by pharma companies had potential collective sales of $40 billion.

Predictions like that have generated a large amount of investment by venture capital firms and by stock investors through a series of public offerings by small immune-therapy companies, including BioNTech.

“It seems we are entering a new age of cancer therapeutics where the focus is now moving to harnessing the body’s immune system to do what it was designed for, and using biotechnology to remove the blocks [also known as checkpoints] cancer cells can throw up thereby facilitating their immune system recognition and killing,” wrote Adrian Dawkes and Kathryn Chung, both analysts at U.K.-based PharmaVentures Ltd., in a report earlier this year.

“With more checkpoint inhibitors to be researched and the spread of T cell engagement approaches, we could be witnessing the first treatments that ‘cure’ a range of cancers. As such, we can expect this to be a hot area for deal making in the immediate future.”