Eli Lilly tees up discovery pact worth more than $1.6B with Merus for T cell-focused bispecific antibodies

Under science chief Dan Skovronsky, Eli Lilly has taken some big swings at next-gen therapies, including trying to find the next big thing in oncology. Now, after one early failure in the field, Lilly is going back to the bispecific antibody well with a new deal with a Dutch biotech.

Lilly will pay $40 million upfront with an additional $20 million equity stake in Merus NV to identify and develop three bispecific antibodies looking to engage the CD3 antigen on T cells and redirect immune cells, the Indianapolis pharma giant said Tuesday.

Each eligible candidate can earn up to $540 million in development and sales biobucks, Lilly said, bringing the deal’s potential future payouts to more than $1.6 billion. Merus can also expect sales royalties in the “mid-single to low-double digits” if its candidates hit the market, Lilly said. The deal comes under the umbrella of Lilly’s Loxo Oncology unit, which the drug giant agreed to buy for $8 billion back in early 2019.

Lilly will lean on Merus’ Biclonic development platform, which has identified 175 novel and diverse anti-CD3 common light chain antibodies, the company said. Merus’ tech comes with the know-how for “functional screening of large libraries for optimal performance,” CEO Bill Lundberg said in a statement, adding some targeted direction for the biotech’s expansive catalogue.

Merus’ bispecifics are the latest R&D Hail Mary for Lilly under CSO Skovronsky, who came on board in 2018 with the mission of shaking up the drugmaker’s stale portfolio with big plays in oncology, neurology and rare disease.

The Loxo buyout was an early example of that risk-taking drive. Just recently, Lilly agreed in mid-December to buy out Prevail Therapeutics and its AAV9 gene therapies for $1.04 billion plus a $4 CVR based on one of those candidates nabbing an approval in targeted countries by the end of 2024. Lilly argued the Prevail pickup would help firm up its role as an “established leader” in neuroscience while adding a play at the hot market for gene therapies.

In bispecific antibodies, Lilly is taking another big swing at a market that has so far turned out few results on the commercial side. Just one bispecific antibody, Amgen’s Blincyto, has ever been approved, although the field has seen growing interest as potential “off-the-shelf” competitors to CAR-T and its expensive and time-consuming manufacturing process.

It’s not Lilly’s first go at bispecific antibodies after the drugmaker culled a PD-1/TIM-3 candidate back in July 2019, just months after the drug went into Phase I human trials. Anti-TIM-3 has been a major area of focus across Big Pharma, including investments from Roche and Novartis. Despite dropping the bispecific, Lilly is still working on the TIM-3 mechanism of action as a standalone project with a monoclonal antibody currently cycling through Phase I/II trials.