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AbbVie wagers up to $2B on a Chinese biotech's cancer drug.

AbbVie has put $2 billion on the table to get access to an experimental cancer drug being developed by the Chinese biotech I-Mab.

I-Mab's drug lemzoparlimab is a man-made antibody designed to target a protein that's overexpressed on cancer cells. The protein, called CD47, tells the immune system not to destroy the cell, in turn allowing the cancer to rapidly reproduce. CD47 has become an attractive area of cancer research, with companies such as Seattle Genetics, Gilead, Bristol Myers Squibb and Zai Lab all testing drugs in early-stage clinical trials.

The deal hands AbbVie exclusive rights to develop and commercialize lemzoparlimab in all areas of the world outside greater China. I-Mab, in exchange, gets $200 million upfront and is eligible for up to $1.74 billion in milestone payments, of which $840 million are tied to clinical and regulatory milestones. The remaining $900 million are based on commercial achievements.

AbbVie has a mixed track record on cancer drug deals. Its $21 billion acquisition of Pharmacyclics, while pricey, provided access to a share of sales from the blood cancer drug Imbruvica, a profit split with Johnson & Johnson that has netted AbbVie $15 billion since 2015. Conversely, AbbVie essentially lost $6 billion after the central drug in its Stemcentryx buyout fizzled out in clinical testing.

With I-Mab, AbbVie is hedging its bets. The deal's relatively small upfront payment means AbbVie won't lose too much if lemzoparlimab doesn't pan out. Yet, nearly $1.8 billion in potential milestones suggests that AbbVie can envision I-Mab's drug succeeding commercially.  

Other large drugmakers have found CD47-targeting agents to be worthy additions to their pipelines. Most notably, Gilead shelled out $5 billion this year to acquire the California-based biotech Forty Seven and its lead drug, magrolimab.

Magrolimab is being tested against several kinds of blood cancer. A late-stage study evaluating the drug in patients with a group of cancers called myelodysplastic syndromes is supposed to begin this month and deliver data in early 2022.

Lemzoparlimab isn't as far along, though AbbVie and I-Mab contend that the way it's designed could help it stand out from other CD47 agents in development.

They say the drug is meant to have minimal binding to normal red blood cells, which should make it more tolerable than its rivals while at the same time maintaining "strong anti-tumor activity." Topline results of the recent early-stage trial seem to confirm this possible differentiation, according to AbbVie and I-Mab, as lemzoparlimab was well-tolerated and showed a more favorable pharmacokinetics profile.

More specifically, the companies said that among evaluable patients, there were no severe hematologic adverse events or side effects that would preclude them from testing higher doses of the drug. They plan to present full data at a scientific conference later this year.

For I-Mab, the deal with AbbVie offers a near-term and, potentially, long-term source of cash. In addition to the milestone payments, I-Mab would receive tiered royalties in the low- to mid-teen percentages on global net sales of lemzoparlimab outside of greater China, pending the drug's approval.

Terms of the deal also put AbbVie first in line to negotiate licensing agreements for two more lemzoparlimab-based antibodies under developed at I-Mab. Between upfront and milestone payments, the minimum potential value of each such license is $500 million, for a combined total of no less than $1 billion. I-Mab said in a regulatory filing that the relevant programs won't move forward if it and AbbVie don't agree on licensing terms.

The deal also provides a nod of confidence from one of the world's biggest pharmaceutical companies. I-Mab shares on the Nasdaq stock exchange were up 15% at market's open Friday, to trade at $41.10 apiece. The share price fell throughout the morning, however, to below $37 apiece.

Alongside the deal news, I-Mab announced Friday that it has entered into definitive agreements with a consortium of institutional investors to raise around $418 million through a private placement. Hillhouse Capital Group leads the consortium, which also includes GIC, Avidity Partners, OrbiMed, Octagon Capital Advisors and a half dozen more firms.

Author:Jacob Bell


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