Pharma giant Merck has entered into a definitive agreement to acquire oncology biotech VelosBio for $2.75bn in cash. The acquisition remains subject to certain customary adjustments and conditions; the deal is expected to be closed by the end of 2020.
Founded in 2017, VelosBio focuses on developing first-in-class antibody-based drugs that target receptor tyrosine kinase-like orphan receptor 1 (ROR1). Its lead candidate, VLS-101, is an antibody-drug conjugate (ADC) targeting ROR1 and is being investigated in a Phase I study for haematologic malignancies and a Phase II trial for solid tumours.
VelosBio founder and CEO Dave Johnson noted in a release: “We are very pleased that Merck has recognized the value of our first-in-class ROR1-directed investigational therapeutics. As part of Merck’s oncology pipeline, our lead product candidate, VLS-101, is now well positioned to achieve its maximum potential to benefit appropriate cancer patients in need.”
ROR1 and VLS-101’s promise has been central to VelosBio’s growth to validate the clinical company over the past three years. VelosBio has been in Arix Bioscience’s portfolio since 2018 when the investment firm co-led a Series A round. Arix managing director and VelosBio board member Jonathan Tobin notes: “As one of the top forces in oncology drug development globally, Merck makes the perfect partner to maximise the potential benefit of VelosBio’s lead candidate, VLS-101, for the treatment of patients with cancer.”
Explaining Merck’s interest in VelosBio and ROR1
ROR1 is a novel therapeutic target in oncology that has been validated by VelosBio’s work. It is a transmembrane protein that is expressed during early embryogenesis and plays a role in organogenesis.
“ROR1 is expressed broadly in both hematologic malignancies and solid tumours but not in normal adult tissues, which is unique and offers the potential for broad activity,” explains Merck vice-president of oncology clinical research Vicki Goodman.
She adds: “By targeting ROR1, VLS-101, in particular, is designed to deliver cancer-fighting therapeutics selectively to tumour cells, while sparing normal cells.” This makes ROR1 an exciting ADC target, according to Goodman.
However, VelosBio is not primarily focused on VLS-101; it is developing a wider pre-clinical pipeline of next generation ROR1-targeting ADCs and bispecific antibody drugs for blood and solid cancers, explains Tobin. Goodman notes: “We are also excited to explore the potential of the next-generation ADCs, which may complement VLS-101.”
ADCs are of significant interest to Merck. This is the second ADC deal the pharma giant has signed this year; the first was with Seattle Genetics for its LIV-1 targeted ADC ladiratuzumab vedotin in September, which was valued at $1.6bn in upfront payments and equity investment.
Merck’s plans for VelosBio’s pipeline
ROR1 is especially expressed in certain subtypes of non-small cell lung cancer, breast cancer, including hard-to-treat triple negative breast cancer, and ovarian cancer. In fact, “in many patients with cancer, ROR1 expression has been associated with more aggressive course of disease that does not respond to current therapies”, notes Goodman.
As such, this acquisition aligns with “Merck’s strategy to broadly develop innovative oncology assets and to expand further into haematologic malignancies and potentially solid tumours where there remains an unmet need”, according to Goodman.
The strategy, Goodman notes, is “to undertake a broad and comprehensive development plan for VLS-101 across multiple tumour types and therapy lines”.
Merck may also explore combining VLS-101 with other oncology agents, such as blockbuster Keytruda, “based on where we see activity with the monotherapy”, concludes Goodman.