By Nuala Moran BioWorld Today Correspondent
LONDON – BioVex Group Inc is to be acquired by Amgen Inc. in a cash sale that values the University College London spinout at up to $1 billion. There will be $425 million up front for the investors of the privately held cancer vaccines specialist, with $575 million in additional payments against regulatory and sales milestones.
That is a welcome reward for the venture capitalists who have supported the company through six private rounds since its formation in 1999. The company moved its headquarters from the UK to Woburn Mass., in 2005, to enable it to tap U.S. investors, but failed to get an initial public offering off the ground in 2006. In its most recent private round, which closed in November 2009, BioVex raised $70 million from a combination of new and existing investors. (See BioWorld Today, Nov. 11, 2009.)
At present, BioVex’s lead product, OncoVex GM-CSF, is in two pivotal Phase III trials in melanoma, and head and neck cancer, both being run under FDA special protocol assessments. The melanoma trial has almost finished recruiting, while the head and neck cancer trial began in December 2010. The product has a dual mode of action, consisting of a modified herpes simplex virus with a single gene deletion that renders it harmless to normal cells, while retaining oncolytic properties. At the same time it delivers the gene for the immune stimulant, granulocyte macrophage stimulating factor.
“We need to and will advance and expand the pipeline; BioVex is indicative of that objective,” said Kevin Sharer, Amgen CEO, discussing the acquisition on Monday, as Amgen presented its fourth quarter and full-year results for 2010.
The figures show the Thousand Oaks, Calif.-based company is sitting on cash of $17.4 billion. Sharer said this will be used to make “intelligent acquisitions” when they become available.
“It’s not that the cash is burning a hole in our pockets; the kinds of opportunities we are interested in are not many in number. BioVex is relatively small, but significant as an indicator of what we are trying to do,” Sharer said.
Following completion of the deal, BioVex will operate as a fully owned subsidiary of Amgen. Philip Astley- Sparke, CEO of BioVex, said Amgen’s expertise in biologics manufacturing and development means “[It] is ideally positioned to leverage the potential of OncoVex in multiple solid tumor indications.”
BioVex most recently presented clinical data at the J.P. Morgan Healthcare conference in San Francisco earlier this month. In the Phase I/II study in 17 patients with head and neck cancer, OncoVex GM-CSF was well tolerated with no significant side effects and 93 percent of patients had a complete response. None had recurrence in the neck at a median follow-up of 30 months, when 82.4 percent of patients remained alive.
The Phase III study will enroll 528 previously untreated patients with locally advanced disease, with the primary endpoint of a statistically significant increase in two- year event-free survival (relapse, progression or death) for patients treated with chemotherapy and radiation plus OncoVex GM-CSF, compared to patients treated with chemotherapy and radiation alone.
The Phase II trial in melanoma enrolled 50 patients with Stage IIIc and Stage IV melanoma who were treated with OncoVexGM-CSF as a stand-alone therapy.
There were 14 objective systemic responses, a 28 percent response rate. Responses were observed in patients with all stages of disease, including the complete resolution of uninjected visceral deposits. The pivotal Phase III controlled trial is enrolling a total of 360 patients, which is comparing treatment with OncoVex GM-CSF to subcutaneously administered GM-CSF in patients with unresectable Stage III and Stage IV melanoma. The primary endpoint is the rate of durable response.
BioVex has a second product, ImmunoVex HSV2, a vaccine for genital herpes, which is currently in a Phase I UK study in volunteers.
The company has maintained its R&D operation in Abingdon, UK.
Amgen will complete the acquisition this quarter, but in advance of that did not want to discuss any details of the clinical data BioVex has amassed to date. However, Roger Perlmutter, Amgen’s head of R&D, commented on the “very impressive” results from Phase II, saying, “You get confidence with the fact that there really is a significant effect on tumors.”
Although the trials were not controlled, Perlmutter said, “These are not tumors that go away by themselves. We need to see if the response is long-lasting, and that’s what the Phase III will tell. My sense is that I’m optimistic, and that’s of course the most important part of why we proceeded with the transaction.”
Yet the lack of controlled data to date makes the BioVex buy appear high risk, noted Oppenheimer & Co. analyst Bret Holley. “Additionally, the FDA approval path for replication competent viruses is unclear,” he added in a research note.
Cowen and Co. analyst Eric Schmidt was more optimistic about OncoVex’s chances for success, though he acknowledged the product’s “modest commercial opportunity,” between $200 million to $300 million, due to its local delivery via intratumoral injection.
Shares of Amgen (NASDAQ:AMGN) closed Tuesday at $57.16, down 13 cents.
For BioVex, the sale is a “landmark” transaction, said Sander Slootweg, managing partner at Forbion and nonexecutive board member at Biovex.
The small biotech has been one of Forbion’s most successful investments to date.
“We have been BioVex’s largest shareholder for several years, and have supported the company by leading and structuring its recent financing rounds,” Slootweg said. “We are very pleased that Amgen, a clear leader in the biologics space, has recognized the potential of OncoVex GM-CSF.”