Merck Acts on its Post-Keytruda Plan, Spends $1.85B to Acquire Pandion for Autoimmune Therapies

Pandion’s short run as independent biotech is coming to an end. Almost two years after coming out of stealth mode, Merck and Co. is acquiring the company for its impressive pipeline of autoimmune disease therapies. The $1.85 billion cash deal will buy Merck a promising drug in early-stage testing for ulcerative colitis and lupus and a set of preclinical drugs for other autoimmune diseases.

Typically, treatment for diseases where the immune system starts killing its own cells involves suppressing the entire immune system. While this is effective at dialing down the negative effects of the immune system, it can make the body more susceptible to infections and inflammation. Pandion is developing a novel class of drugs that work by increasing the population of T-regulatory cells (T-regs) or by precisely activating PD-1 checkpoint protein. The novelty of the drugs is that they act at the local site of disease, avoiding a systemic immunosuppression characteristic of current treatments.

Pandion’s quick progress with the drugs fetched the company $58 million in series A financing in 2018, $80 million financing in April last year, and $135 million in an IPO last July.

Pandion’s Autoimmune Pipeline

Regulatory T cells, or Tregs, play a key role in modulating other cells in the immune system, so they don’t attack the body’s own tissues. The failure of Tregs can lead to autoimmune diseases. Pandion’s lead drug candidate, PT101, is designed to selectively activate and expand Tregs. The drug comprises two components: a protein backbone and an engineered version of interleukin 2 protein that activates Tregs at low doses and proinflammatory natural killer (NK) cells at higher doses. An ideal autoimmune drug would be the one that activates only Tregs and suppresses NK cells.

In Phase 1 study, Pandion’s drug did exactly that. It prevented the expansion of NK cells and triggered activation and expansion of Tregs. A 3.6-fold increase in Tregs over baseline and an expansion of a subset of activated Tregs, called CD25 bright Tregs, was observed following drug treatment. With this data, Pandion is moving on to Phase1b/2a study for ulcerative colitis and Phase 2 trial for Lupus in the mid and second half of this year, respectively.

Besides PT101, the company is also developing drugs to activate PD-1 receptors, a protein that is dear to many cancer immunotherapies. However, unlike checkpoint inhibitors, Pandion’s drugs will activate the protein, making the immune system unresponsive to its own cells. Pandion’s PT001 is designed to activate PD-1 receptors in gut tissues, which is directed at treating gut-restricted autoimmune diseases.

What is in it for Merck?

At the 39th Annual JPM conference last month, Merck discussed its growth plans after losing market exclusivity for Keytruda. The company was clear that it needs to move away from Keytruda’s shadow and start diversifying its portfolio. In that wake, Merck signed deals with VelosBio and Seattle Genetics for antibody-drug conjugates last year. The deal with Pandion is also part of the same plan and is expected to reap Merck a sizable profit in the post-Keytruda era.

As per the report published by Fior Markets, the global autoimmune treatment market is expected to grow from $3.28 billion in 2017 to $7.95 billion in 2025. If Pandion’s drug stands the test of safety and efficacy, it might as well become the next Keytruda.

Related Article: Beam Therapeutics Acquires Georgia Tech Spin Out, Seeks Non-Viral Gene Therapy Delivery Vehicles

References

1. https://www.merck.com/news/merck-to-acquire-pandion-therapeutics/
2. https://investors.pandiontx.com/news-releases/news-release-details/merck-acquire-pandion-therapeutics

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Author

Ruchi Jhonsa