Merck Bets $15M on Ambrx’s “Smart Bomb” Antibodies

6/18/12Follow @xconomy

Merck is making its first move into one of the hotter corners of biotech, by forming a partnership to make “smart bomb” antibody drugs with San Diego-based Ambrx.

The Whitehouse Station, NJ-based pharmaceutical giant (NYSE: MRK) has agreed to pay Ambrx $15 million upfront, another $288 million in milestone payments, and an undisclosed royalty rate on worldwide sales of any drugs that might come from the collaboration. For that, Merck is getting access to Ambrx’s technology for combining targeted antibody drugs with potent toxins to give them more wallop against diseased cells. Merck scientists will contribute some undisclosed biological targets they are interested in, and Ambrx’s job will be help discover some “empowered” antibodies, aka “antibody drug conjugates,” to hit those targets.

Merck has made its name over the decades for its prowess in making synthetic small-molecule compounds as drugs, which can conveniently be given as oral pills. But now that patents are expiring on many of the aging hits, analyst estimates are that eight of the world’s top 10 drugs in 2014 will be biotech drugs, which are larger molecular structures that are usually injected. These require very different scientific skills, and Merck has been building a portfolio through a variety of ways, including its acquisitions of Kenilworth, NJ-based Schering-Plough, Lebanon, NH-based GlycoFi, and Beverly, MA-based SmartCells. More recently, it struck a partnership with Vancouver, BC-based ZymeWorks to make “bispecific” antibodies that can hit more than one molecular target, plus today’s deal with Ambrx to create more potent antibodies.

“We feel it fits in very well with our whole biologics strategy, which includes trying to deliver best in class biologics using platform approaches,” says Deborah Law, the vice president of biologics discovery at Merck Research Laboratories in Palo Alto, CA. “We’ve been working hard to identify those platforms that are significantly better than the standard of care.”

Simon Allen, Ambrx's chief business officer

Simon Allen, Ambrx’s chief business officer, said the deal is important to his company partly because of the cash it provides, but also because of the technical validation. He stressed that while most antibody drug conjugates of today are being tested for cancer, Ambrx’s technology should enable it to make drugs that are potent and safe enough to be given for chronic, non-life threatening conditions that affect millions of more people.

“Merck has recognized the value and importance of taking biologic drug conjugates outside of oncology,” Allen says. “We think it’s a natural evolution for biologics. Merck has the vision, and we are thrilled to be working with them. Success in this collaboration will open up a whole new field of opportunity.”

Ambrx and Merck are certainly not strangers, and they have one very important connection between the two of them. The prominent chemist Peter Schultz, who founded Ambrx in 2003 and remains on its board of directors, was recently recruited to run a new $90 million Merck-funded nonprofit research center in San Diego called Calibr. Ambrx and Merck also had a partnership in the past to co-develop a genetically engineered drug based on FGF21 for diabetes. That alliance has ended, and the molecule is now being co-developed by Ambrx and Bristol-Myers Squibb, Allen says.

While biotech scientists have dreamed for three decades of making “smart bombs” that destroy diseased cells and spare healthy tissue, it’s been easier said than done. But there have been major strides in this work the past few years, as Seattle Genetics won FDA approval in August for one such “empowered antibody” for a couple of rare lymphomas, and Genentech showed this month that its souped-up version of trastuzumab (Herceptin) was better at slowing tumor growth, and likely better at extending life, than the original. Those successes have helped energize a number of startups around the world working to link antibodies to toxins, which I listed here at Xconomy in May.

So what does Ambrx have that’s different and special? The key, Allen says, is in the company’s ability to precisely control the way it binds antibodies to the toxins. The company’s technology enables it to use an extra-long stretch of DNA, which allows it to insert a non-natural amino acid at the same spot every time in a large, Y-shaped antibody molecule, Allen says. By creating such a specific binding site on the antibody, Ambrx scientists believe they can control exactly how many toxins bind to the antibody during manufacturing, and exactly where they belong, to give the drug ideal pharmaceutical properties, Allen says.

Today’s leading technologies for linking antibodies and toxins don’t provide that same degree of specificity, Allen says. Bothell, WA-based Seattle Genetics (NASDAQ: [[ticker:SGEN]) and Waltham, MA-based ImmunoGen (NASDAQ: IMGN), the leading developers of such linker technology, use manufacturing processes that aren’t that consistent, which means that there can be variability in the number of toxins that bind to each antibody, and the place they bind, Allen says. If not enough toxins get bound to the antibody, the antibody-drug combo might not be effective. If too many get bound, or too many get bound to the wrong part of the antibody, it could cause the immune system to react negatively and neutralize the drug before it can have the desired effect on the biological target, he says.

More consistent antibody-drug binding properties should make it possible to develop drugs that are still potent against diseased cells, but also have the kind of mild side effect profiles that are essential for drugs against chronic conditions like autoimmune diseases, Allen says.

“We think there’s a lot of room for improvement in conjugation,” Allen says.

All this work is still at an early stage, so it’s way too early to start forecasting if or when any of the drug candidates will get into clinical trials. But Ambrx, an R&D operation with 57 employees, has been cash-flow positive for more than a year, thanks to a series of partnerships with Merck, Pfizer, Bristol-Myers Squibb, and Merck KGaA of Germany.

“We’ve been cash-flow positive for a number of years, which is unique for a biotech at our stage of development. That will enable us to drive our own internal pipeline of candidates that use Ambrx technology into the clinic,” Allen says.

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