AZ's Celgene tie-up 'will boost immuno-oncology business'

AstraZeneca (AZ) has forged an alliance with Celgene to accelerate the development of its checkpoint inhibitor MEDI4736 in blood cancers.

The deal is one of two designed to bolster the potential of AZ's primary immuno-oncology asset MEDI4736, with AZ also joining forces with French biotech Innate Pharma to test the PD-L1 blocker with the latter's anti-NKG2A antibody IPH2201 in lung cancer.

MEDI4736 is lagging behind rival checkpoint inhibitors from Bristol-Myers Squibb and Merck & Co – which are already on the market to treat solid tumours – and the tie-up with Celgene could give AZ a stronger position in haematological malignancies.

Under the terms of the deal, Celgene will make an upfront payment of $450 million to AZ in return for rights to develop and sell MEDI4736 for a range of blood cancers, including non-Hodgkin's lymphoma, myelodysplastic syndromes and multiple myeloma.

Celgene will initially take the lead on the clinical development programme, which will focus on the use of MEDI4736 as both a monotherapy and in combination with the US firm's portfolio of cancer drugs, which are led by myeloma blockbuster Revlimid (lenalidomide).

After the end of 2016, AZ will start to fund 25 per cent of R&D costs and will also manufacture and sell the drug, with Celgene receiving a hefty royalty on sales resulting from the collaboration, starting at 70 per cent and reducing to 50 per cent over four years.

Both companies have also intimated that the collaboration may lead on to bigger things, with additional pipeline assets from AZ slotted into a wider collaboration in haematological cancers.

The performance of checkpoint inhibitors in blood cancers has been mixed, with BMS' Opdivo (nivolumab) and Merck's Keytruda (pembrolizumab) both showing promise in phase I trials while Opdivo failed to show a significant effect in multiple myeloma.

AZ and Celgene feel that the combination of the PD-L1 blockade with Celgene's drugs could accentuate MEDI4736's potential in this area.

Analysts seemed to be divided on the merits of the deal, with some praising AZ for making a bold move to accelerate development of MEDI4736 in a therapeutic category outside its core focus, while others suggested it had given too much away in the deal, given that the antibody is one of its main pipeline assets.

Meanwhile, AZ's collaboration with Innate will explore the potential of combining MEDI4736 with IPH2201, another checkpoint inhibitor which has been designed to tackle a cellular process that leads to inhibition of natural killer (NK) and cytotoxic T cells.

The two companies will conduct a phase II trial of IPH2201 in solid tumours, both as a monotherapy and in combination with MEDI4736, and also work on the development of associated biomarkers. AZ will make a $250 million payment to the French firm for rights to the combination plus access to the drug as a monotherapy.

News of the two deals came as AZ reported slightly better-than-expected first-quarter results, with revenues down 6 per cent to $6.1 billion – falling mainly as a result of generic competition to the company's gastrointestinal drug Nexium (esomeprazole). Core operating profit fell 8 per cent to $1.8 billion.