Antibody-Drug Conjugates – Hot, Hot, Hot

The concept of ADCs has been around for the last 30 years, but it was really within the last five or so years that drug development interest in the space has really accelerated.  The reasons for the increased enthusiasm for ADCs are multifold.  First, healthcare reform granted biologics 12 years of exclusivity, even if the patent has expired.  This incentivizes pharma companies to develop antibodies and also encourages them to develop ADCs and other strategies to extend the brand life of marketed biologics.  Second, many first generation antibodies are starting to see higher rates of relapse than previously anticipated.  By linking first generation antibodies with cell-killing agents, pharma companies could keep relapsed patients within their brand family.  Finally, scientists have uncovered many new and exciting targets that provide ideal candidates for ADCs.

Over the last couple of months the enthusiasm, and investor interest, in ADCs has really picked up.

ADC Heat Index

Seattle Genetics:  Arguably the hottest player in the ADC space right now.  The company expects FDA decisions in late August on brentuximab vedotin, which it is developing with Takeda for treating two types of blood cancers.  Seattle Genetics has licensed its linker technology to numerous companies, generating significant non-dilutive funding to support its own internal development efforts.  All told, the company has 11 active clinical programs that are being developed by its collaborators.  Publicly traded, the company’s stock price has gained 60% over the last year.

Immunogen:  In late May, Immuogen offered 7 million shares priced at a 5.7% discount and netted $84 million from the offering.  Given the current investment climate, raising such a large amount of capital at a marginal discount is a testament to the confidence that investment professionals have in the company.  The stock offering comes on the heals of the company releasing positive Phase II data from a study for T-DM1 in the treatment of breast cancer.

Genentech & Pfizer:  I have heard people estimate that these two heavyweights combined have approximately 200 ADC programs in various stages of development.  On top of that, Pfizer recently inked a major ($200 million!) deal with Seattle Genetics.  

Summary

While ADCs might be hot as a whole, the activity amongst pharma companies in the space is decidedly unbalanced.  There are some companies, like Bristol-Myers, which are probably quite happy to focus on their own promising oncology pipelines; however, if T-DM1 (Seattle Genetics) is approved later this summer, there is a good chance that deal activity in this space will heat up amongst other interested parties.  Sanofi, Novartis, and Johnson & Johnson, comparatively, have barely dipped their toes into ADCs.  Each of those companies could potentially acquire Seattle Genetics or Immunogen sometime soon.