Astra scoops JP Morgan

Not too long ago companies used to time big transactions to coincide with January’s JP Morgan healthcare conference – think Bristol Myers Squibb’s $74bn swoop on Celgene in 2019, for instance. More recently, however, deals have been done whenever the price has been right, a seemingly more logical approach.

AstraZeneca’s $1bn acquisition of Gracell illustrates the new way, not only scooping JP Morgan, further eroding the investor meeting’s relevance, but also coming in the middle of the Christmas holidays. Optimistic biotech investors will see in this a view among buyers that the biotech markets have bottomed out, and that pressure is on to strike deals before asset prices rise again.

The Gracell deal is notable for seeing Astra ramping up its presence in cell therapy. The UK group had no significant skin in this game, until revealing in-house work on Car-T projects against Steap2, GPC3 and Claudin18.2 in 2022, and then striking a licensing deal with Cellectis last November.

Why Gracell?

Gracell doesn’t have an extensive R&D pipeline, its key asset being the BCMA x CD19 bispecific Car-T project GC012F. According to Astra’s statement this is the main focus of the acquisition, which is priced at $1bn in immediate cash, plus $200m contingent on “a specified regulatory milestone”.

GC012F targets the extremely competitive space of multiple myeloma, and analysts expect it to become the fifth anti-BCMA Car-T project to be launched. The most recently disclosed data cut of an ostensibly first-line Chinese study, presented at last month’s ASH conference, showed 19 of 22 patients in stringent complete remission at between six and 28 months after GC012F infusion.

However, this trial involves an unusual setting more akin to maintenance than true first-line treatment; patients received two cycles of induction therapy, which itself put most of them into remission. As such the purpose of the study is to see whether GC012F on top of reduced induction (typical treatment would have involved six cycles of induction) can deepen remissions.

There are clearly key questions about the relevance of this setting, and indeed about the interpretability of a trial run entirely in China. However, for Astra to pull the acquisition trigger is a major endorsement, given that the UK company would be expected to have carried out extensive due diligence, and to have combed through the data in depth.

Gracell had already secured the endorsement of key funds including Janus Henderson, OrbiMed, RA Capital Management and TCGX, which participated in a private placement in August. And before that the FDA cleared an IND for a US study of GC012F.

Long game

Still, GC012F is some years from launch, so Astra is playing the long game. Evercore ISI analysts say this will give the group time to invest in manufacturing; Johnson & Johnson/Legend’s problems in meeting demand for Carvykti show why it’s important to ramp up production early when planning to launch a cell therapy. 

What else might have attracted Astra? Gracell boasts a manufacturing process with a shortened production time, though the relevance of this at present is hard to gauge. And GC012F is being studied in lupus – relevant since Astra’s cell therapy deal with Cellectis included a focus on autoimmune disease.

Evercore notes that Astra’s deal leaves few large players without a presence in cell therapy; Roche, another prominent latecomer, has struck recent tie-ups with Poseida and Adaptimmune, for instance.

But biotech investors will celebrate more broadly. Last month the US FTC blocked Sanofi’s planned licensing deal with Maze Therapeutics, a rare disease company; Astra’s willingness to pay up for Gracell suggests that the FTC hasn’t put a major dampener on business development.

AstraZeneca in cell therapy

Source: OncologyPipeline.