Xilio's second bailout

In the past 12 months the conditionally acting therapeutics specialist Xilio has twice stood on the brink of insolvency, and both times it's been bailed out by an eager big biopharma partner. A year ago Gilead emerged as a last-minute rescuer, and this time an eleventh-hour bailout featuring more cash up front than Xilio's entire market cap has come from AbbVie.

While the Gilead tie-up concerned a single project, Xilio's tumour-activated IL-12 XTX301, the deal with AbbVie is an early-stage discovery alliance to develop masked T-cell engagers. Though yesterday Xilio was sitting on a $30m market cap, and just a few months' cash in the bank, AbbVie has given it $52m in a new equity investment and up-front fee.

This is despite recent precedent suggesting uncertain prospects for such masked therapeutics, whose aim is to remain inactive until a masking moiety is cleaved off in the tumour. The latest company to demonstrate this is Xilio itself, with vilastobart, a masked anti-CTLA-4 MAb that managed a confirmed response rate of just 11% in combination with Tecentriq in colorectal cancer.

That disappointment triggered a share price fall last month, and Xilio's situation looked precarious. The group's remaining cash, largely the result of the Gilead windfall in March 2024, stood at $61m at the end of last September, and was projected to last only into this year's third quarter.

2026 runway

The fresh $52m from AbbVie won't keep Xilio going forever, and indeed Xilio says the up-front fee alone will extend its runway only to the first quarter of 2026. But importantly it buys the biotech some more time, during which it might be able to generate more data and perhaps seek fresh cash from investors.

Alongside the deal Xilio announced the entry of three new projects into its pipeline, and both developments will be seen as the company drawing a line under the disaster of vilastobart.

The three new projects are all conditionally acting T-cell engagers, and target PSMA, Claudin18.2 and Steap1. While they will remain preclinical for some time the first at least is a direct challenge to Janux, one of the few players in the conditionally acting therapeutics space to have found favour with investors.

Janux carries a $2bn market cap, largely thanks to a heavily curated dataset backing the activity of its anti-PSMA masked T-cell engager JANX007. At an investor call on Wednesday Xilio presented pharmacokinetic data suggesting that its new anti-PSMA molecule has a better therapeutic window than JANX007.

Unnamed projects new to Xilio’s pipeline

Source: Xilio presentation.

Xilio's shares opened up 110%. A year ago, with Xilio worth just $17m and enough cash to last only to the end of 2024, Gilead paid $44m for XTX301; that molecule remains in play, and indeed it could trigger milestone fees from Gilead, though given the poor track record of cytokine approaches any such payments must be seen as pure upside.

While little is being disclosed about the nature of the AbbVie tie-up, Xilio did shed more light on its approach to designing conditionally acting T-cell engagers. These, it said, could have a basic bispecific format, which it calls ATACR, but a more advanced feature would be a trispecific (SEECR) with an added co-stimulatory domain.

Masking technology can be applied to either the tumour-targeting, or CD3-engaging or co-stimulatory domains, Xilio claimed. The AbbVie collaboration "maintains optionality", and any combination of the above is on the table.