Fianlimab

As Regeneron’s cancer portfolio continues to suffer setbacks, the company is placing a bet in a different direction through a deal with Parabilis Medicines valued at as much as $2.2 billion. Parabilis is focused on making targeted treatments against cancer-causing proteins inside cells that were conventionally considered to be “undruggable.” As part of the deal announced Monday, Regeneron will pay Parabilis $50 million upfront and invest another $75 million in the biotech’s next financing round. In exchange, Parabilis will work on five initial drug targets as part of the collaboration that spans “multiple therapeutic areas.” While the companies didn’t specify the areas or targets in their press releases, Parabilis’ primary focus has been on cancer. The agreement also includes up to about $2.2 billion in milestone payments, plus “up to the low double digits” in royalties if any approved drugs emerge from the partnership. Regeneron also has the option to add additional targets to the deal. The deal comes as Regeneron’s cancer drug work has faced a series of roadblocks over the last several years. In its latest setback, disclosed Friday, Regeneron’s LAG-3 blocker fianlimab failed a Phase 3 melanoma trial, sending the company’s shares $REGN down more than 10% Monday morning. Much of Regeneron’s cancer pipeline is antibodies and immunotherapies. On the flip side, Parabilis develops small peptides that act as targeted therapies. The new $125 million from Regeneron adds to the $305 million in fresh funding Parabilis disclosed in January after it reported early clinical data showing its lead drug zolucatetide can shrink rare tumors. Zolucatetide targets beta-catenin, which historically was considered undruggable because it is a flat protein that lacks the good footholds that conventional small molecule drugs need in order to attach. But Parabilis’ drug acts like a molecular rock climber that can latch on without those deep footholds. Parabilis was founded by serial entrepreneur Greg Verdine in 2015 and was previously called FogPharma. Verdine has previously founded a number of companies, including Warp Drive Bio — another undruggable-focused company that ultimately provided the underlying basis for Revolution Medicines’ pancreatic cancer drug — and Wave Life Sciences.

The failure of Regeneron’s “defining catalyst” of the first half of the year puts fresh pressure on the company, analysts said.\n A phase 3 trial of Regeneron’s LAG-3 inhibitor has missed its primary endpoint, leaving the biopharma reeling from the second failure of a key late-stage program in the past year.The trial assessed fianlimab in combination with Regeneron’s PD-1 inhibitor Libtayo as a first-line treatment for unresectable locally advanced or metastatic melanoma. Progression-free survival (PFS) on the drug combination was statistically no better than on Merck & Co.’s PD-1 inhibitor Keytruda, causing the trial to miss its primary endpoint.Median PFS was numerically longer with the fianlimab combination, at 11.5 months on the high dose, compared with 6.4 months on Keytruda. The statistical miss was driven by a late separation in the PFS curves, BMO Capital Markets analysts said in a note to investors after speaking with Regeneron.“It is clear that while mPFS was improved with high-dose fianlimab combo treatment, separation from monotherapy treatment did not occur until later in the study, leading to the not statistically significant result,” the analysts said. “Somewhat encouragingly, [Regeneron’s investor relations] did note a trend in [overall survival] improvement.” The p value was just the wrong side of statistical significance. But, as the analysts said, “close does not count.” The failure of Regeneron’s “defining catalyst” of the first half of the year puts fresh pressure on the company, according to the analysts, who said they were left “shaking our heads” by the latest flop.Pressure began to ratchet up almost one year ago, when Regeneron and Sanofi reported the failure of one of two phase 3 trials of their IL-33 drug itepekimab in chronic obstructive pulmonary disease. The back-to-back misses for key pipeline projects “amp up the pressure” on the next 12 to 18 months of clinical development at Regeneron, the analysts said.Regeneron has ways to salvage fianlimab. A phase 3 trial comparing the high-dose fianlimab combination to Bristol Myers Squibb’s LAG-3/PD-1 fixed-dose immunotherapy Opdualag is continuing. Regeneron sees showing an overall survival benefit over Opdualag and hitting the primary response rate endpoint of the head-to-head trial as paths back for fianlimab, Evercore ISI analysts said in a note to investors. Yet both BMO and Evercore analysts removed fianlimab from their models in response to the phase 3 flop. It is possible that Regeneron will show fianlimab is noninferior to Opdualag, BMO analysts said, but that is no longer the base-case assumption. BMO and Evercore analysts forecast $1.8 billion and $900 million in risk-adjusted peak sales, respectively, in melanoma before removing fianlimab from their models. With fianlimab now seen as a long shot, BMO analysts said “clean positive readouts” from Regeneron’s Factor XI program will be critical to regaining investor confidence. Regeneron is developing two Factor XI antibodies in a broad program, with initial pivotal data expected in 2027 and a series of readouts in the calendar for the coming years. Phase 3 data on the cemdisiran-pozelimab combination are another catalyst, BMO analysts said. Results from pivotal trials of the combination in geographic atrophy and paroxysmal nocturnal hemoglobinuria are due this year.