Please ensure Javascript is enabled for purposes of website accessibility

Five Prime, Bristol-Myers Squibb Cut $350M Immuno-Oncology Deal

By Ben Fidler – Mar 18, 2014 at 6:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Five Prime, Bristol-Myers Squibb cut $350M immuno-oncology deal.

Five Prime Therapeutics (FPRX) didn't spring out of the blocks like many of the other members of biotech's IPO class of 2013. But the South San Francisco, CA-based biotech is now having its day in the sun, because it just cut a deal worth up to $350 million with Bristol-Myers Squibb (BMY 1.63%) to team up and discover some drugs in the hot field of immuno-oncology.

Bristol and Five Prime will work together to discover, develop, and commercialize immuno-oncology drugs, which are designed to help drive an immune system attack against tumors. Using Five Prime's drug discovery platform, the two will develop therapies that home in on undisclosed targets in two "undisclosed immune checkpoint pathways." Bristol's own experimental antibody, nivolumab, hits PD-1, a target in another such pathway that helps tumors hide from the immune system. The big New York drugmaker wants more potential candidates to use in tandem with its own cancer immunotherapy drugs and is tapping into Five Prime's discovery platform to help find them.

"Five Prime's innovative technology platforms complement our immuno-oncology pipeline and will help expand our understanding of promising new therapeutic options for patients," said Francis Cuss, Bristol's executive vice president and chief scientific officer, in a statement.

Shares of Five Prime jumped about 20 percent in pre-market trading on Monday.

Bristol is paying Five Prime $20 million in cash up front, and another $21 million to buy 4.9 percent of Five Prime's stock at a roughly 30 percent premium over Five Prime's closing share price of $18.75 on Friday. Five prime will also get $9.5 million in research funding spread over the course of the collaboration (Bristol didn't say how long that goes). The biotech could get another $300 million if the candidates discovered in the deal hit various development, regulatory, and sales targets.

The deal is the latest grab in the industrywide free for all to amass as many immuno-oncology assets as possible, and test them in various combinations to try to find the most potent mix. In the past month alone, Novartis acquired Boston-based start-up CoStim Pharmaceuticals and Waltham, MA-based Tesaro inked a wide-ranging antibody discovery deal with AnaptysBio—both with the idea of acquiring more drug candidates in the immuno-oncology field and combining them with other programs. Then, of course, there's Bristol, Merck, and Roche/Genentechwhich all have experimental cancer antibodies that they're reaching all across the industry to test.

Five Prime, meanwhile, has an in-house library of DNA sequences for more than 5,600 human proteins and uses it to try to hunt for previously unknown disease triggers that could be blocked by novel drugs. The company has partnerships in place GlaxoSmithKline and UCB to help discover drugs, and is also using its platform to advance internal drug programs in rheumatoid arthritis and gastric cancer. Still, Five Prime doesn't have any products on the market, and none of its candidates are even in mid-stage studies as of yet.

Five Prime went public at $13 per share in September 2013, pricing right within its $12 to $14 per share range. Shares went south for a bit before steadily rising in late 2013 and early 2014.

This article originally appeared on Xconomy, along with:

Ben Fidler has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.