Incyte Gives Calithera A New Lease Of Life

| About: Incyte Corporation (INCY)
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With Calithera (NASDAQ:CALA)

stock languishing 56% off its float price and 85% below its peak two years ago the company needed a new lease of life, and got it yesterday via a licensing deal with Incyte (NASDAQ:INCY) on CB-1158, an asset to which few had paid much attention.

Until now Calithera’s main focus had been on the glutaminase inhibitor CB-839, but even a deal with Bristol-Myers Squibb on a combo approach here was unable to reinvigorate its shares. The Incyte deal promises more immuno-oncology combination trials, but this time as part of a formal alliance with a clear scientific rationale, with the junior partner on the hook for much of the clinical cost.

As such the up-front $45m plus $8m equity investment from Incyte will only partly come as a clean boost to cash, with Calithera committed to funding 30% of CD-1158’s development. In return Calithera retains a generous 40% cut of future US profits – likely a better economic interest than a straight royalty would have given.

Arginase inhibition

The rationale behind the tie-up is CB-1158’s mechanism of action: the small-molecule asset inhibits arginase, an enzyme that breaks down the amino acid arginine.

Arginine has been linked to T-cell activity, and depletion of the amino acid by arginase blocks the expansion and activation of T cells and natural killer cells, Calithera says. Meanwhile, Incyte’s immuno-oncology strategy centres on inhibiting IDO, an enzyme that causes immunosuppression through the breakdown of another amino acid, tryptophan.

Thus both approaches target immuno-oncology pathways, but use small molecules rather than antibodies. There is thus obvious scope for an all-oral combination, and indeed Calithera says a combo of CB-1158 with Incyte’s IDO inhibitor epacadostat is planned.

Before that, however, monotherapy data for CB-1158 should emerge – possibly at the Asco meeting – and a trial cohort combining CB-1158 with Bristol's (NYSE:BMY) Opdivo will get under way. Calithera ended the third quarter of 2016 with $56m in the bank, and said the Incyte deal would give it a cash runway into 2019; the stock closed up 47% yesterday.

Long-standing focus

With Calithera so far having mainly focused on CB-839, it might come as a surprise that it managed to deliver a deal with CB-1158. However, at the time of its $80m IPO in October 2014 it already had an internal presence in arginase inhibition.

Two months later it licensed an early portfolio of arginase inhibitors from the private company Mars Symbioscience for $300,000 up front, but none of these has yet moved into the clinic. Calithera later selected CB-1158 as its lead arginase inhibitor, starting a solid tumour clinical trial with monotherapy and Opdivo combination cohorts last September.

The group boasts that CB-1158 is a first-in-class asset, and a search of EvaluatePharma backs this up, revealing no other clinical arginase inhibitors. Paradoxically, however, Polaris Group and Aeglea Biotherapeutics are developing forms of arginase itself, as ADI-PEG 20 and AEB1102 respectively, hoping that arginine depletion can cause cancer cell death.

Such contradicting strategies need not necessarily be mutually exclusive, though Incyte’s backing of Calithera has given arginase inhibition its biggest endorsement to date.

Project

Study

Trial ID

CB-1158

236 advanced solid tumour pts; 4 monotherapy escalation/expansion cohorts, 3 Opdivo combo cohorts

NCT02903914