Pharma's strategic shift towards precision oncology

Discover how pharma giants are navigating patent cliffs by investing billions into biotech innovations, with a special focus on precision medicine and radiopharmaceuticals transforming cancer treatment.

22 March 2024

The drumbeat of deals in the biotech sector is getting louder as pharma majors begin to confront the wave of patent expiries that will pose significant challenges across the industry between now and 2030. In common with previous cycles, we expect more deals to be consummated in the near future as drug companies start to deploy their very substantial cash resources built in recent years, with some estimates putting the industry war chest as high as US$1.5 trillion. As ever, these drug companies will be shopping for innovation, typically, but not always, in later-stage assets that have a relatively clear path to an approvable drug on a five-year time horizon.

We have written about the pace of dealmaking in this sector in recent months, and after an especially busy December, the pace appears to be picking up again. Focus areas for the pharma companies seem to be oncology, neurology, immunology, rare diseases, and cell therapy. One area of particular interest to Curated, however, also appears to be attracting considerably more attention: the whole field of radiopharmaceuticals. For example, in January this year, Lantheus Holdings Inc., a leading radiopharmaceutical-focused company, entered into a strategic agreement with Perspective Therapeutics, another US business in the field. Perspective is developing advanced treatment applications for cancers throughout the body using proprietary technology that uses alpha-emitting isotope Lead-212 to deliver powerful radiation specifically to cancer cells via specialised targeting peptides. This was followed by a significantly larger deal in this sector in which AstraZeneca announced the acquisition of Fusion Pharmaceuticals for up to US$2.4bn.

Fusion is a clinical-stage biopharmaceutical company developing next-generation radiopharmaceuticals as precision medicines for cancer treatment. This is the fourth AZ deal in as many months, but it is especially interesting because it brings new expertise and R&D to AZN as it seeks to develop more precision oncology medicine solutions for cancer patients to replace traditional radio and chemotherapies.

The Fusion deal is exciting because the business was founded with the help of HealthCap back in 2017 (through its HealthCap VII fund) as a co-lead investor alongside Johnson & Johnson Innovation. Fusion was originally spun out of the Canadian Center for Probe Development and Commercialization (CPDC) hosted at McMaster University in Ontario. This deal was sourced from HealthCap’s international network, and HealthCap was the only initial European investor to participate. This exit is especially pleasing because it highlights HealthCap’s ability to find, build, and commercialise cutting-edge healthcare technology. It will also deliver an exceptional return to the Fund’s investors.

Curated is raising funds for the HealthCap IX fund, which will again focus on precision medicine opportunities in Europe and the US. The target raise is EUR 200mn, over two-thirds of which has already been committed. We see this fund as building on the success of the previous three funds, all of which were also focused on precision medicine investments where innovative drugs have higher probabilities of success, shorter development timescales and less expensive, smaller clinical trials because they are targeted at study populations that are pre-screened as likely responders to these targeted therapies.

Curated’s interest in precision oncology is broader than our partnership with HealthCap. We are also currently working with two biotech businesses developing precision, innovative therapeutics in cancer. One is pioneering the development of a third-generation PARP inhibitor targeted at genetically defined subsets of common cancers (Tilikum), and the other (4C Biomed) specialises in immuno-oncology and whose lead asset is a highly innovative monoclonal antibody targeting a novel immune checkpoint. The research reports on these highly innovative businesses can be accessed via the Curated research library.

Beyond this, Curated is also partnered with a precision diagnostic business that is developing a unique patented technology that can completely change how radiotherapy is used to treat cancer patients. This business, Atomic Oncology, has developed a diagnostic test (the Radnos test) that precisely measures intra-tumoral concentrations of manganese atoms, which in turn generates a score that provides clinicians with precise, clinically actionable information that determines whether a tumour will or will not respond to radiotherapy. Something that hitherto, and despite radiotherapy being over 100 years old, is not currently possible because medical science, until now, has not been able to identify why tumours have dramatically different levels of radiosensitivity. Consequently, the trend in cancer treatment towards increasingly personalised or precise treatments has bypassed radiotherapy.

Following the ground-breaking discoveries of the Atomic Oncology team, it is now possible to very precisely quantify why different tumours are either radiosensitive or resistant and consequently tailor radiotherapy treatment to the specific characteristics of each patient’s disease. This technology, which is now past its proof of concept, signals a significant advance in the science of radiotherapy, a cornerstone of cancer treatment for millions of patients worldwide, something AstraZeneca also highlighted in its Fusion announcement.

Following the two recent radiopharmaceutical deals outlined in this blog, we believe investor and corporate interest in this underexploited but developing area of cancer treatment should increase. It seems that radiotherapy, the longest-established cancer therapy modality, is at last embracing the opportunities presented by the precision medicine revolution, and not before time.

For further details on HealthCap IX, Tilikum, 4C Biomed or Atomic Oncology or to access the research, please get in touch.

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