Loxo Oncology, a biopharmaceutical company of Eli Lilly and Co. (Lilly), has entered into a research collaboration and exclusive license agreement with Merus, to develop up to three CD3-engaging T-cell re-directing bispecific antibody therapies.

Under the terms of the agreement, Merus will lead the discovery and early-stage research activities, while Loxo Oncology at Lilly will conduct additional research, and conduct development and commercialisation activities.

Lilly is expected to make an upfront cash payment of $40m and $20m equity investment in Merus common shares, in addition to tiered royalties on product sales, subject to the company commercialising a therapy from the collaboration.

Merus is entitled to receive up to $540m in development and commercialisation milestones payments per product, for a total of up to $1.6bn for three products.

Merus president and chief executive officer Bill Lundberg said: “The collaboration with Loxo Oncology at Lilly and their world class research capabilities opens up exciting possibilities for Merus’ Biclonics platform.

“Our CD3 T-cell engager platform includes over 175 novel and diverse anti-CD3 common light chain antibodies across a wide range of affinities and attributes and enables functional screening of large libraries for optimal performance. We look forward to working together with Loxo Oncology at Lilly to define a new generation of medicines to treat cancer.”

“Merus has built a differentiated platform and one that we believe can enable us to create bispecific antibody therapies with wider therapeutic indexes than those available today. We look forward to working closely with Merus to develop new potential medicines for patients with cancer.”

Merus to leverage Biclonics platform, and Loxo Oncology its drug design expertise

Merus is a clinical-stage oncology company engaged in developing advanced full-length human bispecific and trispecific antibody therapeutics, dubbed Multiclonics.

The research and license collaboration will combine Merus’ Biclonics platform with the Loxo Oncology’s scientific and rational drug design expertise.

Loxo Oncology at Lilly was formed in December 2019, by combining the Lilly Research Laboratories oncology business and Loxo Oncology, that Lilly acquired in early 2019.

Loxo Oncology at Lilly chief operating officer Jacob Van Naarden said: “CD3-engaging bispecific antibodies are rapidly becoming one of the most transformative immune-modulating modalities used to treat cancer. We expect these therapies will become an important component of the Loxo Oncology at Lilly biologics strategy.”

In August last year, Lilly expanded a licensing agreement with Innovent Biologics for Tyvyt (sintilimab injection), an anti-PD-1 monoclonal antibody immuno-oncology medicine, to commercialise the drug outside of China.