Merrill
BMS deal for HuLuc63 provides cash, flexibility, validation
PDL and BMS struck a deal for HuLuc63 (elotuzumab), PDL’s anti-CS1 antibody
in phase l for multiple myeloma. The terms are favorable in our view, particularly
for an early stage candidate, as PDL receives $30mn upfront, potentially $480mn
in development & regulatory milestones, $200mn in potential sales milestones, a
profit split in the US, ex-US royalties and BMS pays for 80% of development.
BMS also gets an option to expand the deal to include preclinical candidate
PDL241. Overall, the deal provides cash, reduces R&D burn on HuLuc63,
provides some flexibility in the pipeline and further validates the antibody platform.
Separately, PDL is moving ahead with plans to spin-off of the biotech assets by
YE08. It is also considering various options for monetizing the royalty stream. We
maintain Buy as PDL’s royalties and assets are underappreciated.
HuLuc 63 in phase l trials for multiple myeloma
HuLuc63 binds to CS1, a glycoprotein found on the surface of most multiple
myeloma cells, which is thought to then trigger elimination of the CS1-tagged
myeloma cells by the body’s immune system. It is currently in a phase l
monotherapy trial and two combination trials (with Velcade and with Revlimid) in
the treatment of multiple myeloma. (See Clin. Cancer Res. 2008:14(9) May 1,
2000 for preclinical data). We look for phase ll trials sometime in 2009.
Spin-off plans moving forward
PDL is moving forward with planned spin-off of biotech assets by filing a Form 10
information statement with the SEC and conducting a CEO search, while also
continuing to work with 2 investment banks on options for securitizing or
monetizing the antibody royalty stream. Preliminary plans are for shareholders to
receive 1 share of Biotech Spin Co for every 5 shares of current PDL stock |
