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Research in the field of inflammatory diseases has become one of the hottest areas of drug development, spurred on by an interest in novel therapies that have the potential to be more precise and more powerful than existing treatments. Because of this, the immunology and inflammation (I&I) therapeutic area has recently been attracting a major wave of investment within the biopharma industry and is expected to grow significantly in the coming years.
According to Wellington Management, there have been three “waves” of I&I drugs in recent years. The first wave came about with the use of steroids and chemotherapy, which were frequently found to be worse than the underlying disease they were intended to treat.
Then, in the early 2000s, biomedical advancements in the basic science of immunology combined with productizing therapeutic antibodies enabled the second wave. Here, doctors could finally direct an antibody at a defined immune target, allowing them to control chronic autoinflammatory diseases such as multiple sclerosis and rheumatoid arthritis without indiscriminate immunosuppression. Simultaneously, new therapeutic antibodies were able to target previously undruggable pathways.
And, finally, the third wave of drugs is happening today, with novel targets and improved modalities. This third wave of potential drugs is what currently makes the I&I therapeutic area market so exciting to investors. In this article, we explore some of the latest I&I deals, as well as why the market is one of the most attractive areas in the biopharma industry today.
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Most notable I&I deals and fundraisings of 2024
Last year was already a successful year for the area of I&I. In fact, two of the largest buyouts were for these types of drugs, as Roche acquired Telavant in a $7.1 billion deal, and Merck & Co. bought out Prometheus Biosciences in a $10.8 billion deal. And, now, in 2024, there have already been more than ten buyouts of I&I drug developers. Plus, multiple companies have raised impressive financing rounds to advance the development of their immune-related drugs. Here are some of the most notable deals and fundraisings so far this year:
Johnson & Johnson acquires two immune-focused companies
Johnson & Johnson (J&J) had a busy month in the I&I therapeutic area field in May 2024, making two acquisitions focused on atopic dermatitis. First, it announced that it would be acquiring Numab Therapeutics’ wholly-owned subsidiary, Yellow Jersey Therapeutics in a deal worth around $1.25 billion. Numab has a pipeline of immunology and oncology assets, and this acquisition gave J&J the rights to a candidate called NM26 – a phase 2-ready bispecific antibody targeting two clinically proven pathways in atopic dermatitis.
Meanwhile, J&J’s second acquisition saw the company buy Proteologix, another company with bispecific antibodies targeting immune-mediated diseases, in a deal worth $850 million. Proteologix’s portfolio includes PX128, which is ready to enter phase 1 development for moderate to severe atopic dermatitis and moderate to severe asthma, and PX130, which is in preclinical development for moderate to severe atopic dermatitis.
AbbVie’s acquisition of Landos Biopharma and Celsius Therapeutics
AbbVie has also made two significant immune-related acquisitions in recent months. In March, it announced that it had made a deal to acquire Landos Biopharma in order to further strengthen its portfolio in inflammatory and autoimmune diseases. In the press release announcing the acquisition, Roopal Thakkar, senior vice president and chief medical officer of global therapeutics at AbbVie, said that, with the acquisition, the company aims to advance the clinical development of NX-13, an oral NLRX1 agonist with the potential to make a difference in the lives of people living with ulcerative colitis and Crohn’s disease.
Toward the end of last month, AbbVie also acquired Celsius Therapeutics, whose lead investigational asset is CEL383, a potential first-in-class anti-TREM1 antibody that has completed a phase 1 clinical study for the treatment of inflammatory bowel disease (IBD).
Lilly acquires Morphic to improve outcomes for patients with IBD
In another IBD-focused deal, Eli Lilly announced earlier this month that it would be acquiring Morphic. The company’s lead program is a selective oral small molecule inhibitor of α4β7 integrin for the treatment of IBD that has the potential to improve outcomes and expand treatment options for patients. This molecule (known as MORF-057) is already being evaluated in two phase 2 studies in ulcerative colitis, as well as one phase 2 study in Crohn’s disease.
Biogen expands immunology portfolio with Human Immunology Biosciences buyout
In an effort to expand its immunology portfolio, Biogen signed a $1.15 billion deal to acquire Human Immunology Biosciences (HI-Bio) in May 2024. HI-Bio’s lead asset, felzartamab, is a fully human anti-CD38 monoclonal antibody that has been shown in clinical trials to selectively deplete CD38+ cells – including plasma cells and natural killer (NK) cells – which may allow for additional applications that improve clinical outcomes in a broad range of immune-mediated diseases. The drug has already received breakthrough therapy designation and orphan drug designation from the U.S. Food and Drug Administration (FDA) in the treatment of primary membranous nephropathy (PMN). It has also received orphan drug designation in the treatment of antibody-mediated rejection (AMR) in kidney transplant recipients. Phase 2 studies have been completed in both of these indications and remain ongoing in IgA nephropathy (IgAN) – a serious, progressive, autoimmune disease of the kidney that can lead to end-stage-renal disease.
Novartis buys Calypso and IFM Due
At the beginning of this year, Novartis entered into an agreement to acquire Calypso Biotech, giving Novartis full rights to CALY-002, an anti-IL-15 monoclonal antibody for an array of autoimmune conditions.
Then, in March, Novartis announced another acquisition, as it bought out IFM Due, a subsidiary of IFM Therapeutics. The company entered into an option and collaboration agreement with Novartis in September 2019, whereby Novartis helped to finance IFM Due’s research and development costs for its cGAS-STING program in exchange for the option to acquire IFM Due. This acquisition now provides Novartis with full rights to IFM Due’s portfolio of STING antagonists, which have the potential to treat an array of serious inflammation-driven diseases characterized by excessive interferon and other pro-inflammatory cytokine signaling.
Vertex acquires Alpine Immune Sciences
In April 2024, Vertex Pharmaceuticals said that they would be acquiring Alpine Immune Sciences in a $4.9 billion deal. This gave Vertex access to Alpine’s lead molecule, povetacicept, which is a highly potent and effective dual antagonist of BAFF (B cell activating factor) and APRIL (a proliferation-inducing ligand). The drug has shown potential best-in-class efficacy in IgAN throughout phase 2 studies.
GSK and Flagships partner to create immunology-focused vaccines
Just yesterday, it was announced that GSK and Flagship Pioneering had entered into a collaboration to discover and develop a portfolio of up to 10 novel medicines and vaccines, starting in respiratory and immunology. Ultimately, the alliance intends to bring together GSK’s disease area expertise and development capability with Flagship’s ecosystem of bioplatform companies, including its novel modalities and technologies, to make major advances in healthcare. Both companies will initially fund up to $150 million upfront to support an exploration phase to identify the most promising concepts for further research and development.
Blackstone Life Sciences launches immunology- and inflammation-focused Uniquity Bio
In May, Blackstone Life Sciences launched Uniquity Bio with the intention of developing medicines in I&I. Uniquity Bio emerged from stealth with an FDA acceptance of its phase 2 investigational new drug application for solrikitug, a monoclonal antibody targeting TSLP, and up to $300 million in capital from Blackstone to advance the asset in multiple indications. Given TSLP’s position as the “master switch” cytokine sitting at the top of the inflammatory cascade, solrikitug could have potential utility in a wide array of I&I programs.
Mirador Therapeutics launches with $400 million
Another immune-focused company launched in March of this year with $400 million in funding, called Mirador Therapeutics. The company said it aims to revolutionize precision medicine for immune-mediated inflammatory and fibrotic diseases by leveraging its proprietary Mirador360 development engine to rapidly advance multiple programs.
AltruBio raises $225 million in series B funding
AltruBio landed $225 million in series B funding in May, once again cashing in on its decision to change its development strategy four years ago. Originally called AbGenomics Holdings, the startup had aimed to develop cancer drugs but shifted course in 2020 to developing drugs to treat immunological diseases with high unmet medical needs. AltruBio said it would use the proceeds from the series B financing to advance the clinical development of its novel immune checkpoint enhancer PSGL-1 agonist antibody ALTB-268, supporting ongoing and planned phase 2 clinical trials in ulcerative colitis.
Capstan Therapeutics announces $175 million series B round
Capstan Therapeutics also managed to raise big in a series B round, as it landed $175 million in March. The proceeds are going to be used to advance CPTX2309, Capstan’s lead in vivo chimeric antigen receptor T cell (CAR-T) candidate, to early clinical proof-of-concept in autoimmune disorders.
Lycia Therapeutics’ $106.6 million series C financing
In May 2024, Lycia Therapeutics bagged $106.6 million in a series C round to advance its pipeline of lysosomal targeting chimeras, or LYTAC, extracellular protein degraders to the clinic for autoimmune and inflammatory diseases.
Investment in the I&I market: What are the key drivers?
So, what exactly is driving all of this investment in the I&I market?
Ebru Karpuzoglu, an immunologist trained in molecular medicine and skincare specialist, and chief scientific director and founder of AveSeena, explained that the significant surge in investments in the market has been driven by a combination of scientific advancements, market dynamics, and unmet medical needs. She said that this trend reflects the growing recognition of the potential in this field to address a wide range of chronic conditions affecting millions of people worldwide.
“The I&I market’s attractiveness to investors stems from its promising growth projections, the potential for developing therapies with multiple indications, and the relatively higher success rates in clinical trials compared to other therapeutic areas,” commented Karpuzoglu. “As our understanding of the immune system deepens and new therapeutic targets are identified, the I&I sector continues to offer compelling opportunities for both pharmaceutical companies and investors seeking to make a significant impact in healthcare.”
Let us look at some of these key drivers in more detail:
Growing patient population
The number of people diagnosed with immune-related conditions is increasing. In fact, as many as 50 million people in the U.S. alone now suffer from at least one autoimmune disease, making it the third most prevalent disease category, surpassed only by cancer and heart disease. “This expanding patient base represents a significant market for new treatments,” said Karpuzoglu. “As the prevalence of these conditions continues to rise, the demand for effective therapies grows, creating a lucrative opportunity for pharmaceutical companies and investors.”
High revenue potential
As Karpuzoglu pointed out, immunology drugs have demonstrated substantial commercial success. For example, AbbVie’s well-known drug Humira, used to treat various autoimmune diseases, has gone on to become one of the highest-grossing drugs of all time, peaking at $21 billion in annual sales in 2022, and generating more than $200 billion in revenue throughout its lifetime.
Karpuzoglu said that this type of financial success is a strong incentive for investors because it illustrates the potential for high returns. “Many of the top revenue-generating medicines today are immunology drugs, highlighting the profitability of this market.”
Multi-indication potential
Many I&I drugs have the ability to treat multiple conditions, increasing their market potential and reducing development risks. Karpuzoglu explained: “For instance, a drug developed to treat rheumatoid arthritis might also be effective for psoriasis. This versatility means that even if a drug fails to gain approval for one condition, it might still succeed for another. This multi-indication potential makes I&I drugs an attractive investment, as it diversifies the risk and enhances the chances of commercial success.”
Scientific advancements
Because our understanding of the immune system has significantly improved, scientists have been able to identify new therapeutic targets in recent times. “Researchers have discovered novel biomarkers and pathways involved in immune-related diseases, such as TL1A, which could lead to more effective therapies for autoimmune diseases,” said Karpuzoglu.
Ultimately, these scientific advancements have opened up new opportunities for developing innovative treatments, which in turn attracts investment into the research and development of these treatments.
Unmet medical needs
Karpuzoglu explained that many immune-related conditions still lack effective treatments, providing opportunities for creating new therapies that can fill this gap and improve patients’ lives. “For example, conditions like lupus and multiple sclerosis have limited treatment options, and existing therapies often come with significant side effects,” said Karpuzoglu, adding that developing new, more effective, and safer treatments for these conditions addresses a critical unmet need, making this area a priority for pharmaceutical companies and investors.
Higher success rates
And, last but not least, immunology drugs tend to have higher success rates in clinical trials compared to other therapeutic areas, making them a safer bet for investors, as the likelihood of a drug making it through the rigorous approval process is higher. According to Karpuzoglu, the relative predictability and success of developing immunology drugs reduce the risk for investors, making this market more attractive.
Will this surge in investment soon lead to new therapies reaching the market?
Given the recent interest and investment, analysts expect the I&I therapeutic area market to surge in the coming years, growing to $257 billion by 2032, compared to $98 billion in 2023. This also means that there are likely to be multiple new therapies for immune-related conditions approved in the next few years.
“Yes, the current wave of investment is likely to result in many new therapies receiving approval for I&I [immunology and inflammation] conditions,” commented Karpuzoglu. “The recent surge of investment in the immunology and inflammation sector is poised to catalyze a significant breakthrough in therapeutic development. This influx of capital, coupled with rapid advancements in scientific understanding and technology, has created a fertile ground for innovation in the field. The convergence of these factors suggests that we are on the cusp of a new era in I&I treatments, with the potential to address a wide range of conditions more effectively than ever before.”
According to Karpuzoglu, several key trends are driving this optimistic outlook, each one contributing to the likelihood of numerous new therapies receiving approval in the near future. These include a rich pipeline of drug candidates with many novel mechanisms of action being explored; advances in precision medicine – which Karpuzoglu said increases the likelihood of new drugs being approved, as treatments can be more precisely matched to patients’ needs, improving efficacy and reducing side effects; adapting immuno-oncology advances, such as cell therapy, for the treatment of immune-related conditions; continued investment in R&D; and an expanded understanding of how the immune system contributes to various diseases.
Indeed, the immune system does play an important role in numerous diseases, which is why the recent wave of investment in I&I drugs is so significant for the biopharma industry and, ultimately, to patient populations.
“Its [the immune system’s] involvement extends far beyond traditional immune-related conditions, influencing the onset and course of various health issues that impact millions of people worldwide,” said Karpuzoglu. “This complex interplay between the immune system and diverse diseases underscores the importance of immunological research in addressing many of today’s most pressing health challenges. Understanding these connections can lead to innovative therapeutic approaches and improved management strategies for a variety of chronic conditions across different age groups.”
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