Pfizer's Trillium buy provides another cancer foothold, but competitors await

Pfizer Inc.'s $1.85 billion acquisition of Canadian biotech Trillium Therapeutics Inc. will expand the pharmaceutical giant's blood cancer portfolio, but competitors like Gilead Sciences Inc. could stymie eventual profits, analysts said.

Trillium's development has centered on antibodies targeting the CD47 protein, an area of research that has picked up speed in the biotech sector.

"We believe that the CD47 class is going to be really important moving forward in hematologic malignancies. Because of that, it's going to be competitive," Pfizer's global president for oncology Andy Schmeltz said on an Aug. 23 investor call.

"We're mindful that the Trillium programs are not leading the way in terms of being first-in-class, but certainly we're very focused and we believe that the molecules here are a best-in-class opportunity," Schmeltz said.

Under the deal, Pfizer will acquire all outstanding shares of the Mississauga, Canada-based company for $18.50 per share in cash, which represents a 118% premium to the 60-day weighted average price. S&P Global Market Intelligence values the deal at $1.85 billion considering equity plus the value of assumed current liabilities, net of current assets.

Pfizer invested $25 million in Trillium in September 2020 as part of the U.S. company's Breakthrough Growth Initiative, which also saw Pfizer's chief scientific officer for oncology Jeff Settleman named to Trillium's scientific advisory board.

Shares of Trillium closed up 188.83% at $17.59 at 4 p.m. EDT on Aug. 23.

In addition to boosting the company's hematology portfolio, executives said the acquired molecules from Trillium could potentially be used to treat solid tumors or in combination with other Pfizer assets.

"We see a lot of potential combination partners within our own portfolio both potentially in hematological malignancies and in solid tumors," said Settleman, adding that the company will be exploring whether biologics like elranatamab can be used in combination with TTI-622 and TTI-621.

In a February interview with Market Intelligence, Pfizer's chief development officer for oncology, Chris Boshoff, said the company believed the future is in drug combinations.

Pfizer plans to expand Trillium's announced study of TTI-622 in patients with ovarian cancer as CD47 is expressed in ovarian cancer cells at high levels, Boshoff said on the investor call. Early clinical data has shown that Trillium's biologics could work in solid tumors, the executive said.

Pfizer is aiming for its current development programs to result in drug approvals from about 2025 to 2030, Boshoff added.

The science

Trillium's two lead molecules — TTI-622 and TTI-621 — block the CD47-SIRPα protein, or the "don't eat me" signal expressed by cancer cells to prevent destruction by the immune system. Blood cancers and solid tumors often express high levels of CD47, according to Pfizer, which said the two molecules also deliver signals to macrophages that there is a cancerous cell.

In an ongoing phase 1 study, TTI-622 has exhibited few cases of anemia, a lack of healthy red blood cells, in trial patients, and grade 3 or 4 adverse events were rare, Pfizer said. Anemia is a common problem with therapeutics targeting CD47, including Gilead's drug magrolimab, which the company gained in 2020 from its acquisition of Forty Seven Inc.

Pfizer's entry into the CD47 area gives the class of therapeutics even more validation, RBC Capital Markets analysts Brian Abrahams and Leonid Timashev said in an Aug. 23 note to investors. The analysts pointed out that Gilead could face risks from Pfizer's competition but that magrolimab is still expected to be important in treating two types of blood cancer, called myelodysplastic syndrome and acute myeloid leukemia.

Gilead's magrolimab has already received breakthrough-therapy designation from the U.S. Food and Drug Administration for myelodysplastic syndrome and is Pfizer's lead competitor in the CD47 space, Morgan Stanley analysts said in an Aug. 23 note.

Cantor Fitzgerald analysts said Gilead's magrolimab remains in the lead in hematology with phase 1b trial data for myelodysplastic syndrome expected by the end of the year. "We think the company is moving aggressively in hematology which means TTI-622 may be years behind," the analysts said in a note.

Gilead is not the only contender in the space — AbbVie Inc. announced in September 2020 a collaboration with I-Mab to develop and commercialize I-Mab's own anti-CD47 monoclonal antibody lemzoparlimab. Under the terms of the agreement, the two companies will work together on multiple clinical trials of the therapeutic to treat different cancers and could possibly collaborate on future anti-CD47 molecules.

BofA Securities acted as Pfizer's financial advisers for the deal, with Ropes & Gray LLP and Norton Rose Fulbright Canada LLP acting as its legal advisers. Centerview Partners LLC served as Trillium's financial adviser, while Goodwin Procter LLP and Baker McKenzie LLP (Canada) served as its legal advisers.