Ikena acquires cancer startup Pionyr after Gilead passes on buyout

The deal gives Ikena some financial breathing room, and leaves Gilead with a minority stake in the company. 

Boston-based cancer drug developer Ikena Oncology has reached a deal to acquire biotechnology startup Pionyr Immunotherapeutics in a stock-for-stock deal

Per deal terms, Ikena is acquiring the startup, about $43 million in net cash and its existing assets in exchange for Ikena shares. The acquisition will leave Pionyr stockholders, among them Gilead Sciences, with a 12% stake in Ikena.

Upon closing of the deal, Ikena intends “pursue business development opportunities” for Pionyr’s assets, which include two cancer antibody drugs in early-stage clinical testing. Pionyr stockholders have the chance to receive 50% of the net proceeds, not including sales royalties, in any licensing deal struck over the next two years.

Like many other biotechnology startups to form in the last decade, Pionyr started in 2015 with plans to develop drugs that turn the immune system against cancer. The company raised $70 million in funding over the next two years and, by 2020, had caught the eye of Gilead, which paid $275 million for a minority stake in the company and an option to buy it later on.

Gilead’s interest was part of a push by the company to build a cancer drug business — a strategy that included acquisitions of companies like Immunomedics and Forty Seven. In Pionyr, Gilead was eyeing research tied to Max Krummel, a University of California, San Francisco professor involved in the development of the cancer immunotherapy Yervoy. The work centered around drugs that target cells thought to suppress the immune system’s response to cancer.

At the time, Pionyr had two experimental drugs in preclinical development. Those drugs are now in early testing for solid tumors and, earlier this year, clinical data were presented at the American Society of Clinical Oncology meeting.

By ASCO, however, Gilead had already decided to pass on an acquisition. Though Gilead retained a 49% stake in Pionyr, the startup was freed to “pursue fundraising and partnering opportunities,” it said in a March press release.

Pionyr and its shareholders instead chose to cash out. The deal gives Ikena a financial boost, enabling the company, which has lost more than two-thirds of its value since going public in 2021, to “accelerate and expand” its clinical development efforts, said CEO Mark Manfredi.

“Ikena has made incredible strides this year, and we are glad to welcome the Pionyr shareholders to the Ikena team as we head into a pivotal time for our targeted oncology programs,” said Manfredi, in a statement.

The buyout is “clearly an opportunistic financing,” giving Ikena $43 million in cash for what would be $30 million in equity under its previous closing price, wrote William Blair analyst Matt Phipps.

“We believe it is prudent for management to continually evaluate opportunities to increase cash on the balance sheet, particularly when it can be acquired at a discount,” Phipps wrote. Nearly 100 drugmakers have cut jobs so far this year, according to data compiled by BioPharma Dive, as funding remains difficult for companies to raise.

Ikena’s two most advanced drug programs, known as IK-930 and IK-595, are both in early-stage testing. Data for IK-930 are expected later this year.

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