Targeted immunotherapy tag team

Genentech and Bayhill Therapeutics partner on development of antigen-specific immunotherapy candidate for type 1 diabetes in deal that could exceed $350 million

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SOUTH SAN FRANCISCO, Calif.—In a deal intended to further its focus on immunology drug development—and one marking its first partnership on a diabetes treatment—Genentech Inc. will work with Bayhill Therapeutics Inc., a clinical-stage biopharmaceutical company that develops novel and targeted treatment candidates for autoimmune diseases, to bring an antigen-specific immunotherapy candidate for type 1 diabetes (T1D) to market.

The exclusive, worldwide license agreement—worth an amount that could exceed $350 million—was announced by the companies last month and is centered on the development and commercialization of Bayhill's BHT-3021, a plasmid encoding proinsulin designed to target specific pathogenic immune cells responsible for the autoimmune response in type 1 diabetic patients. The compound is currently in a Phase I/II clinical trial in patients with T1D.

Bayhill will complete the ongoing Phase I/II trial, which Genentech will fund and then take on the responsibility of all future research development and commercialization efforts. For this promising program, Genentech will pay Bayhill $25 million in cash and equity upfront in addition to development, regulatory and sales milestone payments that could exceed $325 million.

Although both companies have yet to put a dollar figure on BHT-3021's market potential, the clinical candidate has the potential to be the first to treat the underlying mechanism of T1D—an autoimmune disorder that affects both adult and pediatric patients and for which there are currently no disease-modifying therapies, says Caroline Pecquet, a spokeswoman for Genentech.

"We believe that Bayhill's BHT-3021 molecule, while in the early stages of clinical development, is a very promising clinical candidate," Pecquet says. "We believe that this molecule has the potential to be a best-in-class and first-in-class treatment for type 1 diabetes."

The deal is Genentech's first collaboration on a potential diabetes treatment, Pecquet notes, and a new way for the Roche group company to continue to pursue products that address unmet medical needs and work through the biological mechanisms being explored in its key research focus areas, including immunology.

"Genentech is always open to pursuing research in disease areas where we see strong biology," Pecquet adds. "Additionally, as type 1 diabetes is an autoimmune disorder, our interest in this molecule is supported by our research focus in the area of immunology."

But the deal is even more pioneering for San Mateo, Calif.-based Bayhill Therapeutics and its 14 employees, which have been honing their antigen-specific therapy technology since the company's founding seven years ago by Stanford University researchers Lawrence Steinman, Hideki Garren, William H. Robinson and Paul J. "P. J." Utz, according to Dr. Mark Schwarz, Bayhill's president and CEO.

"The day we announced this partnership was a very big day for us," Schwarz says. "While many small biotech companies have been successful, there aren't many companies that have become successful on the original technology they were founded on. We have been talking to a wide range of potential partners for quite a long time, but when you are innovative, people need to see things play out and watch what happens. The past seven years have been a long road for us, and we have been up against a lot of non-believers—especially in the early days, when people said, 'this is interesting stuff, but we're not convinced. Come back when you have more data.'"

Current immunosuppressants take a broad-based approach to treating autoimmune disease: "turning off" a general portion of the immune system, ameliorating the symptoms of an autoimmune disease, but also inducing a wide range of side effects, some of which are mild, but some of which may lead to death. In some cases, the immune system becomes so weakened by the powerful immunosuppressants that patients develop cancer. Bayhill's research efforts use a different tactic to treat autoimmune diseases— restoring the patient's immunological "tolerance" to self-antigens to a normal state by selectively eliminating specific, harmful immune responses while leaving the rest of the immune system intact.

BHT-3021 is designed to induce antigen-specific tolerance by selectively turning off the errant autoimmune response attacking the pancreas. The compound has shown efficacy in non-obese, diabetic mice models. In the current Phase I/II trial, patients receiving BHT-3021 demonstrated preservation of C-peptide, no serious adverse events and an acceptable safety profile.

This highly specific immunomodulation action could result in the preservation of pancreatic function and improved long-term health in T1D patients, Schwarz says.

"Currently, there are no disease-modifying agents for type 1 diabetes," he notes, "and there are only a few in development. All type 1 diabetics are treated with insulin, which does nothing to attack the root cause of the disease. At the same time, immunosuppressants don't get at the root cause of a disease, either—they just get a range of root causes. This collaboration is unique in the diabetes space for two reasons: it moves toward increasing the efficacy of drugs, and it also refines their targets. I think Big Pharma is going to start picking this up as advances are made and people start moving toward antigen-specific therapies."

The deal also grants Bayhill the right to opt-in on future development and co-promotion of BHT-3021 as well as competitive escalating royalties on annual net sales. Partnering with Genentech obviously gives Bayhill the resources and expertise it needs to see its work on BHT-3021 to fruition, but perhaps more importantly, it will also allow Bayhill to develop additional products from its BHT-DNA platform, Schwarz says. While Bayhill's initial indications of focus are T1D, multiple sclerosis and myasthenia gravis, Bayhill hopes to develop a robust pipeline of product candidates targeting autoimmune diseases for which the target protein self-antigens are known. Published medical research indicates that 28 such autoimmune diseases have been identified.

"That's why we are so gratified by our partnership with Genentech," Schwarz says. "Genentech itself is a highly innovative company that has pioneered many innovative therapies, so they have the right cultural mindset to bring this forward. What is really compelling is that the folks at Genentech really believe in our technology and understand what our overall goal is for the platform. They believe in the data we have generated and are willing to put their reputation and money and risk and drive it forward. If we can get this to the finish line, it will be a tremendous benefit to diabetes, but really good for autoimmune diseases in general."

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