Eli Lilly and Co (LLY) just announced that it had struck a deal with privately held Topas Therapeutics. The collaboration will see the two team up to develop various assets rooted in a platform developed and owned by Topas, with Eli Lilly then having the opportunity to option any of said assets for future development.
The specifics of the deal remain unclear as both companies have been relatively tightlipped as to exactly what assets are under development and what target indications will be at the top the list. Similarly, the financial side of the deal is murky at best in terms of what Eli or Topas has let slip. With this in mind, the impact of the deal for Eli Lilly is somewhat unclear.
In an attempt to offer up some clarity, here is a look at the technology in question with a discussion of what it means for Eli Lilly, Topas and the healthcare space as a whole.
Before we get started, it’s worth noting that Topas is privately held but it is an entity that spun out of publicly traded Evotec AG (ADR)(EVTCY) last year. The latter holds a substantial portion of the former, meaning anybody wanting to pick up an exposure to this technology that doesn’t involve buying Eli Lilly shares could do so through Evotec.
So, let’s look at the technology.
It is a platform that allows the company to create nanoparticles that are loaded with antigenic peptides. For those not familiar with the science that underpins this side of the industry, peptides are the part of the immune system that carry the antigens that – eventually – get exposed to the immune system cell roundup. To be a little more specific, antigenic peptides are absorbed by what are called antigen-presenting cells (APCs) and processed into fragments. The APCs then present these fragments to T cells, which allows the latter to identify any pathogen that expresses the antigen in question. With its platform, Topas uses what are called superparamagnetic iron oxide particles (SPIONS) conjugated with disease-relevant peptides. On introduction to the body, these SPIONS are absorbed by liver sinusoidal endothelial cells (LSECs), and, in turn, the disease specific antigen that was introduced alongside the peptide is presented to the immune system.
In its lead indication, multiple sclerosis, Topas has been able to show that the use of these LSECs to trigger an immune response can translate to the up regulation of T cells associated with stemming inflammation. Inflammation is at the core of a huge number of diseases, things like rheumatoid arthritis, psoriasis, etc. and the ability to trigger an anti-inflammatory response from the immune system could provide a novel and effective way to go after these conditions.
And it is this novel approach that seems to have caught the attention of Eli Lilly. In the press release detailing the agreement, the company’s Senior Vice President, Thomas Bumol, said this:
“Topas has a very novel approach to immune tolerance induction, which we would like to see successfully applied to certain disease relevant antigens.”
In other words, these are billion-dollar markets for which treatments exist but in many cases these treatments don’t effectively cure a condition. If Topas and Eli Lilly can get an asset to market that is rooted in the SPIONS platform discussed above, the two companies could offer a very much needed alternative treatment to patients for which current standard of care therapies for short.
So that’s the science and where this fits into the industry. What we know about terms that could offer insight into potential near-term target indications and, by proxy, impact for both Topas and Eli?
Well, as mentioned above, not that much. However, we do know that Eli is going to provide R&D capital to Topas and the assets that spin out of the programs funded by this R&D capital will be available to Eli at varying points along the development pathway. A look at the Topas pipeline reveals that the above-mentioned multiple sclerosis indication is really the only one that is anywhere near IND, so it’s reasonable to assume that this is the indication that the two company’s will target first.
Beyond that, Topas lists type I diabetes and celiac disease as discovery stage indications in its pipeline right now. However, if the drug is proven effective in something like multiple sclerosis, which has a number of symptoms rooted in inflammation, there’s a good chance that we will see development in line with this anti-inflammatory approach going forward.
The author has no positions in any of the stocks mentioned in this piece.
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