Ep. 357 - Deal-O-rama, Gilead and Tallon's U.K. vision

A flurry of deals, several with sizable upfront payments, has energized the biotech sector in March. On the latest BioCentury This Week podcast, BioCentury’s Paul Bonanos assesses last week’s deals by Merck, which is laying out $6.7 billion to acquire Terns, and Gilead, which is buying Ouro for about $1.7 billion up front.
Gilead’s deal comes as the Foster City, Calif.-based biotech is looking to defend its position in HIV while resetting in inflammation and immunology and growing its oncology footprint through business development. BioCentury’s Lauren Martz analyzes the company’s pipeline following her recent conversation with CMO Dietmar Berger.
Turning to the U.K., Editor in Chief Simone Fishburn details her conversation with CEO of MHRA, Lawrence Tallon, regarding what new reforms in the U.K. mean for drug developers and how he views initiatives helping to build the sector and place the U.K. in the race to become a destination for clinical trials.

Rates for the 26th Bio€quity Europe May 4-6 in Prague increase after this week. Register now as a delegate or apply to join the 2026 Presenting Company Class before the conference sells out.

View full story: https://www.biocentury.com/article/658974

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00:00 - Introduction
01:09 - Merck Buying Terns
04:31 - Gilead, Galapagos Deal
09:35 - Growing Gilead
19:20 - Tallon's Vision for U.K. Biotech

To submit a question to BioCentury’s editors, email the BioCentury This Week team at podcasts@biocentury.com.

Transcript

0:00

[AI-generated transcript.]

Jeff Cranmer: 0:02

Deal O Rama the past week has seen a flurry of biotech deals, headline by Merck, proposing to Buy Terns for 6.7 billion for a chronic leukemia therapy, and Gilead proposing to buy Ouro with partner Galapagos. The latter deal proposal comes as Gilead is looking to defend its position in HIV while resetting an eye and growing oncology. And across the Atlantic new clinical trial regulations are on tap for the U.K. Do they mark the start of a new era for the UK's life science sector. We speak with the head of MHRA, Lawrence Tallon to find out. I'm Jeff Cranmer and this is the BioCentury This Week podcast. Joining me today are my colleagues.

Simone Fishburn: 0:59

Simone Fishburn, Editor in Chief.

Paul Bonanos: 1:02

Paul Bonanos, Director of Biopharma Intelligence.

Lauren Martz: 1:05

And Lauren Martz, Executive Director of Biopharma Intelligence.

Jeff Cranmer: 1:09

Okay, Paul, you have been doing double duty, you're our daily news editor keeping us in line with everything that's happened in the biotech industry, but you're also our lead deals writer, and you had a bit of a busy week last week. Paul where do you wanna start?

Paul Bonanos: 1:24

Oh, let's see. Yeah, you're right. There have been a lot of deals lately. I did have to write a few deal stories and it's really been kind of all month. I mean, it's. It's still March. We saw Servier by Day One. This month. That was early in the month. Things went relatively quiet for a bit. Our colleague called it Spring Break. But then since two Fridays ago, three big transactions, you all talked about Synnovation last week, selling the PI3Kα program to Novartis. And since then, as you said, we have Gilead buying a private bispecifics developer called Ouro, on Wednesday for 1.7 billion upfront. And then Merck taking out the oncology company Terns for 6.7 billion on Thursday. There were also a couple smaller deals on Friday, and it looks like it's carrying over into this week. Do you wanna talk about the Merck one first?

Jeff Cranmer: 2:11

Yeah, let's start there Paul. That was certainly the biggest of the week.

Paul Bonanos: 2:15

Yes, Merck buying Terns, so it's 6.7 billion Terns. They've been around since 2017. Went public in 2021, and it's a little bit of a comeback story. They had been pushing. Pushing harder in metabolic disease for a while. they had an oral GLP-1, a couple other metabolic programs, but they pulled the plug on that last year, stopped investing in that area, which made their lead program a program for chronic myelogenous leukemia, CML, called TERN-701. It's in the same class broadly as Gleevec, which is decades old targeting BCR-ABL. There some newer ones in that class as well. Novartis, notably has Scemblix, which unlike Gleevec, works via an allosteric mechanism rather than an active site mechanism. Scemblix does have some warnings on its label, pancreatic toxicity, some blood pressure changes, food effects, and TERN-701 is designed to avoid all of that. Ideally, it can drive remissions where patients go off therapy for a while and maybe even have some curative potential. TERN-701 has some Phase I/II data, looks like a clear efficacy signal with a good safety profile. And Merck, of course, has been doing M&A to fill the Keytruda gap when it goes off patent in a couple of years since, since about the middle of last year, Merck has bought a COPD company Verona, and an infectious disease play Cidara, it's close to $20 billion for those two. Terns is 6.7 billion. And they're adding that into the mix. Keytruda is a really big thing that's hard to replace. It's like, uh, what Michael Lewis wrote in Moneyball, where you can't replace Jason Giambi, you can just replace him in parts. You can't buy a $32 billion drug. Right? this is one of the pieces that will hopefully fill in the gap when they lose patent protection.

Simone Fishburn: 4:03

do we know how far they are to filling that gap with different pieces?

Paul Bonanos: 4:08

I haven't totted it up yet, but obviously they, if they put almost 20 billion out for COPD and infectious disease, they have high hopes for many billions in sales from those at peak. And it sounds like Terns is a multi-billion dollar drug opportunity too.

Jeff Cranmer: 4:24

Certainly worth ting up. I imagine Merck will continue to hunt for more deals. Let's talk about Gilead. Lauren had been digging into a Gilead story, and then all of a sudden they propose quite an interesting deal leveraging their relationship with Galapagos. Paul what, what's going on here and is this a done deal or is it still coming together?

Paul Bonanos: 4:49

it's partly done, let's put it that way. I mean, there, there are a lot of moving parts and one of them is still moving. That's another way to put it. Let's start with the Ouro piece, right? Ouro is what we've been calling a NewCo. I think our definition is it's innovation from Asia combined with Western VC money to form a global developer of the asset or assets from Asia. Yes. A startup company that's going to. Globalize a, an innovative bit from Asia. So that's what Ouro was. It was a program from Keymed Chinese company and it was backed by a syndicate with founding investor Monograph Capital plus TPG Life Sciences, NEA, and Norwest among others. The program is a T cell engager that targets CD3 and BCMA, and it's in development for some immunological conditions, some anemias, cytopenias, Sjogren's syndrome, bullous pemphigoid. It's in Phase I/II testing now apparently with some clinical data, but Ouro hasn't said much about that so far. So Gilead is looking to buy them or has, proposed to buy them for 1.7 billion. we don't say it's done until it's done, but that deal has been, has been cinched. And here's where it gets interesting. So Gilead, as you mentioned, had a deal with the Belgian company Galapagos dating back to 2019. Gilead paid more than $5 billion in cash and equity for access to Galapagos pipeline. And so far it has not amounted to very much. Galapagos has been through a lot. It doesn't really resemble its former self, it's been through a whole era with Paul s Stoffels, as CEO tried to bring in some cell therapies, tried to separate the cell therapy business from the not cell therapy business that didn't happen. Stoffels is gone. New CEO came in last year. Long story short, Galapagos still has a lot of cash, a very thin pipeline, and the idea has been that it would in-license something of value worth pursuing. And Gilead still owns, about a quarter of Galapagos has two board seats. They have some influence over what Galapagos does, and so the solution that Gilead and Galapagos are apparently working out it's not final yet, but both have signaled their intent is to integrate Ouros employees into Galapagos, split some of the development costs of the T cell engager, and then Galapagos would share in the economics if things work out and the T cell engager reaches the market. Does that all make sense? I mean, it's a, a naughty little arrangement, right? But it's a chance for Gilead to put Galapagos Cash to work for a worthwhile program that could set up both companies for a good outcome. It's obviously very early, but I think Ouro's program has some promise and it's a chance for Galapagos to reshape itself. They've been on the ropes for a long time and,

Simone Fishburn: 7:34

It sounds to me, and Lauren, I think you're gonna talk a little bit more about Gilead. But from where I'm sitting, I mean maybe it's a great deal and I hope so. But it is a little bit, like you said, there seem to be two companies that are a bit struggling. Both Galapagos was a high flyer. I think at some point we talked about it being a bellwether in Europe. It's certainly not at that kind of trajectory right now. Maybe this can help it turn around and at the same time. Lauren, help me out here. I mean, Gilead, it seems to me that since the heyday of being fantastic in infectious disease, and maybe they're still in fantastic in infectious disease. They bought Kite. They've been trying to establish a really solid footprint in cancer, and then INI and their story hasn't yet caught fire in my mind. Tell me how you're looking at this, because I think you did a bit of a deeper dive on Gilead.

Lauren Martz: 8:30

I think that's, fair. Except for, I don't think they're necessarily struggling in the infectious disease area from, you

Simone Fishburn: 8:37

No, I

Lauren Martz: 8:37

HIV franchise is, is, you know, a leader, leader in that space. But yes.

Simone Fishburn: 8:43

I just wanna clarify. Totally agree. Infectious disease, that that story is very solid.

Lauren Martz: 8:48

Yeah. The super solid story in HIV that follows on from the HCV success, which is great. I think. it hasn't necessarily been the same story in INI and cancer, although there are a couple really successful cancer programs. That, that Gilead has. But within the INI space a lot of those misses as Paul sort of alluded to date, back to the original Gilead deals. And even before the Galapagos deals, and even before the really broad 2019 Galapagos deal there was a 2015 collaboration that was, I think$750 million deal for Filgotinib. Which did not pan out. And after that, there were several programs through that broader deal that also didn't work out within the INI space. When I spoke with Dietmar Berger, CMO of Gilead a couple of weeks ago he did talk about prioritizing INI building internally. This obviously is going externally as well. But this is the first T cell engager within this INI space for the company that I'm aware of. So it does give them a new modality and a new way to go after the sort of this hot area of B-cell depletion, whether that's through CAR Ts or T cell engagers, or even the more standard MABs. So they are working within the CAR T cell space to try to accomplish something similar with a bicistronic CAR T, um, again, CD19 and CD20. This just gives them another avenue into those kind of B-cell depletion amenable diseases.

. Simone Fishburn: 10:20

Thanks Lauren. So tell us about the rest in INI and then, you know, maybe move to cancer. How's that kite deal worked out for them and more?

Lauren Martz: 10:30

Sure. So within INI something I found interesting in their pipeline is that they have two Phase II programs, for IBD, for ulcerative colitis and Crohn's disease. And these are really innovative new mechanisms there and a and a third in Phase I. So it seems like that's sort of becoming an area of focus, which has been historically a really difficult disease to to treat with some of the other inflammatory disease mechanisms. In 2024, there was also a $4.3 billion acquisition of CymaBay Therapeutics, which gave the company Livdelzi, which is a primary biliary cholangitis therapy, which Dietmar Berger suggested is the anchor for this rebuilding of the INI pipeline at Gilead. And then you also asked about cancer, which is the third pillar that the company has. So he mentioned that as Gilead has done historically looking externally for oncology assets is something that they'll continue to do. So a lot of the M&A that Gilead has done over the past five, 10 years has been cancer focused, and there's definitely been some mixed success there. But the Kite acquisition, I think we can consider that a success. So, Yescarta came out of that. That's the top selling CAR T cell therapy, it's a, a CD19 CAR T and Gilead's working on a few other CAR Ts. We've seen some in vivo CAR T cell deals that have followed that one. that is sort of one of the anchors of the company's oncology portfolio and pipeline. And then they also have Trodelvy, which came from the Immunomedics deal, which I think is also considered a success. I mean, that was a, a huge acquisition and maybe got some criticism for the purchase price. But the company's moving this, this antibody drug conjugate into the early lines of treatment for breast cancer for triple negative breast cancer, which could really expand the market and I think help it reach kind of the peak sales potential that Gilead was thinking about when it did that deal.

Simone Fishburn: 12:28

So Lauren, I just wanted to ask you, you know, I think about the Kite deal that in that day, that was a very edgy technology. I mean, it's still an edgy technology actually, but you know, it was one of the first deals they really did stick their neck out there. I think the Trodelvy deal, even then when they did that, that was quite a new technology. And I think what I'm asking you is whether, for my criticisms earlier where Gilead is right now, maybe, you know, do you see that they have quite an appetite for very forward thinking, next generation science and technologies that they're not playing it safe with me toos or eighth in class? Is that a fair assessment?

Lauren Martz: 13:09

I think that. I think they're certainly sticking, sticking with building out where they have been successful in the past, other than those examples which are reaching into new spaces. But since then, we've seen a lot of, you know, as I mentioned, building on the CAR T success with In Vivo CAR Ts and other adjacent technologies. I haven't seen a ton of ADC activity after the tro delvy deal, but I, I think that's, I think that's probably fair.

Simone Fishburn: 13:33

I guess I'm thinking of our audience out there who might be thinking, would Gilead be interested in my asset? And, what's it gonna take for somebody to get interest from Gilead?

Lauren Martz: 13:46

And I think that, you know, he did mention that they are always on the lookout for oncology deals. So I think it's probably a fair assumption that innovative oncology is kind of on the table. you know, We did just see the bispecific for INI deal, which. I think we can still say that's at the cutting edge. It's an incredibly crowded space. I think we're all trying to understand which of the bispecific T cell engagers against BCMA or CD19 is going to end up successful and how they will differentiate and how, how activity and like the profile of the therapy for INI differs with what you would wanna see in oncology. It's certainly an innovative space. It's a crowded space and I think we'll all see how that plays out.

Jeff Cranmer: 14:32

All right, and you can read Lauren's story and uh, Paul's story on both of the deals that we just discussed, up on BioCentury.com, or you can click on the link in the show notes. We did tease that it was a big couple of weeks for deals. What else you got Paul?

Paul Bonanos: 14:50

I, it's just worth mentioning there were a couple smaller ones on Friday that I thought were, worth noting and somewhat interesting. So Excellergy a venture backed company with an INI program. Its got and promise an allergy, food allergy, hives, maybe a couple more things that had just entered the clinic. Went to Novartis for an undisclosed amount upfront, but the total deal value is 2 billion, including milestones. It looks like a strong exit for some VCs. The startup was spun out of Stanford and RedTree was the seed investor, RedTree has close ties to Stanford and other West Coast institutions they had done a series A with Samsara and Decheng joining RedTree. So good for them. And then Transcend a neuropsychiatric company with a PTSD product in the clinic was acquired by Otsuka for 700 million upfront. They're also 525 million in milestones in that deal. So from Wednesday to Friday, four substantial deals, probably somewhere around 10 billion upfront in total. And then the last one this morning, it's much smaller, but uh, Kezar life sciences acquired by Aurinia. Hard to say whether they're actually going to keep advancing the asset or whether this was a deal for a company trading below cash. Aurinia is now being steered by a new management team from Tang Capital, and Tang has Concentra that often does these sort of buy and shut down deals. So it's not clear exactly what the future of Kezar is, but that's one more M&A deal today.

Jeff Cranmer: 16:17

Yeah, Tang's been quite active with these deals, Paul, are they keeping any companies alive or are they just shutting 'em all down?

Paul Bonanos: 16:24

all of the deals, nearly all of them anyway, have a CVR. Should someone want to acquire the asset and advance it? Or should there be. More of a positive outcome, but to my knowledge, no, no deals have happened, and I don't think Concentra advances the assets. They tend to buy and keep the cash.

Jeff Cranmer: 16:42

Right on. And you mentioned, that Ouro was set up as a a NewCo under the NewCo model. I just wanted to drop Keymeds name in there. Keymed is one of the most active China-based companies behind the NewCo Deals. it's uh, kind of a double win for keymed, first, getting the deal for Ouro and then getting this takeout as well. So Keymed, along with Jiangsu Hengrui two of the companies to really watch really deep pipelines Hengrui had its, uh, earnings last week and I think they've said they have a hundred innovative molecules in their pipeline. So expect more movement from both of those companies. All right. We are gonna take a uh, quick break and then we're gonna come back and hear about Simone's conversation with Lawrence Tallon, CEO of MHRA.

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Jeff Cranmer: 18:46

Okay, and Bio€quity Europe, first time in Central and Eastern Europe for the event now in its 26th year we have some limited spaces remaining for presenting companies. You can reach out to me if you have interest in uh, nominating a company or nominating yourself to present. Uh, advanced rates end this week. So rates will be going up, so it's a good time to jump in. Simone. All right. Let's head to the motherland. You got to sit down with Lawrence Tallon virtually. on the eve of a major overhaul of new clinical trial regulations. What did you learn?

Simone Fishburn: 19:35

Oh, it was a really interesting conversation. I gotta tell you, it was like more interesting live. I wish we'd recorded it, but uh, we will have an opportunity actually at Grand Grounds in Amsterdam, we will have both Lawrence Tallon and Emer Cooke. So, uh, Opportunity to hear him live. But yeah, it's an interesting and exciting time. Potentially let's do this whole potentially thing in the U.K. The government is bringing in a series of clinical trial reforms that in fact predate in their genesis, they predate Lawrence Tallon being CEO of MHRA. It's gonna be his job to make sure they all work. And he's bringing a lot of other ideas to the table. So the clinical trials reform, which Jeff, I don't know, I'm not gonna say that whole title and name of that law that is, is in there. But

Jeff Cranmer: 20:28

There's quite, quite a few parentheses

Simone Fishburn: 20:31

a lot of parentheses going on there. I don't know what the British are doing in that. But anyway it passed last year and it comes into force on April the eighth, and they're calling it the biggest overhaul in 20 years for clinical trials in the U.K. Skeptics among, you will say the bar was low, but I think that's a little cruel. Um, it's certainly, you know, there's a lot of new things in here. And I think that an important context to this is something that we've been talking about and we'll be talking about all year, which is this global race to improve the speed at which first in human data are generated and generally to improve clinical trial efficiencies for sponsors. So, Lawrence Tallon talked about, I'll tell you two or three of the highlights. One is there's gonna be a guaranteed 14 day first assessment of Phase I clinical trials. So 14 days to get a turnaround to get a response from MHRA. The second, which they call the other end of the spectrum, they call the low, lower risk end of the spectrum is a notifiable scheme, right? So what that means is that if these are fairly, low risk trials and they've already got thorough regulatory approval in sort of a reference regulator like the US or EU, or Australia. Then in the U.K. instead of having to work for full clinical trial approval basically within 14 days, if you haven't heard from them, if you haven't been given a reason to amend it, you can just go ahead. So that is like a, removing unnecessary hurdles. And they think that about a fifth of clinical trial volume will be in these notifiable schemes. And then, you know, they're still working towards this. Here's what's interesting. They're working towards this 150 day goal between when you first apply and when the first patient is dosed. Now within that there's a 60 day part of that, which is under MHRA. They've already met that goal. I think they've actually even beaten that goal, but the remaining part of it is not entirely under Lawrence Tallon's responsibility. There are other players as well. And so this is where it gets interesting because there's NICE and there's the NHS. And so, they have um, ILAP scheme and they have an aligned pathway, but generally. The integrated system of the U.K. is something that Lawrence Tallon and his colleagues are trying to turn to their advantage. So instead of a lack of coordination between these bodies being something that slows things down, what they're trying to do is get them better aligned. And they say the government have given them incentives for that. And so actually make it more efficient

Lauren Martz: 23:18

Simone, did he talk at all about how the different as the different government organizations, are gonna work together or the other ways that they're gonna make this process more efficient?

Simone Fishburn: 23:29

Right? Yes, he absolutely did. So the first thing is he outlined a few specifics, the U.K. has an advantage, he says, of a single payer health system, so that allows them to create a single national contract, with terms and conditions so that you know you don't have to have multiple different contracts every time you go to a different site. And so there's one template. He did say that it would be a template that's adaptable to the local environment, but generally one of the things that can take people sponsors a long time is back and forth over the contract. So this would be like a template and because it's a single payer health system, it can be used, throughout the U.K. The other is he said that they're gonna actually make data more available so that trial sponsors can know what sites are recruiting quickly and which are not doing so well, and so they can choose their trial sites. And then, you know, they also wanna make incentives flow to the right sites. And another thing which is that they're gonna use this NHS app. So we've talked about this from Patrick Vallance before the Minister for Science. The point being that the U.K. has something that just about every place has that not only is recruitment slow, but so many patients who would be eligible for trials just don't get into them. And so the idea of this app, which most people have, is that it would actually make it a lot easier for many patients who are eligible to get into these trials.

Jeff Cranmer: 24:59

Simone, one thing uh, that caught my eye when I was, editing the piece was the aligned pathway. Can you, uh, I, I love a good pathway with a regulatory, uh, organization. Can you, uh, break down what that's all about?

Simone Fishburn: 25:13

the aligned pathway is new system whereby NICE, which is the sort of HTA for NHS approves whether a drug is gonna be covered by NHS. So where the NICE approval process and the MHRA, which is the regulatory approval process don't happen in sequence but in parallel. And so that's actually gonna be the default. So they have very clear incentives for MHRA and NICE to work together, which has not been the case in the previous few years. But they've this new system has created incentives for them to do that, and they actually want that to be the default. So it's not that you have to have an agreement with NICE in order to get a drug approved by MHRA, but they feel that if you have that early on and they are aligned, then your path to market and to selling in the U.K. will be much easier. And just one last thing about that because Steve Usdin also talked to Lawrence Tallon, and he raised this, several months ago when he spoke, where there's always this question of pricing in the U.K. But even beyond that, there's still this point that the U.K. is only a small part of the market, right? Like, I think Tallon puts it at 3%. So I think that his goal is to have approvals in the U.K. be a gateway to approvals in other jurisdictions so that, he could have alliances with these other regulatory authorities, whereby if it's approved in the U.K. it might automatically appro approved in other certain other countries. And then that would mean that actually you are opening up a much bigger market by getting MHRA approval. So I think he's got some interesting ideas about how to make the U.K. a destination. And we'll see.

Jeff Cranmer: 26:51

Certainly something we're gonna be watching. Uh, read the interview on BioCentury.com Click the link in the show notes. And while you're there, you can like us, subscribe to us and this indeed is a topic we're gonna stay with. Lauren, you have a couple of stories coming up. Anything to tease for us?

Lauren Martz: 27:11

I'll be speaking with a few other regulators from the U.K. to get more details on the clinical trial reforms and learn a bit about how they're approaching rare diseases under the, the new regulations.

Jeff Cranmer: 27:21

Excellent. Elsewhere in biotech, the Critical Path Institute's new One to Millions initiative is looking to build the shared infrastructure needed to operationalize FDA's plausible mechanism framework. Our colleague Steve Usdin, wrote a piece on that after speaking with the head of C-Path. Shreehas Tambe has been named CEO of Biocon. He's an insider tap to lead the Indian biotech bellwether as it restructures to sort of create one Biocon. And Kodiak's VEGF conjugate has finally found its footing in diabetic retinopathy can read our colleague Tierney Baums, piece in BioCentury.com. Thanks for tuning in. We'll be back next week with our Second Quarter Public Markets preview. Stephen Hansen will be joining us. And a special thanks to Kendall Square Orchestra, which provides the music for BioCentury this week. Thanks for tuning in.