On August 23, Trillium Therapeutics, an Arctic Aurora LifeScience and Arctic Aurora Biotech Select portfolio company, announced that it had agreed to be acquired by Pfizer for USD 2.26 billion – a 204% market premium to the previous closing price. The deal comes after long drought period for large cap acquisitions of smaller public biotech companies following turbulent small-mid cap biotech equity market movements from the highs during 2020 and early 2021 to the significant drops during the spring of 2021 and onwards.
Trillium has developed two cancer drug candidates currently in early stage clinical development that targets the protein CD47 that is believed to play an important role in cancers cell’s escape from the immune system. Many cancer cells overexpress CD47 that is found on the surface of the cells where it interacts with certain immune cells in a manner that signals that the cells are ‘self’, that is belonging to normal cells in the body and thereby should not be attacked by immune cells. This escape mechanism has similarities with how the immune checkpoint drugs like multi-blockbuster products Keytruda and Opdivo work.
CD47 expression is particularly high in blood cells, hence Trillium’s main focus has been on blood cancers like Lymphomas and Leukemia. But the company has also planned to go into solid tumors. Another Arctic Aurora fund holding, ALX Oncology has already entered Phase 2 studies with their CD47 drug candidate in a solid tumor setting (importantly, in combination with Keytruda). ALX shares closed up 16% following the takeover news of Trillium.
The group of small-mid cap biotechs have seen market values decrease considerably during the year. The equal weighted S&P Biotechnology Select Index has dropped nearly 30% since its highs in early February this year. However, large cap pharma and biotech’s innovation replenishment issues remain; many of the larger companies in the industry require external products or R&D to complement current products in order to sustain growth. And with market prices for biotech companies currently at a large discount to general equity markets and general small-mid cap equities there are plenty of opportunities to pick up novel therapeutic innovation in this space.
The Trillium-Pfizer merger is subject to customary shareholder, legal and regulatory approvals.
This is the first takeout for Arctic Aurora Biotech Select since the start of the fund in June and the 14th takeout for Arctic Aurora LifeScience.