Sun Pharma buys Checkpoint and its new cancer drug

Sun Pharma has agreed a takeover deal with US biotech Checkpoint Therapeutics, which recently claimed FDA approval for its first drug but is also running low on cash.

The Indian pharma group – which sells generics, biosimilars as well as branded medicines around the world – is making an upfront payment of $4.10 per share in Massachusetts-based Checkpoint, a two-thirds premium on its closing share price on the Nasdaq on Friday, which values the company at around $355 million.

Sun Pharma has made its play just three months after Checkpoint won FDA approval for PD-L1 inhibitor Unloxcyt (cosibelimab) for the treatment of adults with metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC who are not candidates for curative surgery or radiotherapy.

It has also promised another $0.70 tied to approvals of Unloxcyt in Europe, specifically if it is cleared in Germany, France, Italy, Spain, or the UK before certain deadlines.

Unloxcyt was approved by the FDA in December, almost a year to the day after the US regulator first turned down Checkpoint's application down due to issues with a third-party contract manufacturer.

The company was already running low on cash at that time and, by the end of the third quarter, was sitting on just $4.7 million, although it managed to top that up with the sale of $9.2 million in warrants in the fourth quarter. It has not yet published its fourth quarter results or given any indication of Unloxcyt's early take-up in the market.

Unloxcyt was being positioned as a lower-cost alternative to PD-1 inhibitors already approved to treat cSCC, including MSD's Keytruda (pembrolizumab) and Regeneron's Libtayo (cemiplimab), which sits well with Sun Pharma's position as a company experienced in competing on price and with an international presence.

Checkpoint has also claimed some advantages over its PD-1 inhibitor rivals, including a stronger effect on natural killer (NK) immune cells and a reduced tendency to stimulate antibodies that can limit the drug's effectiveness.

Sun Pharma chairman and managing director Dilip Shanghvi said: "Combining Unloxcyt…with Sun Pharma's global presence means patients with cSCC may soon have access to an important, new treatment option. The acquisition further bolsters our innovative portfolio in onco-derm therapy."

The takeover – expected to conclude sometime in the second quarter – also includes a royalty-bearing agreement with Fortress Biotech, Checkpoint's controlling stockholder, which has already voted in favour of the deal.

Shares in Checkpoint had rocketed in pre-market trading to reach the offer price at the time of writing.