Taiho snaps up ADC partner Araris for up to $1.14bn

Japan's Taiho Pharma has reached a deal to buy Switzerland's Araris Biotech, around 18 months after they started collaborating on the development of antibody-drug conjugates (ADCs) for cancer.

Taiho is parting with $400 million upfront for Araris, a spin-off from the Paul-Scherrer-Institute in Zurich, Switzerland, with the deal terms including another $740 million in potential milestone payments.

The 2023 agreement (PDF) between the two companies was short on detail – financial terms were also not disclosed – but involved Araris using its proprietary linker-conjugation platform to generate novel ADCs against undisclosed targets provided by Taiho.

The Japanese pharma had responsibility for all testing of the candidates once delivered. The alliance marked something of a departure from its traditional focus on developing small-molecule, orally-administered drug candidates for cancer like Lonsurf (trifluridine and tipiracil) for colorectal cancer and Lytgobi (futibatinib) for myelodysplastic syndromes.

Now, it seems that it was impressed by Araris' technology AraLinQ platform, which aims to create ADCs that are highly specific to their targets, deliver potent cell-killing payloads, and have a low tendency for earlier, off-target release that could lead to side effects. Araris' portfolio includes both topoisomerase- and auristatin-based linker-payloads, according to its website.

In a statement, Taiho said that Araris' platform "has generated highly uniform, stable and potent ADC therapeutic candidates that have demonstrated a wider range of safety and increased antitumour effect compared to conventional ADCs in preclinical studies." It expects the first candidates from its alliance to start human testing later this year or in 2026.

4BIO Capital, which was a seed investor in Araris and led its Series A round two years ago, said Taiho's bid was an endorsement of its technology, which enables the attachment of multiple payloads to a single 'off-the-shelf' antibody in a one-step process, whilst ensuring long-term stability and safety of the resulting ADC as well as increased antitumour effect.

"This acquisition validates Araris' position as one of the most exciting ADC companies in the market," said the investment group's managing partner Dima Kuzmin, who serves as chairman of Araris, and noted that the biotech is the first unicorn ($1 billion-plus company) to emerge from 4BIO's fund.

"Having worked with Araris closely during its collaboration, Taiho knows the potential of Araris' proprietary AraLinQ technology and is best placed to accelerate these transformative treatments to patients," he added.

The deal is expected to close in the first half of the year. Once completed, Araris will operate as a wholly-owned subsidiary of Taiho, retaining its base in Zurich.

Taiho has been steadily building its pipeline in recent months, licensing rights to Arcus Biosciences' CD73 inhibitor quemliclustat, in trials for metastatic pancreatic ductal adenocarcinoma (mPDAC), and Haihe Biopharma's MET inhibitor gumarontinib for non-small cell lung cancer with MET exon skipping mutations.