Foghorn Therapeutics, a biotech whose technology can affect one of the ways a cell regulates gene expression, has shown its approach has the potential to address a particular mutation tied to more than 30 different types of cancer. Eli Lilly sees that program, and the technology that discovered it, as key to new cancer treatments and the pharmaceutical giant is committing $380 million to the clinical-stage biotech to kick off a multi-drug research alliance.
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According to terms of the agreement announced Monday, Lilly has agreed to pay Foghorn $300 million cash up front. In addition, Indianapolis-based Lilly is making an $80 million equity investment in its new partner at the price of $20 per share, a nearly 67% premium to the stock’s closing price on Friday.
Cambridge, Massachusetts-based Foghorn develops drugs that modulate chromatin, a substance in a chromosome consisting of DNA and protein. Cells control the expression of genes with molecules that turn genes on or off, a system called the chromatin regulatory system. Foghorn describes its approach as “gene traffic control.” The company’s technology provides insight into the chromatin regulatory system, enabling the identification and validation of potential chromatin drug targets.
While drugging the chromatin regulatory system has potential applications in virology, immunology, and neurology, cancer is Foghorn’s initial focus. According to the biotech, cancer mutations affecting the chromatin regulatory system create genetic dependencies that a cancer cell relies on for survival. The company uses its technology to develop drugs that target these vulnerabilities.
Foghorn’s internal research has yielded a lead drug candidate that blocks BRG1 and BRM, two proteins key to chromatin regulation. That small molecule drug, code-named FHD-286, is in Phase 1 testing in uveal melanoma and acute myeloid leukemia. The alliance with Loxo Oncology at Lilly will focus on developing cancer drugs targeting BRM, as well as drugs for an additional undisclosed oncology target. The companies said that data suggest there are more than 30 different cancers with BRG1 mutations, which account for about 5% of all tumors, and up to 10% of non-small cell lung cancer tumors.
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“Oncogenic mutations in BRG1 impact a large population of cancer patients and we believe are best addressed therapeutically with a highly selective BRM inhibitor, though designing such a drug is a difficult chemistry challenge,” Jacob Van Naarden, CEO of Loxo Oncology at Lilly and president, Lilly Oncology, said in a prepared statement. “We’ve been very impressed by the progress the Foghorn team has made against this product profile and are excited to work with this highly talented team.”
The BRM-targeting drugs covered under the alliance will use two approaches: enzymatic inhibition and targeted protein degradation. The field of companies pursuing both types of drugs is competitive, and protein degradation has gained momentum progress from companies such as Arvinas, Kymera Therapeutics, C4 Therapeutics, and Nurix Therapeutics—all companies aiming to develop new drug for cancer and other diseases, some of that work being done in partnership with large pharma companies. Lilly is one such company, having inked a research alliance with Lycia Therapeutics and its extracellular protein degradation technology earlier this year. Foghorn acknowledges the growing competition but it states in its 2020 annual report that it believes it is the only company with the ability to study the chromatin regulatory system at scale.
Lilly and Foghorn will share equally in the development of drugs addressing BRM and the other undisclosed target. The two companies will split profits of U.S. sales of any BRM-targeting drugs, with Foghorn receiving royalties from sales outside of the U.S.
The deal also includes three discovery-stage programs based on Foghorn’s gene traffic control technology. For those programs, Foghorn will take the lead on the discovery and early research of these molecules while Lilly will take the lead on clinical development, and if approved, commercialization. These three programs could bring Foghorn up to $1.3 billion in milestone payments. The company would also receive royalties from Lilly’s sales of these drugs. Alternatively, Foghorn might choose instead to share in the U.S. commercialization of these drugs, an option it may exercise after a drug candidate completes dose-finding toxicity studies.
Foghorn was founded in 2015 by venture capital firm Flagship Pioneering. The company’s technology is based on research from academic co-founders at the Dana Farber Cancer Institute and Stanford University that revealed new understanding of how mutations cause disease by disrupting the chromatin regulatory system. The biotech went public in October 2020, raising $120 million.
The Eli Lilly alliance is Foghorn’s second one. Last year, Merck signed on as a partner, paying $15 million up front to discover and develop small molecule drugs that disrupt transcription factors, which are proteins that turn genes on and off. The specific target or targets of those drugs have not been disclosed. That deal could bring Foghorn up to $245 million in R&D and regulatory milestone payments.
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