Peeking Inside the Loxo Oncology-Foghorn Therapeutics $1.7B Cancer Collaboration

Peeking Inside the Loxo Oncology-Foghorn Therapeutics $1.7B Cancer Collaboration
Foghorn Therapeutics has grown its pipeline to more than 10 programs targeting a variety of cancers. Three of those programs, involving the company’s two lead candidates, are expected to read out initial clinical data in 2022 after reaching the clinic this year. Foghorn has Phase I studies in progress for FHD-286 in metastatic uveal melanoma and relapsed or refractory acute myeloma, as well as for FHD-609 in advanced synovial sarcoma. [Source: Foghorn Therapeutics]

When his wife retrieved the Christmas lights from their garage in mid December, Foghorn Therapeutics President and CEO Adrian Gottschalk recalled, the decorations she unpacked presented an apt analogy for explaining the science behind his company, a developer of precision therapies.

Just as the string of lights was tangled up into a ball, so too DNA is wound up in the cell nucleus like a spool of thread around a protein scaffold made up of histones, creating a structure called chromatin. When information embedded in DNA is not in use, the chromatin is wound up and tightly packed. But when the cell needs to access that information, it has to unpack the chromatin, relying on an exquisite regulatory system to open and close the right sections of the genome in order for the cell to properly function.

To gain access to a particular gene, “you have to pull out a loop [of DNA], and that’s what the chromatin regulatory system does: It provides access to the underlying DNA so that that gene can be expressed and the DNA can be transcribed,” Gottschalk explained. “When it works well, we’re healthy. When it goes awry, one gets sick.”

Many common disorders result from breakdowns in chromatin regulation, including autoimmune disorders, neurological disorders—and several forms of cancer.

Foghorn has strengthened its initial focus on cancer by joining Loxo Oncology at Lilly to launch an up-to-$1.68 billion collaboration. The companies plan to co-develop and co-commercialize novel oncology therapies by applying Foghorn’s Gene Traffic Control® platform for understanding and modulating the chromatin regulatory system, which regulates gene expression by directing the movement of molecules that turn genes on and off.

The companies agreed to partner on Foghorn’s selective Brahma (BRM) oncology program, applying enzyme inhibitor and protein degrader modalities; an additional undisclosed oncology target; and three additional discovery programs that also apply Gene Traffic Control, also for undisclosed targets.

Loxo Oncology at Lilly—an R&D group formed within Eli Lilly after it acquired Loxo in 2019 for $8 billion—agreed to pay Foghorn $300 million in cash, plus an $80-million equity investment in Foghorn shares at $20/share—nearly double the share price the morning the deal was announced on December 13. “I think that’s obviously some validation of the biology of the platform and the work we’re doing,” Gottschalk said.

Loxo also committed up to $1.3 billion in payments tied to achieving development and commercialization milestones, plus royalties on sales.

55% Stock Jump, 10+ Programs

Investors roared their approval of the Loxo collaboration by sending Foghorn’s shares up 55% that day, to $18.58 and it has continued to consolidate on those gains, topping $20/share in early 2022 trading.

The companies first connected in early 2021, Gottschalk said, drawing in part on relationships between Loxo executives and members of Foghorn’s management team. The companies also connected following indications of interest by Loxo about Foghorn’s approach to synthetic lethality, a cancer-fighting approach in which mutations in two genes together result in cell death.

Foghorn has grown its pipeline to more than 10 programs targeting a variety of cancers. Three of those programs, involving the company’s two lead candidates, are expected to read out initial clinical data in 2022 after reaching the clinic this year. Foghorn has Phase I studies in progress for FHD-286 in metastatic uveal melanoma (NCT04879017) and relapsed or refractory acute myeloma (NCT04891757), as well as for FHD-609 in advanced synovial sarcoma (NCT04965753).

FHD-286 is a selective, allosteric and orally available, small-molecule, enzymatic inhibitor of BRM and brahma-related gene-1 (BRG1), two highly similar proteins that are the ATPases, or the catalytic engines across all forms of the BAF complex, a key regulator of the chromatin regulatory system.

The company says its BRM-selective program is being developed to address BRG1 mutated cancers by using protein degradation and enzymatic inhibition.

“In this case with the BRM target, we are using our platform to study the target of interest here and then actually find chemical matter or small molecules that can interfere with it, so we’re trying to disrupt that dependency that the cancer cell has,” Gottschalk said.

Under Chairman and CEO David A. Ricks, Lilly has sharpened its focus on cancer in recent years, growing its portfolio to seven marketed oncology drugs and a pipeline of eight candidates in 20 clinical trials. In August, Lilly promoted Loxo Oncology CEO Jacob Van Naarden to senior vice president, CEO of Loxo Oncology at Lilly and President, Lilly Oncology, with the intent of unifying Lilly’s two centers of cancer drug development. At Lilly Oncology, Van Naarden succeeded Anne White, who was named senior vice president and president of Lilly Neuroscience.

In a statement, Van Naarden said: “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.”

Chemistry Challenge

“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,” he added.

The reason, Gottschalk explained, lies with the similarity between BRG1 and BRM.

“Finding chemical matter that is selective for BRM but not for BRG1 has been something that the field has not been able to do, to our knowledge,” he said. “We’ve used our platform to find that chemical matter that is very selective for the BRM protein but will not touch as much the BRG1 protein.”

Protein degradation is an area of interest to a growing number of drug developers. Months before the Foghorn collaboration, Lilly inked an up-to-$1.6 billion partnership in August with Lycia Therapeutics to discover and develop novel degraders for up to five targets that aim to address key unmet medical needs in Lilly’s therapeutic areas of focus, including immunology and pain.

In July, Pfizer committed up-to-about $2 billion in launching a collaboration with Arvinas to develop and commercialize ARV-471, an oral PROTAC® (PROteolysis TArgeting Chimera) estrogen receptor protein degrader under study in a Phase II dose expansion trial (NCT04072952) in estrogen receptor (ER) positive / human epidermal growth factor receptor 2 (HER2) negative (ER+/HER2-) locally advanced or metastatic breast cancer.

Pfizer agreed to pay Arvinas $650 million upfront, plus a $350 million equity investment in Arvinas and up to $1.4 billion tied to achieving approval and commercial milestones.

Among other drug developers pursuing protein degradation therapies are C4 Therapeutics, Kymera Therapeutics, and Nurix Therapeutics.

Foghorn has cited data suggesting there are more than 30 different cancers with BRG1 mutations accounting for approximately 5% of all tumors, including up to 10% of non-small cell lung cancer (NSCLC) tumors, with minimal overlap with other driver mutations. NSCLC is potentially an important indication for FHD-286, Gottschalk said, although a decision on that or any other indication will be made in partnership with Loxo.

A Range of Cancers

“There’s certainly potential implications in colorectal cancer, bladder cancer, cervical cancer, and esophagogastric cancers — a range of different cancers. Those are just some of the more prevalent ones,” Gottschalk said. “Because BRG1 is so heavily mutated, we haven’t yet studied that and will obviously be working with our colleagues at Loxo to figure out where exactly to develop this.”

In preclinical studies, FHD-286 showed anti-tumor activity across a broad range of malignancies including both blood and solid tumors. Foghorn is seeking to add indications for FHD-286 in multiple solid tumors.

FHD-609 is a selective protein degrader of BRD9 (bromodomain-containing protein 9), a subunit of the non-canonical BAF complex that is required for synovial sarcoma cells to survive. “It’s going to basically take that protein to the cell’s recycling bin and get rid of it,” Gottschalk analogized.

Substantially all synovial sarcoma cancers contain a translocation between a BAF subunit gene, SS18, and another set of genes known as SSX. These rearrangements render the cancer genetically dependent upon BRD9 — a synthetic lethal relationship.

Foghorn says its initial indications for -286 and -609 entail significant potential patient populations: More than 20,000 relapsed or refractory AML patients, more than 5,000 uveal melanoma patients, and more than 1,800 patients a year with synovial sarcoma.

Also in Foghorn’s pipeline — all preclinical and heading into IND-enabling phases — are a selective ARID1B program targeting ARID1A-mutated cancers via a protein degrader; a program focused on “multiple” synthetic lethal targets using enzyme inhibitors and protein degraders; multiple transcription factors using transcription factor disrupters and protein degraders—and an undisclosed single transcription factor disruptor program being co-developed with Merck & Co.

According to a regulatory filing, Merck paid Foghorn $15 million when the collaboration launched in July 2020, and agreed to pay Foghorn up to $245 million upon achieving research, development, and regulatory milestones; up to $165 million upon reaching sales-based milestones; plus royalties on net sales of approved products.

For the BRM-selective and undisclosed target programs, Foghorn will lead discovery and early research activities, while Lilly will lead development and commercialization activities with Foghorn participating in operational activities and cost sharing. Foghorn will lead discovery and early research activities for the additional discovery programs.

How Foghorn Got Its Name

Based in Cambridge, MA, Foghorn was incorporated in 2015 as a spinout company of Flagship Pioneering. It emerged from stealth mode in 2018 when Flagship committed an initial $50 million to the startup. Foghorn got its name from a co-founder and board member, Cigall Kadoch, PhD, of Dana Farber Cancer Institute, Harvard Medical School, and the Broad Institute of MIT and Harvard. Kadoch grew up in the San Francisco Bay Area, where foghorns have long prevented shipping accidents on the foggy inlet.

“It’s an elegant way, as she was thinking about this biology, of how precisely things get signaled, and which genes to turn on and when. That’s why she wanted to name the company Foghorn,” Gottschalk shared.

“The formation of the company was centered around the question: What if we could have a dramatic impact on patients by providing a whole new set of treatments? And what if those treatments were based on biology that is effectively changing how gene expression occurs—in other words, changing when genes are turned on and off? If one could do that, one could potentially help millions of people.”

The biology that could change gene expression occurrence, Foghorn found, was the chromatin regulatory system: “It is implicated in a raft of different diseases, so it’s very much relevant for patients,” he added.

A year before coming out of stealth, Gottschalk joined Flagship to lead Foghorn following 13 years at Biogen, where he advanced to senior vice president and head of neurodegeneration therapeutics, where he oversaw commercialization of medicines for amyotrophic lateral sclerosis, Parkinson’s disease, and Alzheimer’s disease, including the controversial Aduhelm® (aducanumab), approved by the FDA in June.

After a Biogen colleague joined Flagship, Gottschalk looked into joining the firm: “They do amazing innovation work and Foghorn was one of the companies that drew my attention, just for the potential to make a huge difference in cancer and other diseases,” Gottschalk said. “It’s been a great ride so far.”

Since Gottschalk joined Foghorn, the company went public in October 2020, through an initial public offering that generated net proceeds of $122 million.

Foghorn’s cash, cash equivalents and securities have shrunk since then, from $185.8 million as of December 31, 2020, to $120.8 million at the end of September 2021. The company finished the third quarter with a net loss of $26 million, up from a net loss of $18.37 million in Q3 2020. During the first nine months of 2021, Foghorn’s net loss was $72.18 million, up from a $48.04 million net loss a year earlier.

Foghorn’s workforce has multiplied 10-fold from 12 people to about 120 during Gottschalk’s tenure, with plans to keep growing in 2022.

“As we expand our pipeline, as we continue to focus on our clinical programs, as we work with our collaboration partners, we’re obviously going to be growing in every dimension,” Gottschalk said. “It should be an exciting year to join the company.”