Deal With Novartis Values Aduro at $925M Pre-IPO

March 30, 2015 • Top News • Tags: , ,

Aduro’s latest big pharma deal was with Novartis for immuno-oncology products derived from Aduro’s cyclic dinucleotide (CDN) approach to target the STING (Stimulator of Interferon Genes) receptor. Novartis will make an upfront payment of $200 million to Aduro and, if all development milestones are met, Aduro is eligible to receive up to an additional aggregate amount of $500 million.

Aduro’s CDN program is in preclinical trials, having shown tumor shrinkage and immune responses in mouse tumor models. ADU-S100, the name of the small molecule candidate, may be capable of providing antigen-specific T-cell immunity to prevent further growth of distal, untreated tumor metastases, a response known as an abscopal effect. Further preclinical studies demonstrated that the abscopal effect is entirely STING receptor-dependent. This data provided Novartis with the rationale for the deal and advancing Aduro’s molecule for the treatment of locally advanced or metastatic cancers in human trials.

This deal continues the hype of immunotherapies as Aduro received $200M upfront for a preclinical candidate. In addition, Novartis has made an initial 2.7 percent equity investment in Aduro for $25 million, with a commitment for another $25 million investment at a future date. This gives Aduro a pre-IPO valuation of $925M. I believe this figure will be much higher when Aduro actually lists publicly, as explained here. To compare, Aduro’s rival Advaxis, which also has listeria-based cancer vaccines in trials, is only valued at $360M. There is a market mispricing here that will be corrected upon Aduro’s IPO.

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