In a strategic move to bolster its CAR T-cell therapy portfolio, Lyell Immunopharma Inc. (LYEL) has acquired ImmPACT Bio USA Inc., a privately owned clinical-stage biotechnology company. The deal, valued at $30 million in cash and 37.5 million Lyell shares, brings IMPT-314, a promising CAR T-cell therapy, into Lyell’s pipeline. However, this acquisition has sparked concerns among analysts about the complexities and potential distractions it might introduce.
Lyell has been prioritizing its pipeline, focusing resources on its most differentiated CAR T-cell clinical programs. Following the acquisition, Lyell will be focusing on IMPT-314 and LYL119. The company recently announced the discontinuation of the development of LYL797 to concentrate on the Phase 1 clinical trial of LYL119, which is expected to begin enrolling patients with platinum-resistant ovarian cancer or relapsed/refractory endometrial cancer later this year or early next year. Lyell is also discontinuing its LYL845 tumor-infiltrating lymphocyte (TIL) program due to the clinical data in advanced melanoma patients not meeting the pre-determined criteria for continued development. The company’s next-generation TIL and rejuvenation programs in preclinical development will also be discontinued.
Lyell expects its current cash balance to sustain operations until 2027. In addition to the upfront consideration, ImmPACT shareholders are eligible for contingent consideration consisting of 12.5 million Lyell shares and a low single-digit royalty on future net sales.
Analysts at BofA Securities have downgraded Lyell from Buy to Underperform, setting a price target of $1, down from $6. The analyst notes that while the discontinuation of LYL797 wasn’t unexpected, optimism is growing for LYL119’s improved therapeutic window. However, the acquisition of ImmPACT Bio for its IMPT-314 introduces complexities that could overshadow the narrative. The analyst believes that while IMPT-314’s potential is visible, the program lacks clinical and commercial synergy, and with limited resources and increasing competition, it risks becoming a distraction.
Another analyst emphasized that with Lyell’s focus on restarting its solid tumor program and expanding into hematology, maintaining a positive outlook is challenging. The uncertainty surrounding IMPT-314’s ability to deliver significant clinical improvements, coupled with the stiff competition from established players like Gilead Sciences Inc (GILD), Bristol Myers Squibb & Co (BMY), and Novartis AG (NVS), adds to the cautious sentiment.
LYEL stock closed down 9.16% at $0.86 on Wednesday.
