On October 24, 2022 GlaxoSmithKline ("GSK") reported that Lyell Immunopharma, Inc. ("Lyell" or the "Company") that, as part of a number of strategic actions it is taking, it is discontinuing its development of product candidates targeting NY-ESO-1, including the second‑generation product candidates incorporating Lyell’s genetic and epigenetic reprogramming technologies (LYL132 and LYL331), as well as other second-generation approaches GSK was exploring (Filing, 8-K, Lyell Immunopharma, OCT 24, 2022, View Source [SID1234622302]). On October 24, 2022, GSK provided notice of its decision to terminate the License and Collaboration Agreement between the Company and GlaxoSmithKline Intellectual Property (No. 5) Limited and Glaxo Group Limited, dated as of May 23, 2019, as amended (the "GSK Agreement"). The termination is effective on December 24, 2022.
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Lyell’s understanding is that the discontinuation of these programs is based on a strategic review of GSK’s pipeline and follows Lyell’s update in August 2022 that GSK had received data from the study of its first-generation lete-cel product candidate in non-small cell lung cancer ("NSCLC"), which does not incorporate any of Lyell’s reprogramming technologies.
The Investigational New Drug ("IND") application for LYL132 was cleared in January 2022 and the IND for LYL331 has not yet been submitted to the U.S. Food and Drug Administration. Given the early stage of these second-generation programs, the termination is not based on any clinical efficacy or safety data from these programs.
This termination of the GSK Agreement has minimal impact to Lyell operations as, with the exception of the manufacturing of LYL132, which incorporated Lyell’s proprietary Epi-R manufacturing protocol, the programs were being run by GSK. Due to the previously announced stop in enrollment, no patients have been treated with LYL132 and Lyell is discontinuing any further work on these programs. Glaxo Group Limited remains a significant stockholder of the Company.
This does not change the Company’s guidance that cash, cash equivalents and marketable securities balances are expected to be sufficient to meet working capital and capital expenditure needs into 2025.
Background on GSK Agreement
In 2019 Lyell and GSK entered into the GSK Agreement to research and develop potential T-cell therapies that applied Lyell’s technologies and cell therapy innovations to CAR or TCR targets. Lyell received $250 million in the form of a combined upfront payment and equity investment and would have been eligible for technology validation, development and sales milestones as well as single digit royalties on potential future products.
As disclosed in our Quarterly Report on Form 10-Q filed in August 2022, uncertainty regarding the further development of product candidates under our collaboration with GSK resulted from preliminary clinical data GSK received from a study of its first-generation lete-cel product candidate in NSCLC, which does not incorporate any of our reprogramming technologies.
The foregoing description of the GSK Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of (i) the GSK Agreement, which was filed as Exhibit 10.15 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1 on June 9, 2021, and (ii) the Second Amendment to the Collaboration and License Agreement between the Company and GSK, dated December 16, 2021, which was filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K on March 29, 2022, each of which is incorporated herein by reference.