Lyell to Acquire Cell Therapy Startup ImmPact in Turnaround Bid

Lyell Immunopharma, a cell therapy developer known for its ambitious goals, is making strategic changes to enhance its focus on cellular immunotherapies for cancer. On Thursday, the company announced an agreement to acquire ImmPact Bio, a biotechnology startup specializing in cancer and autoimmune diseases, for $30 million in cash and 37.5 million shares of Lyell stock. ImmPact's stockholders may potentially receive an additional 12.5 million Lyell shares if certain milestones are achieved, along with sales royalties if the startup's leading therapy is successfully marketed.

As part of its new strategy, Lyell has streamlined its pipeline to concentrate on its most promising programs. These include an experimental therapy for solid tumors and a blood cancer treatment developed by ImmPact, both of which are currently undergoing clinical testing. Consequently, Lyell is discontinuing research on another type of cell therapy and an earlier solid tumor treatment. With these changes, Lyell now anticipates its financial resources to extend into 2027.

These moves represent Lyell's efforts to rejuvenate its operations. The company, co-founded by two former leaders of Juno Therapeutics—a cell therapy firm acquired by Celgene, and subsequently by Bristol Myers Squibb—has raised nearly $1 billion from investors, including Arch Venture Partners, who also supported Juno. In 2021, Lyell went public with a $425 million initial public offering, one of the largest biotech IPOs in recent years.

Lyell's initial promise was to advance cell therapy beyond the current CAR-T products used for blood cancers. Its core technologies aim to enhance various T cell properties, potentially enabling treatments to target a wider range of tumors or exhibit greater potency than existing therapies. Despite these high hopes, Lyell has faced challenges. The company lost a partnership with GSK in 2022 and subsequently laid off a quarter of its workforce. One of its leading therapies, LYL797, encountered safety issues and did not demonstrate a sufficiently wide therapeutic window, as stated by CEO Lynn Seely. Another therapy, a tumor-infiltrating lymphocyte treatment for melanoma, fell short of the company's stringent criteria for further development.

The company's stock, which debuted at $17 per share in 2021, was valued at approximately $1.10 at market close on Thursday. Lyell's leadership is optimistic that the recent strategic reset will steer the company back on track. Despite tough competition from established lymphoma therapies like Gilead’s Yescarta and Bristol Myers Squibb’s Breyanzi, Lyell believes that the therapy acquired from ImmPact shows promise in early testing to deliver superior outcomes. Lyell plans to present initial data from this program, IMPT-314, at a medical conference this year and aims to initiate a pivotal trial in 2025 for patients who have undergone at least two prior therapies but have not yet received a CAR-T treatment.

ImmPact had been developing IMPT-314 primarily for B-cell lymphomas and also for autoimmune diseases, a research area gaining interest among cell therapy developers. However, Lyell is prioritizing the potential of IMPT-314 in treating blood cancers. Seely emphasized that IMPT-314 stands out from approved CAR-T cell therapies and offers a significant opportunity to capture market share.

Additionally, Lyell is focusing on a newer version of LYL797, named LYL119, which is expected to offer better efficacy at lower doses. Seely mentioned that LYL119 should have a wider therapeutic window and be safer than its predecessor. The company plans to start enrolling patients with ovarian or endometrial cancers in a study later this year or early next year.

These strategic adjustments reflect Lyell’s commitment to overcoming past challenges and advancing its innovative cell therapy treatments for cancer.