Padlock Therapeutics, Inc.

Today, a brief rundown of news involving Gilead and Padlock Therapeutics, as well as updates from Boundless Bio, Lonzaand Bausch + Lomb that you may have missed.Investors of Padlock Therapeutics have sued Bristol Myers Squibb for allegedly refusing to make milestone payments tied to its 2016 acquisition of the biotechnology startup, Endpoints Newsfirst reported. Bristol bought Padlock for $150 million in cash, and promised the startups shareholders up to another $450 million if certain progress points were met. A Delaware Chancery Court lawsuit unsealed this week and filed by investors including Atlas Venture, though, claimed Bristol has reneged on those obligations, according to the report. Bristol reportedly intends to respond to Padlock investors in court.Disputes like this arent rampant, Padlocks founding CEO Michael Gilman, now the head of Arrakis Therapeutics,told BioPharma Dive. But if that occurs, there are substantial implications for everyonebecause the upfront/milestone structure is a blueprint for our industry, benefits all parties involved, and relies on trust that buyers will act in good faith after a deal closes. That theres a breakdown in trust and good faith here is probably obvious. And its unfortunate for everyone involved, Gilman said. Ben FidlerDietmar Berger will succeed Merdad Parsey as Gileads top doctor, the drugmaker announced Thursday. A hematologist and oncologist, Berger was previously chief medical officer at Sanofi. At Gilead, hell oversee the companys work in virology, oncology and inflammation, as well as its development and medical affairs units. Gilead previously announced Parseys plans to depart in the first quarter of 2025. Dietmars exceptional leadership in global drug development, his track record in delivering transformational therapies, and the breadth and depth of his experience make him an ideal choice as Gileads Chief Medical Officer, Gilead CEO Daniel ODay said in a statement. Ned PagliaruloTwo Boundless Bioexecutives are resigning, alongside a decision by the company to stop developing one of its top drug candidates. Boundless said Thursday that Chief Medical Officer Klaus Wagner and Chief Business Officer Neil Abdollahian are stepping down in December and January, respectively. Boundless will search for a full-time replacement for Wagner while company adviser James Freddo serves as interim CMO, but it doesnt intend to appoint a new CMO. Boundless also cited the competitive landscape in deciding not to advance a solid tumor drug into Phase 2 testing, as previously planned. The company has already laid off staff, and lost most of its market value, since going public in March. Ben FidlerLonza plans to shed its capsules and health ingredients unit to focus on its core contract development and manufacturing business, the company confirmed Wednesday in announcing a new corporate structure. Under new CEO Wolfgang Wienand, Lonza will consolidate its current organization across nine business units into three business platforms focused on mammalian and drug product services, small molecules and specialized drug modalities. The CDMO expects its new model to deliver, on average, low teens sales growth in constant exchange rates. Ned PagliaruloContact lenses maker Bausch + Lomb confirmed it is exploring a potential sale in a Thursday statement responding to inquiries from the Canadian Investment Regulatory Organization about volatility in its share price. The Financial Times previously reported private equity firms Blackstone and TPG were considering buying the company, but on Tuesday wrote the deal may not happen due to Blackstones concerns over the price. In its statement, Bausch + Lomb said that it continues to consider a sale, but cant give any assurances about reaching an agreement. The company is led by Brent Saunders, who sold Allergan to AbbVie for $63 billion in 2019. Ned Pagliarulo '

Former shareholders in autoimmune biotech acquired by Bristol Myers Squibb are suing the large pharma for what they claim are missed milestone payments and maneuvers to discredit the biotech’s work. BMS bought Padlock Therapeutics in 2016 for $150 million upfront and up to an additional $450 million if certain R&D and regulatory milestones were hit. Padlock’s shareholders are now claiming that BMS moved a monoclonal antibody into the clinic in November 2023, and that asset — BMS-986454 — was derived from the startup’s R&D. They say the company didn’t tell them that the clinical milestone had been achieved. If it had, that would have triggered a payment to shareholders. “BMS decided to renege on the deal and claim all of the benefits of Padlock’s discoveries for itself,” the Padlock shareholders said in their legal filing. The dispute was made public on Monday in a legal filing in the Delaware Court of the Chancery. Padlock was founded in 2014 by repeat biotech entrepreneur and industry veteran Michael Gilman, who currently leads Arrakis Therapeutics. “The larger issue here is that the success of our whole industry is built on deals like this,” Gilman said in a statement to Endpoints News on Thursday. “Now they’ve advanced one of our antibodies into the clinic. We believe they owe our shareholders — which includes our scientific founders and advisors and all of our employees, as well as the venture investors — a contractually agreed milestone payment. They disagree. So we’ve gone to court on behalf of the shareholders.” The lawsuit showcases the risk that biotech investors and shareholders take when selling startups on a tiered payout schedule contingent upon milestones. At least 15 of the approximately 45 biopharma M&A deals tracked by Endpoints News this year have involved milestones or contingent value rights. “BMS has always complied with its obligations in connection with its acquisition of Padlock,” a BMS spokesperson said in a statement to Endpoints News on Thursday. “We will respond to these allegations in court.” BMS was also recently sued by former shareholders of Celgene, which it acquired in 2019. Last month, they claimed BMS delayed seeking approval of certain drugs, including Breyanzi, by certain deadlines so it wouldn’t have to make payments to the shareholders, according to Reuters . The Padlock deal was an outright acquisition, but many collaborations are also structured via upfront and biobuck payment schedules. A review of 128 biopharma deals showed that 53% of milestone payments were pending and 30% had been missed, according to a report last year from M&A services provider SRS Acquiom. It also found that, out of 211 earnout deals with at least one milestone due by mid-2023, 28% had a dispute regarding milestones. Padlock was focused on a class of enzymes known as protein-arginine deiminases, or PADs, which drum up inflammation. Gilman and the Padlock team invented PAD inhibitors that can break up the inflammatory cycle and stop the damage that PAD enzymes unlock on the body, according to the legal filing. The inhibitors are thought to have the potential to treat RA, lupus, multiple sclerosis and other autoimmune diseases. Their work gained the attention of blue-chip investors like Atlas Venture, Johnson & Johnson Innovation, MS Ventures and Index Ventures, which invested in Padlock’s $23 million Series A. In his statement, Gilman said he was “thrilled BMS is taking one of the Padlock antibodies into the clinic.” “Fast forward eight years, and I believe this target is even better validated and more valuable,” Gilman said. “BMS presumably believes that because they’ve continued to invest in the Padlock molecules all this time.”

Investor The Series A was led by GV, with participation from AtlasVenture, Takeda Ventures, Vertex Ventures HC, Amgen Ventures, Alexandria Venture Investments, and ShangPharma Group. Obsidian Therapeutics officially launched with the completion of a Series A financing worth $49.5 million. The company was founded in 2015 by Atlas Venture, who provided exclusive funding through mid-2017. The Series A was led by GV (formerly Google Ventures ), with participation from AtlasVenture, Takeda Ventures, Vertex Ventures HC, Amgen Ventures, Alexandria Venture Investments, and ShangPharma Group. Obsidian is focusing on immuno-oncology, and includes regulated cytokine cassettes to be used with CAR-T products. These enhance anti-tumor activity and cellular persistence, and provide regulated CAR-T cells to improve safety and anti-tumor efficacy. In this area, the company uses destabilizing domains (DD), which was developed by the Obsidian’s scientific founder, Thomas Wandless , a professor of Chemical and Systems Biology at Stanford University . DD has two parts. One is a synthetic biological cassette. It is inserted in the gene vector. The second part is a small-molecule drug that controls the cassette. They are controlled with readily-available, non-immunosuppressive, FDA-approved small-molecule medicines. The purpose of destabilizing domains is to help stabilize the fused payload protein in immuno-oncology therapeutics. When there is no specific small molecule ligand, fusion proteins degrade rapidly. But in the presence of the ligand, the fusion protein becomes stable and functional. Obsidian is working to engineer cells that have controllable functions that can be precisely tuned using already available non-immunosuppressive chemotherapy drugs. In addition to the financing, Michael Gilman was brought on as chief executive officer. Gilman is also the chief executive officer of Arrakis Therapeutics , former founding chief executive of Padlock Therapeutics and Stromedix, Inc . , and had executive positions at Biogen and ARIAD Pharmaceuticals . “While existing cell therapies in oncology have shown substantial efficacy, the range of applications is still narrow, and significant toxicities limit broader adoption,” Gilman said in a statement. “By equipping cells with new tumor-fighting powers, and by putting precise and dynamic dosing control in the hands of the treating physician, we believe we can improve safety, efficacy, and durability of CAR-T therapies. Moreover, we think Obsidian’s pharmacologic operating systems will enable us to build entirely new classes of living medicines.” The company licensed DD technology from Stanford University and launched a research collaboration with Crystal Mackall of the Stanford School of Medicine. Obsidian’s management includes: Gilman as chief executive officer; Tariq Kassum, senior vice president, head of Business Operations and company co-founder; Steve Shamah, senior vice president and head of Research; Vipin Suri, vice president, head of Discovery and co-founder; Celeste Richardson, vice president, Cell Therapy. “The need for pharmacologic regulation in CAR-T is acute,” said Peter Barrett, partner at Atlas Venture and chairman of the board of Obsidian, in a statement. “We founded Obsidian to enable a new generation of cell therapies equipped with regulated cytokines, receptors, and transcription factors to give physicians and patients exquisite control over these powerful therapies.” Including Barrett, the company’s board includes Karen Hong, senior investment director at Takeda Ventures, Carolyn Ng, principal, Vertex Ventures, Jason Gardner, chief executive officer of Magenta Therapeutics , and Michael Gilman. Board observers include Blake Byers, general partner at GV, Michael Gladstone, principal at Atlas Venture, and Gladys Nunez, principal, Amgen Ventures.