F-star Therapeutics, Inc. and Merus N.V.: Initiation of Research Coverage

Thursday, April 8, 2021

William Blair initiated research coverage of F-star Therapeutics, Inc. (FSTX $10.37) and Merus N.V. (MRUS $23.00), which are developing immuno-oncology therapies in the evolving field of bispecific and multispecific antibodies.

In a deep dive report published in conjunction with the initiations, analyst Matthew Phipps explained that bispecific antibodies include different variable fragments (or other protein structures) combined into a single molecule, which creates the potential for one therapy to target two separate antigens, either on the same protein or different proteins, for either increased tissue targeting or immune effects. F-star’s proprietary mAb2 bispecific platform enables the company to produce stable, well-characterized molecules at large scale without the added complexity of fusion proteins or forced heterodimerization. The company has three clinical bispecific programs focused on immuno-oncology targets in early stages of development. Merus’s Multiclonics platform has produced numerous clinical candidates to date, and Phipps believes Merus is nearing its first commercial opportunity with the development of zenocutuzumab in patients with neuregulin 1 (NRG1) gene fusion-positive tumors.

Phipps said, “F-star’s most advanced asset, FS118, a PD-L1xLAG-3 bispecific, is in a Phase II monotherapy study in second-line squamous cell carcinoma of the head and neck, which seeks to provide rapid proof-of-concept ahead of potential expansion opportunities. Initial data from the FS118 SCCHN trial are expected in early 2022 and will guide future development for the therapy. F-star’s PD-L1x4-1BB bispecific, FS222, is designed to block immune suppression through PD-L1 signaling and subsequently stimulate T-cells through 4-1BB agonism. Biomarker data showing strong T-cell activation, particularly at dose levels sufficient to block PD-L1 signaling, and a tolerable safety profile from the initial Phase I results could differentiate the molecule from competition, supporting blockbuster potential. Lastly, FS120, a novel bispecific T-cell agonist targeted at 4-1BB and OX40, recently entered clinics; initial safety and biomarker data are expected this year.”

For Merus, Phipps highlighted three additional lead clinical programs beyond zenocutuzumab. “We are particularly interested in clinical updates with MCLA-129 and MCLA-145,” Phipps said. “The mechanism of MCLA-129, which targets EGFR and c-MET, has recently been validated by clinical results from Johnson & Johnson’s amivantamab and we believe initial positive results with MCLA-129 could draw interest from potential collaborators. MCLA-145, a PD-L1x4-1BB bispecific, has the potential to drive deeper or more durable responses in tumors commonly treated with PD-L1 monotherapies via localized 4-1BB agonism. Longer term, we expect Merus’s Biclonics and emerging trivalent Triclonics technologies will continue to generate molecules with strong drug-like properties, expanding the company’s pipeline and creating opportunities for additional business development activities.”

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