Arrowhead Research, a nanomedicine company with development programs in RNA therapeutics and obesity, has acquired Alvos Therapeutics (formerly Mercator Therapeutics), the first biopharmaceutical company to use in vivo phage display technology to systematically develop novel cancer drugs.

In exchange for all the outstanding shares of Alvos Therapeutics, Arrowhead issued an upfront payment of 315,467 shares in restricted Arrowhead common stock. Alvos stockholders are also eligible to receive additional issuances of stock valued at up to $23.5 million at the time of issuance based on the achievement of clinical and regulatory milestones, which begin with demonstrating statistically significant efficacy in clinical trials. Alvos stockholders could receive additional Arrowhead stock as the first three drugs using the new technology achieve certain sales milestones.

Alvos, which was co-founded by MD Anderson Cancer Center (MDACC) developers of the technology, is a natural addition to Arrowhead from both an operational and strategic standpoint, and represents a significant leap forward in targeted therapeutics. MDACC has already achieved clinical proof of concept in targeting metastatic prostate cancer with one of the sequences, and Alvos has multiple other anti-cancer development programs in the pipeline.

The technology, designed to specifically bind and enter tumor cells and the vasculature supporting tumors, is thought to be the world's largest library of human-derived targeting agents, representing thousands of unique peptide sequences. These targeting sequences can be linked to Arrowhead's siRNA delivery vehicles as well as to traditional small molecule drugs to preferentially shuttle them into target cells.

Originally, MDACC used a technique called phage display to generate a vast library of specific peptides that home to both known and novel receptors. The acquisition enables Arrowhead to further expand that library by working with the same developers to generate additional data with more patient screening at MDACC.

“Alvos has identified rapidly internalizing cell surface receptors for over 30 diseased and normal tissue types and peptides that efficiently target them,” said Christopher Anzalone, CEO, Arrowhead. “This substantially enhances our existing siRNA programs by providing us with a huge proprietary library of human-derived targeting ligands to couple with our well-established and well-tolerated DPC and RONDEL delivery platforms.

Arrowhead intends to apply the new technology for targeting their proprietary DPC and Rondel siRNA delivery platforms. In addition, the peptides can be linked to small molecule cancer drugs to create a new class of drugs, Peptide-Drug Conjugates (PDCs) designed to preferentially accumulate at and inside tumors. This new class has the potential to significantly advance cancer treatment by decreasing side effects, increasing efficacy, and/or decreasing dose of traditional therapies.

Arrowhead plans to integrate development of the Alvos technology into its Madison, Wis. facility. By leveraging existing employees, facilities and expertise, additional costs assumed as a result of the transaction are expected to be low.