Novartis AG (ADR) (NYSE:NVS) is set to buy CoStim Pharmaceuticals Inc. to beef up its cancer immunotherapy pipeline.

novartis

The Switzerland-based company said in a statement Monday that it will acquire Cambridge, Massachusetts-based CoStim, a closely held biotechnology company for an undisclosed sum.

$35 billion annual sales

A hot field of cancer treatment known as immunotherapy may reach $35 billion in annual sales.

Sensing opportunity in the hot area, recently Merck & Co., Inc. (NYSE:MRK) announced it is involved in three separate collaboration agreements for clinical trials testing the promising MK-3475 immunotherapy cancer treatment, part of a new class of immunotherapies that target cancer cells.

According to Mark Fishman, who heads the Novartis Institutes for BioMedical Research, therapy for many types of cancers are expected to increasingly rely upon rational combinations of agents. Immunotherapy agents provide additional arrows in our quiver for such combinations.

The drug giant, Novartis AG (ADR) (NYSE:NVS) is one of a number of big pharmaceutical companies exploring immunotherapies, which treat disease by spurring, enhancing, or turning off the body’s immune response. Working with collaborators at the University of Pennsylvania, Novartis’s Cambridge-based scientists are removing a type of white blood cells known as T cells from cancer patients, genetically engineering them to combat cancer, and then reintroducing them.

Novartis gets a pipeline of drugs from CoStim

CoStim, bankrolled by local venture firms MPM Capital and Atlas Ventures as well as Partners Innovation Fund, is developing a pipeline of drugs that stimulate a patient’s immune system to fight cancer. CoStim will be rolled into Novartis AG (ADR) (NYSE:NVS)’s Cambridge-based immunotherapies research team, which will start with 20 to 30 people which is likely to be expanded into a larger team.

MPM provided the initial capital to found CoStim, and later co-led the formal Series A investment in early 2013 with Atlas Venture. Additional investors included Johnson & Johnson Development Corporation and the Partners Innovation Fund. According to Dr. Daniel Hicklin, CoStim’s President and Chief Scientific Officer, “The field of immunomodulation is the most exciting area of oncology drug development today”.

One of the immunotherapy programs that Novartis is acquiring from CoStim is a program that is targeting the PD-1 receptor. The receptor is currently also the focus of several other companies, including Bristol-Myers Squibb Co (NYSE:BMY)’s nivolumab as well as Merck & Co.’s MK-3475.

The merger with CoStim should help Novartis AG (ADR) (NYSE:NVS) to compete with rival immunotherapy programs.