Taiho Pharmaceutical is coughing up $275 million in upfront cash to take back some licensing rights of its lung cancer med from Cullinan Oncology, which it first partnered with more than three years ago.
The deepened collaboration was announced Thursday and is by and large a costly amendment to a more than three-year-old deal in which Taiho first signed away ex-Japan licensing rights of the drug, CLN-081, to Cullinan Oncology’s subsidiary, Cullinan Pearl.
Now, as the drug nears a pivotal phase 2 trial, Taiho evidently wants more skin in the game and is buying Pearl with a $275 million down payment to reclaim full rights everywhere but the U.S. and China. Cullinan also stands to gain up to $130 million in milestone payments.
As for future profits, both companies will split what’s made in the U.S., given the two share development rights there. The drug at the center of the deal targets a rare subset of non-small cell lung cancer (NSCLC) patients that have rare EGFR exon 20 insertions. According to Cullinan, among patients with NSCLC, roughly 2% have these mutations. Both companies are chasing Takeda after its oral treatment specifically for this subset of patients nabbed FDA approval in September 2021.
Cullinan CEO Nadim Ahmed told Fierce Biotech that Taiho’s offer was part of a “competitive process” but that ultimately, what stuck out was the company’s familiarity of the drug.
“And because [Taiho] already have that US oncology, commercial infrastructure, it was a natural fit,” he said.
Arguably more notable than the back-and-forth nature of this deal was its price, which cost Taiho more upfront cash than milestone payments. Licensing deals are often backloaded with potential payments, dubbed “biobucks,” indicative of the numerous pitfalls drugs can face before they officially nab FDA approval.
For example, two recent partnerships involving U.K.-based Amphista Therapeutics totaled more than $70 million in upfront cash but more than $2.2 billion in potential milestone payments. In April, Jazz Pharmaceuticals committed $15 million upfront for one of Werewolf Pharmaceuticals’ assets, but milestone payments could total $1.26 billon.
Ahmed said the drug’s breakthrough designation has to some degree “derisked” the drug and validates more initial money. Cullinan is slated to highlight data from a phase 1/2 trial of CLN-081 at the 2022 American Association of Clinical Oncology annual meeting
The benefit for Cullinan is two-fold: For starters, the company is bullish that CLN-081 has best-in-class potential. So, a sizable upfront haul gives them a hefty sum to put toward commercialization efforts they expect to spend on.
But the company also has four earlier oncology assets that have either just launched into the clinic, or will in 2023— development that this money will help fund.
“As we evolve into a late-stage oncology company, and then ultimately, our aspiration to become an end-to-end fully integrated biotech company, we're going to need those funds to kind of do some of these programs,” said Ahmed. He noted that this deal pushes Cullinan’s war chest past $600 million and extends its cash runway through 2026.
The money, the assets and the confidence are fueling rapid growth, with Ahmed noting the company is hoping to double the size of its workforce this year. He described the company’s molecules as “home run things” not “incremental things.” The culmination of all of this is a company that Ahmed believes is punching above its weight.
“I'm actually looking forward to the problem of having too many assets, too many things to commercialize, because the opposite is not a good place to be,” he said.
News of the deal sent Cullinan's shares jumping, up $1.75 to $9.06 per share, a 24% rise.
Editor's note: This story was updated at 10:27 a.m. ET with information on Cullinan's share price.