Japan Pharma Co. Invests $275 Million in U.S. Oncology Firm

Source: Streetwise Reports   05/13/2022

Cullinan Oncology Inc. shares traded 23% higher yesterday after the company reported it entered into a strategic investment, development, and licensing agreement with Taiho Pharmaceutical Co. Ltd. of Japan for its CLN-081/TAS6417 for use in treatment of non-small cell lung cancer.

Biopharmaceutical company Cullinan Oncology (CGEM:NASDAQ), which is engaged in developing targeted and transformative oncology and immuno-oncology therapies, and Tokyo-based pharmaceutical company Taiho Pharmaceutical Co. Ltd., a specialty research and development firm focused on oncology, yesterday announced that the two companies have entered into a strategic investment, co-development and licensing agreement to commercialize and advance Cullinan Oncology’s lead program, CLN-081/TAS6417.

The report indicated that the agreement between the two firms provides that Taiho Pharmaceutical will acquire Cullinan Pearl Corp., a Cullinan Oncology subsidiary, in exchange for an upfront payment of $275 million. The agreement also includes a provision for payment of an additional $130 million if certain EGFR exon20 non-small cell lung cancer (NSCLC) regulatory milestones are achieved. The companies advised that that the transaction is expected to close in Q2/22, subject to ordinary closing conditions and U.S. regulatory approvals.

Cullinan Pearl presently owns the worldwide rights for CLN-081/TAS6417 except in Japan. In exchange for its investment, Taiho will be tasked with co-developing and co-marketing Cullinan Oncology’s lead program known as CLN-081/TAS6417, which was described in the reports as “an orally available, differentiated, irreversible epidermal growth factor receptor (EGFR) inhibitor that selectively targets cells expressing EGFR exon 20 insertion mutations while sparing cells expressing wild-type EGFR.” The company advised that CLN-081/TAS6417 is currently being evaluated in Phase 1/2a clinical trials as a treatment for patients with NSCLC who have an exon 20 insertion mutation.

Under the terms of the collaboration agreement, Cullinan Oncology will continue to aid in co-developing CLN-081/TAS6417 and will retain the rights to co-market CLN-081/TAS6417 in the U.S. with Taiho’s U.S. subsidiary, Taiho Oncology Inc. Any future profits from sales in the U.S. will be shared equally between the two firms.

Cullinan Oncology noted that around 1.9 million people globally have NSCLC which accounts for about 85% of all newly diagnosed lung cancer patients. The company stated that “among those patients diagnosed with NSCLC, approximately 2% or 38,000 patients have exon 20 insertions.”

Taiho Pharmaceutical’s President and Representative Director Masayuki Kobayashi commented, “We are pleased to bring CLN-081/TAS6417 back into our pipeline and move it towards commercialization with Cullinan Oncology…Cullinan Oncology has carried CLN-081/TAS6417 from pre-IND to planned pivotal study in approximately three years. Meanwhile, the Food and Drug Administration (FDA) has granted Breakthrough Designation status for this novel molecule.”

Cullinan Oncology’s CEO Nadim Ahmed stated, “We are excited to embark on this collaboration with Taiho. Taiho is an ideal partner with whom to advance CLN-081/TAS6417 into later-stage development and commercialization, given their deep understanding of the molecule and strategic focus on targeted therapies, existing stake in Cullinan Pearl, and strong oncology-focused commercial capabilities in the U.S.”

CEO Ahmed continued, “The structure of the agreement provides the opportunity to efficiently establish our own commercial infrastructure, which will also be leveraged for our future programs. The transaction payments, reduced development expense, and potential ongoing revenue stream upon future commercialization will help us to devote greater resources to advance our robust pipeline of assets across a wide range of modalities, each with the potential to be the first or best in their class, to deliver on our promise to bring new therapeutic solutions to patients with cancer.”

The two companies collaborated to form Cullinan Pearl in 2019 and at that time the company was granted the exclusive worldwide rights (excluding Japan) for commercialization of CLN-081/TAS6417. Since it was established, Cullinan Pearl was successful in advancing CLN-081/TAS6417 to an Investigational New Drug application and received Breakthrough Therapy Designation by the U.S. Food and Drug Administration (FDA) in early 2022.

Cullinan Oncology Inc. is a biopharma company based in Cambridge, Mass. that works to create and develop transformative therapeutics and new standards of care for cancer patients. The firm’s leading pipeline candidate, CLN-081 is an oral small molecule designed as an irreversible EGFR, inhibitor engineered to selectively target cells expressing mutant EGFR variants, including EGFR exon 20 insertion (EGFRex20ins), mutations, with relative sparing of cells expressing wild type EGFR. The company is pursuing the use of CLN-081 in a Phase 1/2a clinical study as a potential treatment for non-small cell lung cancer (NSCLC) in adult patients with EGFRex20ins mutations.

Taiho Pharmaceutical is owned by Otsuka Holdings Co. Ltd. and is a specialty pharmaceutical company that concentrates its R&D efforts in the area of oncology. The firm also is engaged in developing medicines and products for use in allergy and immunology, urology, and OTC consumer healthcare.

Cullinan Oncology began the day with a market cap of around $403.0 million with approximately 44.8 million shares outstanding and a short interest of about 5.9%. CGEM shares opened 3.67% higher today at $9.33 (+$0.33, +3.67%) over yesterday’s $9.00 closing price. The stock has traded today between $9.09 and $10.51 per share and after closing up 23.12% yesterday, is currently trading at $10.49 (+1.49, +16.56%).

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