About 15 months after Cullinan Oncology debuted with $150 million and introduced its part-fund/part-operating company model for piecing together a pipeline full of cancer drugs under individual investment vehicles, the biotech is publicly spotlighting an early-stage oncology drug that is being adopted after making the cut.
The biotech struck a deal with Taiho Pharmaceuticals to take the drug and put it in a vehicle dubbed Cullinan Pearl, which will operate under the umbrella organization now manned by a lean-and-mean team of 15. Taiho in turn gets a chunk of equity and its venture arm is investing alongside Cullinan in a launch round for Pearl.
The drug here is TAS6417, an EGFR tyrosine kinase inhibitor, which “spares wild type EGFR.” The thinking is that feature will help the team amp up the potency of the drug to distinguish it from the rest of the drugs in the same field.
“We are a means to an end,” says Owen Hughes, the CEO at Cullinan. Taiho had this one nestled in among its early-stage pipeline projects and is licensing it out for Cullinan to see if it can beat a fast path through the clinic — either unveiling some real value or killing it as a loser.
Back when I talked to Hughes in the fall of 2017 during the formal launch of Cullinan, he outlined a plan to build a pipeline entirely out of deals with other companies, turning to vendors to do a lot of the heavy R&D lifting for the subsidiaries under direction from the team.
Since then, he’s had a first-hand lesson on just how competitive that market is. He’s also killed 2 option deals where they had a shot at some promising programs but couldn’t replicate the preclinical research work that snagged their attention.
Hughes, though, has an ace in the hole. Patrick Baeuerle at MPM is the co-founder, financial backer and CSO of the company. He directed the Micromet BiTE platform, acquired by Amgen, which completed the development on the first BiTE. And after helping launch a series of biotechs in the cancer space, he’s also been helping Cullinan come up with a slate of home-grown drugs to add to the pipeline.
Cullinan now has 8 programs under the umbrella, including VK-2019, an Epstein-Barr Nuclear Antigen 1 inhibitor discovered at The Wistar Institute. Hughes and the team set up Cullinan Apollo for that drug. You can look for 1 or 2 new deals this year, he adds, as the biotech reaches the high end of the 6 to 10 projects originally planned.
The CEO isn’t getting specific on the upfronts and milestones for these early-stage drugs, which wouldn’t likely astound anyone in this free-flowing environment. But he did note that the key to capturing these programs has less to do with cash than equity. The partners get a company committed to hustling ahead, and a chunk of equity — generally 20% or less — that can pay off if they score pay dirt data.
So how is the money holding out? Hughes says they recently banked their second $50 million tranche to push ahead with dealmaking. The third tranche is waiting for them as they continue to make progress.
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