Kodiak turns down $125M payment from Baker Bros. deal, slashes royalty cap by 55%
Following a massive public raise last November, Kodiak Sciences has re-worked a royalty sale agreement with an old partner — and declined new funds in the process.
Kodiak is turning down a planned $125 million payment from Baker Bros. Advisors, according to an SEC filing, cutting short an agreement that saw the biotech hand over a 4.5% stream of royalty sales on its experimental anti-VEGF therapy KSI-301 for retinal vascular diseases. In conjunction with the move, Kodiak is shrinking the royalty cap from just over $1 billion to $450 million.
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The deal called for Baker Bros. to pay $225 million to Kodiak in two installments, the first of which came as a payment of $100 million back in early 2020. The remaining $125 million, which Kodiak declined Thursday, was originally expected to come sometime in late 2020 once Kodiak had reached at least 50% enrollment in two pivotal clinical studies for KSI-301.
Kodiak reached the expected milestones but turned down the payments anyway, per the 8-K report. The biotech claims its “strong balance sheet” following a November public offering that raised $612 million provided the motivation for turning down the extra $125 million, in addition to “clinical trial progress and capital resources.”
At the time, the move represented a hefty wager for Baker Bros., putting down the cash just a couple months after Kodiak launched its first clinical trial for wet AMD. It’s a strategy the firm had employed in other investments as well, chipping in early to Amarin and a biotech developing a rival for its Vascepa drug, Matinas BioPharma.
Since then, however, Kodiak has vastly expanded their clinical program for KSI-301. In the summer of 2020, the biotech launched two Phase III trials for the candidate in diabetic macular edema, as well as a third study in retinal vein occlusion. Data are expected for each study by the end of 2021.
Kodiak is also planning to start recruiting for another Phase III study in non-proliferative diabetic retinopathy this summer. And execs are expecting to build out further data for the wet AMD indication, plotting a separate study here for treatment-naïve patients. Recruitment here will also start this summer and Kodiak has said it will include these data in its initial FDA filing.
Should the candidate eventually be approved, Kodiak would aim to chase down a market led by the Regeneron blockbuster Eylea. Kodiak will be competing with some big names in pharma to carve up that pie, however, as Novartis and Roche are each wading into the scene with their own drugs.
As the Palo Alto, CA-based biotech sets the scene for these data to drop in succession, it’s similar to the time in which the royalty deal was originally signed. Just one day after nailing down that deal, Kodiak began offering $250 million worth of shares on the public market.