Eil Lilly is in the hunt for new immuno-oncology drugs and it’s paying Kumquat Biosciences $70 million to find them.
The sum, comprised of cash and an equity investment, is an upfront payment to begin a multi-year drug discovery and development partnership. San Diego-based Kumquat could earn up to $2 billion in milestone payments, plus royalties from sales if any of the drugs covered by the agreement reach the market.
The agreement calls for Kumquat to use it small molecule immune-oncology platform to discover the drugs; Lilly has the option to choose an unspecified number of them for further development and potential commercialization. Kumquat’s website lists no drug pipeline, nor does it have any details about its approach to cancer. In the announcement of the deal, the companies say Kumquat is developing first-in-class small molecules that stimulate tumor-specific immune responses.
If Lilly elects to develop any drugs arising from Kumquat’s discovery efforts, the Indianapolis-based pharmaceutical giant will hold global rights to those compounds except for China, where Kumquat will hold the rights to develop and commercialize them. But if any of these drugs secure regulatory approval, there’s an opportunity for the companies to work together to sell them. Lilly has option to co-commercialize the drugs in China; Kumquat has the option to co-develop and co-commercialize in the U.S. an unspecified number of the drug in the U.S.
“Using small molecule inhibitors to target specific tumor antigens in complex with the immune machinery presents a unique opportunity to stimulate an enhanced tumor-specific immune response,” Jacob Van Naarden, chief executive officer of Lilly’s Loxo Oncology unit, said in a prepared statement. “We look forward to working with the accomplished Kumquat team to identify candidate medicines that interact with this target class.”
Kumquat is led by Yi Liu, whose experience includes serving as chief scientific officer of Wellspring Biosciences, a biotech he co-founded that went on to discover and develop small molecules to drug the tough-to-target KRAS protein. KRAS is a target of intense research interest. Long thought undruggable, Amgen earlier this year won the first FDA approval of a cancer drug addressing any KRAS mutation. Cancer drug developer Erasca, whose name is a portmanteau of “erase KRAS” as well as “eradicate RAS-driven cancer” went public earlier this month, raising $300 million for its drug research. Frontier Medicines, a biotech developing KRAS-targeting drugs, recently raised $88.5 million in Series B financing.
Liu has been CEO of Kumquat since it formed in late 2018, according to the company’s website. The company has raised more than $100 million in financing from OrbiMed, Sequoia Capital China, EcoR1, Lilly Asia Ventures, and Roche Venture Fund.