Takeda Bets Big on Anti-Tumor Small Molecule with $1.3B Deal with Kumquat Biosciences

On April 16, 2024, Takeda Pharmaceutical Company Limited announced that it had signed an exclusive licensing agreement with Kumquat Biosciences (hereinafter referred to as Kumquat) for the development of novel immuno-oncology (I/O) small molecule inhibitors, which will be commercialized as monotherapy and/or combination therapy.

The two companies did not disclose the specific drug project involved in the transaction. However, according to their agreement, Kumquat will grant Takeda global development and commercialization rights to the project after conducting Phase I clinical trial activities, with Takeda taking over subsequent development and all commercialization activities.

Kumquat Biosciences will receive up to $130 million in near-term payments and could potentially earn over $1.2 billion if all future clinical, regulatory, and commercial milestones are achieved within the term of the agreement. Additionally, Kumquat will receive tiered royalties from potential net sales of any commercial products arising from this license. In total, the deal could exceed $1.3 billion (approximately 9.4 billion RMB).

Blooming Twice, Kumquat: The Rising Star of Antitumor Drugs

Kumquat Biosciences, specializing in small-molecule immuno-oncology (IO) drugs, was co-founded in 2018 in California, USA, by two Chinese-American entrepreneurs, Dr. Yi Liu and Dr. Pinda Ren. Currently, the company has kept its oncology drug development platform almost entirely undisclosed.

Dr. Liu Yi is a serial entrepreneur with over 20 years of experience in developing innovative small molecule drugs. Before co-founding Kumquat Biosciences and serving as its CEO, Dr. Liu Yi served as the Chief Scientific Officer of Wellspring Biosciences, an innovative biotechnology company he co-founded with Dr. Ren Pingda in 2012. Wellspring Biosciences was the first to discover and develop targeted therapies for RAS proteins, once considered "undruggable," for cancer treatment.

In addition, Dr. Liu Yi co-founded Kura Oncology with Dr. Ren Pingda in August 2014 and served as the Chief Scientific Advisor from its establishment until its listing on NASDAQ.

The ties between the two and Takeda can be traced back to an earlier time. Before joining Wellspring, Dr. Liu Yi and Dr. Ren Pingda co-founded the biopharmaceutical company Intellikine in 2007 with others. Dr. Liu Yi served as Vice President of Drug Discovery, and Dr. Ren Pingda served as Vice President of Chemistry until the company was acquired by Takeda Pharmaceutical Company Limited in 2012.

In the early stages of his career, Dr. Liu Yi held senior scientist positions at SGX Pharmaceuticals and Curagen Corporation. He and Dr. Ren Pingda are also co-inventors of more than 100 patents and patent applications, as well as co-authors of over 50 scientific publications.

As for the two co-founding Kumquat, this is not the first time they have reached a cooperation agreement with an MNC. In 2021, Kumquat established a partnership with Eli Lilly, focusing on discovering, developing, and commercializing novel small-molecule drugs that can stimulate tumor-specific immune responses.

Kumquat will leverage its small molecule immuno-oncology (IO) platform to discover new clinical candidates. Lilly has the option to select a certain number of candidates for further global development and commercialization, excluding Greater China. Kumquat retains the rights to develop and commercialize each candidate selected by Lilly within Greater China, but Lilly has the option to co-commercialize in Greater China. Additionally, Kumquat can opt to co-develop and co-commercialize a certain number of candidates selected by Lilly in the United States.

According to the terms of the agreement, Kumquat will receive a total of $70 million in cash upfront payments and equity investments. Kumquat is also eligible to receive over $2 billion in potential milestone payments, which will be based on the achievement of preclinical, development, and future commercial milestones. Additionally, Kumquat is eligible to receive royalties based on sales of commercialized products arising from the collaboration.

Moreover, it is worth mentioning that Kumquat's investors include several well-known venture capital firms. In addition to Roche Venture Fund under Roche, they also include OrbiMed, Sequoia Capital China, EcoR1 Capital, and Lilly Asia Ventures.

Can Takeda's New Bet Remedy the Pipeline Crisis?

In 2021, when Eli Lilly collaborated with Kumquat Biosciences, it coincided with a year when global pharmaceutical leaders successively focused on KRAS G12C inhibitors, igniting a surge in the research and development of KRAS G12C inhibitors in China: At that time, Amgen's AMG-510 broke the spell of "no drugs available for KRAS mutations," offering a new treatment option for patients with KRAS mutations. Multiple pharmaceutical companies in China have been deeply involved in the KRAS G12C field, continuously refining their work at the preclinical stage and accelerating the clinical trials of related drugs.

At that time, Takeda's potent EGFR small molecule tyrosine kinase inhibitor mobocertinib gained Breakthrough Therapy designation from the U.S. FDA a year before the small molecule anticancer drug boom.

It was not until the second half of 2023, as several pharmaceutical giants released their first-half financial reports, that the concept of an MNC pipeline crisis truly came to the forefront.

In the first half of 2023, Takeda's total sales were approximately US$13.871 billion, increasing by 1.4% year-on-year, but its profit significantly dropped by 53%, to approximately US$1.787 billion.

Takeda's product pipeline can be roughly divided into five major parts, namely: gastrointestinal products, rare diseases, plasma products, psychiatric disorders, and oncology. Among them, gastrointestinal products are their core pipeline, achieving a year-on-year growth of 9.2% in the first half of the year. The report shows that a series of uncontrollable factors led to an increase in the company's net loss, and it was announced that four R&D product pipelines would be cut.

One of the pipelines that was cut is Exkivity, an anti-tumor drug for treating advanced non-small cell lung cancer, which was terminated due to lack of efficacy benefits in Phase III clinical trials. From the announcement of Exkivity's less-than-optimistic clinical results to Takeda spending $1.3 billion, nearly a year has passed.

Despite Kumquat's repeated efforts to maintain the mystery of its technology platform and refusal to disclose it publicly, a statement from P.K. Morrow, Head of Takeda’s Oncology Therapeutic Area Unit, expressed strong optimism about the collaboration. Specifically, Kumquat’s technology platform is expected to maximize the potential of the immune system, address unmet needs of cancer patients, and accelerate the expansion of Takeda’s oncology pipeline.