Kodiak Sciences, an ophthalmology-focused biotech company, based in Palo Alto, Calif., reportedly turned down $125 million from Baker Bros after hitting a clinical milestone. The company’s decision to decline this funding was due in part to its “strong balance sheet” and “clinical trial progress.”
Kodiak Sciences, an ophthalmology-focused biotech company, based in Palo Alto, Calif., reportedly turned down $125 million from Baker Bros after hitting a clinical milestone. The company’s decision to decline this funding was due in part to its “strong balance sheet” and “clinical trial progress.”
Back in December 2019, Baker Bros agreed to fund $225 million to Kodiak in exchange for the rights to 4.5% royalties on the company’s future net sales of KSI-301, a novel anti-VEGF biologic candidate for diabetic retinopathy, wet age-related macular degeneration (AMD) and other retinal diseases. The royalties were outlined in a Securities and Exchange Commission filing last week.
Baker Bros funded $100 million by February 2020 but reserved $125 million in remaining funding after Kodiak achieved specific criteria or clinical milestones. But after hitting 50% enrollment in two key trials involving KSI-301, Kodiak decided to turn down the remaining funding for which it was now eligible to receive.
The agreement between Kodiak and Baker Bros capped potential royalties at a little over $1 billion, but Kodiak’s recent move of turning down the funding reduced this cap to approximately $450 million.
Kodiak has launched two late-stage trials of KSI-301 in retinal vein occlusion and diabetic macular edema. The company has also fully enrolled a study in late-stage wet AMD, while another study on wet AMD is expected to start sometime in the summer of this year. The cash balance of the company as of March of this year was $929 million.
The Calif.-based biotech plans to compete with Regeneron’s blockbuster drug Eylea, if the former company’s KSI-301 candidate is ultimately approved. Novartis and Roche are also moving into the retinal eye disease market with their respective drug candidates, bringing even more big-name competition for Kodiak.
According to a recent Silicon Valley Bank report, this year’s initial public offerings are already close to last year’s offerings. Additionally, healthcare companies in the U.S. have raised up to $21.8 billion in venture capital in the first two quarters alone.
Kodiak’s decision to decline the additional funding payouts was a surprise move, considering many biotech and biopharma companies strive for funding to support drug discovery and development efforts. Given that the development of many drugs can take up to five to 10 years and cost millions of dollars, Kodiak’s rejection of the additional payments has left other companies scratching their heads.
In contrast to Kodiak’s recent decision, clinical-stage oncology company Aravive recently decided to pocket its $3 million milestone development payment it has with its licensee 3D Medicines. The milestone was achieved based on the Center for Drug Evaluation of the China National Medical Products Administration approval of 3D Medicines’ Investigational New Drug application for Aravive’s international Phase III trial of platinum resistant ovarian cancer with therapeutic candidate AVB-500.
China’s HUTCHMED also recently triggered a $25 million milestone payment from AstraZeneca after the company’s first commercial sale of ORPATHYS® (savolitinib), an oral drug used for solid tumors. The receipt of the milestone payment follows the June 2021 approval of the drug in China for the treatment of locally advanced or metastatic non-small cell lung cancer with MET exon 14 skipping alterations in patients who have experienced progression after previous systemic therapy or in patients considered ineligible for chemotherapy.
