Kazia Therapeutics completes third licensing deal in seven weeks

Kazia Therapeutics (ASX:KZA)‘s chief executive says he could do with catching up on sleep after a “whirlwind” seven weeks in which the $185 million cancer-focused Sydney biotech completed three different cross-border licensing deals.

Kazia on Monday announced it had licensed global rights to a promising small molecule oncology drug candidate from Germany-based Evotec SE (FRA:EVT) for an upfront payment of €1 million ($1.6 million), plus contingent milestone payments of up to €308 million ($480 million).

The deal comes on top of Kazia licensing China rights to its potential brain candidate drug to Simcere Pharmaceutical Group on March 29 for an upfront payment $US11 million ($14.2 million), and on March 1 licensing its ovarian cancer drug candidate to Sweden-based Oasmia Pharmaceuticals for $US4 million.

‘Kazia’s a bit different’

The spate of deals would be unusual for a company many times Kazia’s size, CEO Dr James Garner says, but the company is executing on its unusual business model of developing drugs that other pharmaceutical companies don’t have the time or resources to move forward.

“Kazia’s a bit different from most of the biotech companies on the ASX, and indeed most biotech companies generally, in that most companies kind of hang around a particular piece of technology — a discovery at a university, or sometimes something they’ve done themselves,” Dr Garner told Stockhead.

“The company is formed around the technology.

“Kazia is a different kind of company, because we’ve tried to build the company around a business model where we look for really promising but de-prioritised drugs at other companies.

“That may sound a bit weird, but the reality is that most big pharma companies develop many many more drugs than they have the capacity to take forward.”

Kazia’s strategy is to look for really promising drugs that don’t fit into a parent company’s strategy, in-licence the drugs and build their value through clinical trials, and them out-license them for commercialisation, Dr Garner explained.
&nbsp

Paxalisib

Kazia’s licensed its flagship drug candidate, paxalisib, from Roche subsidiary Genentech in late 2016. It is being studied in six clinical trials for treating glioblastoma, the aggressive, deadly brain cancer.

“They just decided, ‘great drug, but strategically, we’re not going to be focused on brain cancer. So, long story short, we brought it into Kazia,” Dr Garner says.

The sale of the China rights to Simcere was the first step in out-licensing the drug, he said. The deal includes milestone payments of up to $US281 million ($362 million) if it is commercialised, plus royalties. But China is only about eight or nine per cent of the global market, Dr Garner said. “That leaves a lot of value on the table for us.”

While the drug candidate is very promising – and Kazia will receive multiple readouts from clinical trials in the second half of this year – Dr Garner said the company wanted to have multiple drugs in development.

“Any company that hangs its fortunes on just one drug is taking a little bit of a risk with its investors’ money. This is a business that rewards diversification.”

EVT801

The drug Kazia has licensed from Evotec is called EVT801, and in technical terms the orally available medicine inhibits what’s known as VEGFR3, vascular endothelial growth factor receptor.

First discovered by Sanofi (NASDAQ:SNY), EVT801 hasn’t been tested yet in humans, but animal studies have been promising.

EVT801 targets lymphangiogenesis, the formation of new lymphatic vessels, hopefully limiting a route tumours use to metastasize throughout the body.

It also seems to change the balance of immune cells within a tumour, meaning it could possibly be used in conjunction with blockbuster immunotherapies such as Keytruda and Opdivo.

“It’s still early days, but it does seem to have this very clear, very distinct effect of activating the immune system so that’s also really exciting avenue for us to explore,” Dr Garner said.

“And to be clear, these are really quite independent mechanisms, we only need one of these things to pan out in humans for this to be very exciting.”

Dr Garner said Evotec scientists will be working with Kazia under a master services agreement as the company moves the drug candidate forward.

Kazia plans to begin phase 1 clinical trial this year, with an initial focus on using the EVGT801 to treat kidney cancer, liver cancer and soft tissue sarcoma.