Introduction of DKK1 antibody to explore PD-1 combined therapy

On January 3, Baekje Shenzhou and leap therapeutics, a biotech company targeting immunotherapy, announced that they had reached an exclusive option and license agreement on the clinical development and commercialization of Dick kopf-1 (DKK1) antibody dkn-01 of leap therapeutics in Asia (excluding Japan), Australia and New Zealand Leap therapeutics will retain the exclusive right to develop, produce and commercialize dkn-01 in the rest of the world In addition, leap therapeutics announced a US $27 million equity financing agreement with Baiji Shenzhou and two institutional investors In accordance with the terms of the agreement, leap therapeutics will receive US $3 million in cash in advance from Baekje, which will receive an exclusive license to develop and commercialize dkn-01 in Asia (excluding Japan), Australia and New Zealand Leaptherapeutics will be eligible for an additional payment from baichi if baichi decides to exercise based on the results of subsequent preliminary proof of concept tests In addition, leap therapeutics is eligible to receive payments from Baiji Shenzhou based on the achievement of specific development, regulatory and sales milestones, with a total transaction value of up to $132 million, and to receive a tiered royalty on any product sold by dkn-01 in the licensed territory As part of a $27 million equity investment being made simultaneously, Baiji will make a $5 million equity investment in leap therapeutics Dkn-01 is a humanized monoclonal antibody, which can bind to and block the activity of Dickkopf-1 (DKK1) protein Dickkopf-1 (DKK1) protein is the regulator of Wnt / β - Catenin signal transduction, and Wnt / β - Catenin signal pathway is usually involved in tumorigenesis and immunosuppression of immune system DKK1 plays an important role in tumor cell signaling and immune suppressive tumor microenvironment by enhancing the activity of myeloid suppressor cells and inhibiting the effect of NK ligand on tumor cells So far, dkn-01 has shown positive combination with immunosuppressant in gastric cancer patients defined by biomarkers This transaction will be helpful for Baiji to explore the combination therapy of anti PD-1 antibody tirelizumab and dkn-01 During the term of the option, leap therapeutics agreed to conduct a study on the combination therapy of dkn-01 and tirelizumab Leap therapeutics plans to evaluate the combination therapy of dkn-01 and tirelizumab in about 40 patients with second-line DKK1 overexpression of gastric adenocarcinoma / gastroesophageal junction cancer, in order to establish a positive clinical experience of dkn-01 combined with PD-1 inhibitors in such patients In addition, leap therapeutics plans to evaluate the efficacy of dkn-01 combined with tirelizumab and chemotherapy in about 20 patients with first-line gastric adenocarcinoma / gastroesophageal junction cancer Leap therapeutics expects to launch these clinical trials in the first half of 2020 In addition, the two parties have signed a securities purchase agreement, and Baiji will sell 1421801 newly designated series a mandatory convertible preferred shares to a major institutional investor at a price of $10.55 per share after the equity financing takes effect, and 1137442 newly designated series B mandatory convertible preferred shares to Baiji Shenzhou and perceptive advisors The share price of the preferred stock is equivalent to $1.055 per common stock, which is the closing price of the common stock of leap therapeutics on the NASDAQ Global Stock Market on January 2, 2020 At the end of the transaction, holders of series a mandatory convertible preferred shares will also receive a voting special preferred share, which will give them the right to elect a member of the leaptherapeutics board of directors With the approval of leap therapeutics shareholders, series a compulsory convertible preferred shares will be automatically converted into prepaid warrants to purchase 14218010 ordinary shares, Series B compulsory convertible preferred shares will be automatically converted into 11374420 ordinary shares, and the additional shares represent 8% of the accrued dividend per year Upon shareholder approval and conversion of preferred shares, investors will also receive warrants to purchase up to an equivalent number of common shares at an exercise price of $2.11 per share Before deducting the placement agency fee and expected issuance fee payable by leap therapeutics, the total income of leap therapeutics from this issuance is about 27 million USD, excluding any income from exercising the certified equity The equity financing plan will come into effect on or before January 8, 2020 if the customary transaction conditions are met.