Sareum Holdings PLC (LON:SAR) has announced amended terms of a 2016 licensing agreement between Sierra Oncology Inc and CRT Pioneer Fund LP (CPF) for SRA737, a Checkpoint kinase 1 (Chk1) inhibitor in clinical development targeting solid cancers.
The AIM-listed drug development firm said under the 2016 agreement SRA737 was licensed to Sierra by CPF for up to US$328.5mln in developmental, regulatory and commercial milestones, plus royalties on the net sales of any product successfully developed. Sareum was eligible to receive 27.5% of the economics equating to up to US$88mln in milestone payments, plus sales royalties, as SRA737 advanced.
Pursuant to the agreement, Sierra made a one-time upfront payment of US$7mln to CPF in October 2016 and paid US$2mln to CPF in January 2017 for the successful transfer of two ongoing Phase 1 clinical trials. Sareum received a total of approximately US$2.5mln from these payments.
Under the terms of the original agreement, additional payments of up to an aggregate of US$319.5mln were payable to CPF upon the achievement of certain milestones, including a milestone payment of US$7.5mln upon the dosing of the first patient in the first Phase 1 trial of SRA737 in the US, and a payment of US$12mln upon the dosing of the first patient of a randomised Phase 2 trial of SRA737.
Under the amended agreement, Sareum said Sierra and CPF have agreed to a decrease in the additional milestone payments of up to US$290mln that may be payable to CPF upon the achievement of certain milestones, including a milestone payment of US$2mln upon the dosing of the first patient of the first trial of SRA737 following the amendment.
In the event that the milestone payment for a milestone event, as defined in the licence agreement, becomes due, but no milestone payment for an earlier milestone event has been paid, then the payment attached to the earlier milestone will automatically become due and payable with the payment for the later milestone event. Sierra will also accrue, for any future milestones, payments once they are considered probable of occurring.
Sareum also said Sierra remains required to pay CPF, on a product-by-product and country-by-country basis, tiered high single-digit to low double-digit royalties on the net sales of any product successfully developed, adding that Sareum continues to be eligible for 27.5% of the economics of the agreement as amended.
"We believe this revised agreement between Sierra and CPF clears the way for the further clinical development of SRA737, either internally or through a partner, giving Sareum the potential to benefit from downstream milestone payments. While the aggregate level of these milestone payments is reduced, we are confident that this amendment will expedite the advancement of the SRA737 programme in a timely manner”, Sareum chief executive Tim Mitchell said in a statement.
“We look forward to further updates on the clinical development of SRA737, a molecule that has shown great promise in clinical trials and preclinical studies, particularly in combination with other types of cancer therapy. In parallel, we continue to invest our own cash resources to progress our exciting wholly owned TYK2/JAK1 inhibitor programmes towards the clinic as planned", he added.
Sareum shares were 17.3% lower at 1.2p in lunchtime trading on Thursday.