- Leap Therapeutics said Monday it will acquire Flame Biosciences in an all-stock deal, giving it an experimental antibody cancer medicine aimed at a protein target that has drawn increased drugmaker interest.
- Instead of paying cash upfront, Leap will issue shares of its common stock to Flame's shareholders. Leap has also agreed to pay those shareholders 80% of any after-tax proceeds from any subsequent deals to license out two of Flame’s early-stage antibodies.
- Under the deal, Leap gets around $50 million of Flame’s net cash and a pipeline headlined by a cancer drug antibody called FL-301 that is in a Phase 1 trial in China. On a fully diluted basis, Flame shareholders will own 47% of outstanding shares in the combined company.
Antibodies targeting the protein Claudin18.2, as Flame’s FL-301 does, have been the focus of some biotechnology dealmaking over the past year, involving companies like Turning Point Therapeutics, Elevation Oncology and even AstraZeneca.
Claudin18.2 is expressed in gastrointestinal and pancreatic cancers, making it a relevant target for would-be treatments.
Flame acquired its Claudin18.2-targeting drug candidate through an agreement in 2021 with the cancer and autoimmune disease-focused biotech NovaRock Biotherapeutics.
Now, Leap will combine Flame’s candidates with its own pipeline. Leap's main candidate, dubbed DKN-01, is a monoclonal antibody designed to treat gastric and gastroesophageal junction cancer. It’s currently in Phase 2 testing and, in 2020, drew interest from BeiGene, which licensed rights in the Asia Pacific region.
If the deal closes, Leap will have a total of $115 million in cash, which the company says will extend its cash runway into 2025 and will allow for further development of DKN-01 and FL-301.
Shares of Leap traded lower by as much as 22% Tuesday morning and are down by about half over the past six months.
Leap will hold a special meeting of shareholders to approve the conversion of convertible, preferred stock being issued as part of the deal.