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Cullinan secures $150M to build oncology portfolio from ‘diamonds in the rough’

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By Marie Powers
News Editor

In January 1905, the world’s largest gem-quality rough diamond was discovered at the Premier No. 2 mine in Cullinan, modern-day South Africa, and cut into several polished gemstones, some of which became part of Great Britain’s Crown Jewels. Cullinan Oncology LLC hopes to imitate that feat by building a portfolio of oncology assets from one-off opportunities whose profile makes them unsuitable for single-asset companies.

“We see ourselves as prospectors looking for the diamonds in the rough,” explained Patrick Baeuerle, Cullinan’s co-founder and chief scientific officer (CSO) for biologics and managing director of MPM Capital, which formed Cullinan and manages the UBS Oncology Impact Fund that co-led, together with F2 Ventures, the company’s $150 million series A round.

“You need special skills to distinguish quartz from a diamond in the rough,” said Baeuerle, credited with naming the company. “We believe we have a good nose for finding diamonds in the rough and turning them into jewels.”

Formed six months ago, Cambridge, Mass.-based Cullinan has the credentials to back its claim. Baeuerle previously co-founded MPM oncology startups TCR2 Therapeutics Inc. and Iomx Therapeutics GmbH, which each raised series A rounds of approximately $45 million last year, as well as Harpoon Therapeutics Inc., which this year raised a $45 million series B, and Maverick Therapeutics Inc., which in January attracted Takeda Pharmaceutical Co. Ltd. to a $125 million investment and exclusive acquisition option. (See BioWorld Today, Sept. 23, 2016, Dec. 9, 2016, Jan. 18, 2017, and May 26, 2017.)

Baeuerle also led the development of the bispecific CD19-directed CD3 T-cell engager, or BiTE, antibody blinatumomab (Blincyto), first at Rockville, Md.-based Micromet Inc., where he served as chief scientific officer, and then at Micromet acquirer Amgen Inc., where he was named vice president of research and general manager of Amgen Research Munich GmbH. Blincyto received accelerated approval by the FDA in 2014, more than five months ahead of its PDUFA date, to treat relapsed/refractory acute lymphoblastic leukemia. (See BioWorld Today, Jan. 27, 2012, and Dec. 4, 2014.)

Other MPM officials also populate the management team. CEO Owen Hughes, MPM managing director, served as chief business officer and head of corporate development at Intarcia Therapeutics Inc., for a time biopharma’s highest-valued privately held company, where he helped raise approximately $1.8 billion in private capital. Intarcia had a setback last month with a complete response letter from the FDA for ITCA 650 (exenatide implant) to treat type 2 diabetes but said no additional trials were expected. (See BioWorld Today, April 2, 2014.)

MPM Managing Director Leigh Zawel is Cullinan’s CSO for small molecules. Zawel previously led Pfizer Inc.’s Centers for Therapeutic Innovation, managing a portfolio of large and small-molecule projects in oncology, immunology and rare disease that yielded five clinical-stage programs in as many years. His resume also includes tenure in the oncology shops at Merck & Co. Inc.’s Research Laboratories, Sanofi-Aventis, a unit of Paris-based Sanofi SA, and Novartis AG’s Institutes for Biomedical Research in Oncology.

MPM co-founder Ansbert Gadicke serves as Cullinan’s chairman. Other members of the team include Corinne Savill, former head of business development and licensing for the pharma division at Novartis, as chief business officer, and Briggs Morrison, CEO of Syndax Pharmaceuticals Inc., an MPM portfolio company, as clinical advisor.

‘We certainly won’t touch cell therapies’

Cullinan’s version of mining high-value oncology assets benefits from the bright light of academic and other discoveries. Thousands of those contenders – many of them “one-off assets,” Hughes said – pass through MPM’s door every year. Over the past two decades, many failed to attract funding not due to clinical risk but to their associated business risk.

“We decided, in order to distribute this risk, to create a portfolio of these one-off assets such that, at any given point in time, if one were to fall from the portfolio it wouldn’t be detrimental to the company,” Hughes told BioWorld.

The combination of people and portfolio assets attracted the series A funds, deemed sufficient to build the initial portfolio of eight to 12 candidates and move them through IND-enabling studies.

“We’re in a unique position, not only having the resources of a fantastic series A but also the proximity to opportunities that come through MPM and through the network of our management team,” Zawel said. “We think we can make plays at some high-risk, high-reward opportunities. You don’t need a lot of these to hit to generate a great return on investment and to impact patients’ lives.”

Cullinan is agnostic on the type of cancer assets that it considers for inclusion in its portfolio, with one exception.

“We certainly won’t touch cell therapies – CAR T cells and the like – because of the enormous complexity associated with the manufacturing,” Baeuerle told BioWorld. Having two experienced CSOs with experience on different sides of oncology drug development otherwise gives Cullinan the bandwidth to pursue a wide range of targets and mechanisms.

The company is starting with three programs, though company officials were tight-lipped on details. Two undisclosed assets were generated organically. The other was in-licensed from an undisclosed university group that Baeuerle said “cracked a really tough nut” related to an oncogene target that could turn into an “enormously cutting-edge” drug.

A year from now, the ratio of internal to external assets likely will be flipped. Although having its own dry lab allows Cullinan to pursue interesting science, in-licensing provides the company with a more efficient development model.

“We’re going to be fairly judicious about what we bring in,” Hughes said. “We’re going to prioritize assets with groundbreaking potential. We’re not going to chase me-toos. Targets that people have talked about drugging, like oncogenes, but haven’t been too successful – that’s where we’ll be looking for opportunities.”

To create a suitable risk profile, Cullinan will seek to create a diverse portfolio that evenly balances immuno-oncology, targeted therapy and other mechanisms across development stages. The business model is predicated on licensing assets primarily during late preclinical through IND before seeking late-stage development and commercialization partners following proof of concept.

Having up to a dozen assets in the pipeline at any given time “is a comfortable place” for the team of 10, supplemented by the network of external professionals that MPM nurtured over the years, Hughes said.

“By the nature of drug development, especially in oncology, we will have dropouts,” he acknowledged. “I like to think about it as if we were entering college. We’ll have a freshman class, a sophomore class, a junior class and a senior class. We’ll have certain dropouts but we’ll also have the ability to in-license assets or develop assets internally that can replace them. The portfolio construction is the most important aspect of the business model.”

Cullinan intends to conduct rigorous experiments quickly to confirm its faith in newly licensed assets “and put enormous pressure on the programs” so that dropouts also occur before they suck up capital, Baeuerle said.

“This is something we don’t see so often, particularly with companies that have just one asset,” he pointed out. Once single-asset plays are formed, even when it’s clear that “the pony should die, it goes on and eats a lot of money on the way,” Baeuerle said. “We won’t make that mistake.”

Cullinan also has zero interest in evolving into a commercial drug company. “Drug development is expensive, and commercialization raises that to another level,” Hughes said. “It’s more competitive today than it’s been in the past, and it will probably be more competitive in the future given the amount of capital that’s addressing the cancer epidemic.”

“Our aspiration is to have a sustainable engine, with the optionality to exit at any particular stage,” Zawel added. “Certainly, we’re prepared to take programs into phase I and, potentially, phase II, but ideally we’ll have a short list of programs in the parking lot. As they die or get monetized we’ll backfill to reach equilibrium and maintain a robust stable of assets.”