Claudin18.2 continues to fan the dealmaking flames

Claudin18.2 emerged as a cancer mechanism to watch last year, and Leap Therapeutics is betting on this space getting hotter. The biotech is asking its shareholders to accept huge dilution in an all-stock acquisition of Flame Biosciences, which owns two very early-stage assets against this target. Should the transaction complete, Flame shareholders will end up owning 58% of the combined entity, or 47% on a fully diluted basis. Flame licensed its Claudin18.2 assets from Novarock last year so new Leap will owe milestone payments should progress be made. And while two unwanted Flame assets will be put up for sale, 80% of any after-tax proceeds would flow back to Flame’s investors. Combined cash of $115m will last until mid-2025, and Leap's management will take the top seats but this all feels like thin icing on a meagre cake for Leap's investors. Still, having endured four years of share price stagnation perhaps they will decide that this deal delivers hope of better returns than DKN-01, which has failed to set the stock alight despite years of development. Much now depends on the progress of more advanced Claudin18.2 projects: over to Astellas, which will present detailed phase 3 data later this year.

Leap and Flame's combined pipeline
Project Description Trial details Note
Phase 2
DKN-01 Anti-DKK1 MAb Defiance in 2L CRC; Distinguish + tislelizumab in GEA Leap owned; development to continue 
FL-101 IL-1β neutralising antibody NCT04758949 in NSCLC withdrawn From Flame; to be sold/out-licensed
Phase 1/2
FL-301 Anti-Claudin18.2 MAb NCT05181865 in solid tumours withdrawn From Flame via Novarock, milestones due; development to continue 
FL-302 Anti-Claudin18.2/ CD137 bispecific   From Flame via Novarock, milestones due; development to continue 
FL-501 Anti-GDF15 MAb   From Flame; development to continue
FL-103 IL-1β neutralising antibody   From Flame; to be sold/out-licensed
CRC=colorectal cancer; GEA=gastroesophageal  adenocarcinoma. Source: Evaluate Pharma &

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