TRACON Pharmaceutical (TCON) Enters Oncology Assets Licensing Collaboration with Janssen

September 28, 2016 8:04 AM EDT
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TRACON Pharmaceuticals (Nasdaq: TCON) announced a strategic licensing collaboration with Janssen Pharmaceutica N.V. (Janssen) for two novel oncology assets from Janssen’s early development portfolio, with Janssen retaining certain rights to potentially reacquire the programs. Johnson & Johnson Innovation facilitated the collaboration. Johnson & Johnson Innovation – JJDC, Inc. (JJDC) also made a $5 million equity investment in TRACON through the purchase of common stock at a price of $5.95 per share.

Key Elements of the Transaction:

  • The transaction grants TRACON the rights to develop two Janssen oncology programs: TRC253 (formerly JNJ-63576253), a novel small molecule high affinity competitive inhibitor of wild type androgen receptor (AR) and multiple AR mutations that confer drug resistance, which is intended for the treatment of men with prostate cancer, and TRC694 (formerly JNJ-64290694), a novel, potent, orally bioavailable inhibitor of NF-kB inducing kinase (NIK), which is intended for the treatment of patients with hematologic malignancies, including myeloma.
  • TRC253 has completed IND-enabling studies and TRACON expects to initiate a Phase 1/2 proof of concept (POC) clinical study in the first half of 2017. Following completion of the initial POC study, Janssen will have an exclusive option to reacquire full rights to TRC253 for an upfront payment of $45 million to TRACON, and obligations to pay regulatory and commercialization milestones totaling up to $137.5 million upon achievement of specified events and a low single-digit royalty. If Janssen does not exercise its exclusive option to reacquire the program, TRACON would then retain worldwide development and commercialization rights to the program and would be obligated to pay Janssen a total of up to $45 million in development and regulatory milestones upon achievement of specified events, in addition to a low single digit royalty.
  • TRC694 is currently in preclinical development and TRACON expects to file an Investigational New Drug (IND) Application in 2018, following completion of additional preclinical studies. Upon completion of an initial clinical POC study, or at any time prior thereto, Janssen will have a right of first negotiation to reacquire the program on terms to be negotiated between the parties. If Janssen does not exercise the negotiation right or the parties cannot agree to terms following negotiations, and if TRACON continues development of TRC694, TRACON would be obligated to pay Janssen development and regulatory milestones totaling up to $60 million upon achievement of specified events and a low single-digit royalty.

“We are excited to enter into this innovative transaction with Janssen and Johnson & Johnson Innovation, and for the potential upside it provides our shareholders,” said Charles Theuer, M.D., Ph.D., President and CEO of TRACON. “This agreement expands our portfolio of potential first-in-class oncology therapies and leverages our existing drug development expertise. It also creates incremental opportunities for near-term non-dilutive funding and long-term value creation that complement our ongoing clinical development efforts with TRC105, our lead late-stage product candidate. Additionally, JJDC’s $5 million equity investment strengthens our balance sheet and is expected to offset the development expenses associated with these programs over the next 12 months.”

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