Product-development pact focuses on mid-stage anticancer agent and discovery deal on kinase inhibitors.

ArQule will initially receive $75 million from Daiichi Sankyo under a cancer drug R&D alliance. The companies signed two agreements: one for the development of ArQule’s  Phase II candidate and another for the discovery of new oncology candidates.

The binding letter of intent for an exclusive license as well as co-development, and co-commercialization rights for ARQ-197 calls for $60 million upfront. The final contract based on the binding letter of intent is expected to be signed next month. It includes joint research, clinical trials, and market launch in the U.S., Europe, South America and the rest of the world excluding Japan, China, South Korea, and Taiwan. Kyowa Hakko Kirin gained exclusive rights in these areas last year for $30 million upfront.

ArQule may earn development and sales milestone payments. ArQule and Daiichi Sankyo will equally share the costs of Phase II and Phase III studies. ArQule’s share of Phase III expenses will be payable solely from milestone and royalty payments by Daiichi Sankyo.

Upon commercialization, ArQule will receive tiered royalties from Daiichi Sankyo on net sales of ARQ 197. ArQule retains the option to participate in the commercialization of ARQ 197 in the U.S.

Daiichi Sankyo will also pay $15 million upfront under the research collaboration, exclusive license, and co-commercialization agreement. ArQule will apply its kinase inhibitor discovery platform (AKIP™) and know-how for the discovery of therapeutic compounds that selectively inhibit certain kinases. The agreement defines two such kinase targets, and Daiichi Sankyo will have an option to license compounds directed to these targets following the completion of certain preclinical studies.

Daiichi Sankyo will also pay research support during the first and second year of collaboration, licensing fees for compounds discovered as a result of this research, milestone payments related to clinical development, regulatory review, and sales, as well as royalties. ArQule retains the option to co-commercialize licensed products in the U.S.

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