Fate Therapeutics’ IO Collaboration with Janssen Could Yield Company $3 Billion

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Killer T-lymphocyte attacking a cancer cell
Killer T-lymphocyte (green) beginning to attack a cancer cell (mauve). [Maciej Frollow/Getty Images]

Johnson & Johnson’s Janssen Biotech will partner with Fate Therapeutics to create cell-based cancer immunotherapies derived from induced pluripotent stem cells (iPSCs), through a collaboration that could generate more than $3 billion for the San Diego cellular immunotherapy developer.

Janssen will bring to the partnership its proprietary antigen binding domains, with the aim of creating product candidates for up to four tumor associated antigens for blood and solid cancers.

To create those candidates, Janssen plans to use Fate’s iPSC product platform to research and develop novel chimeric antigen receptor (CAR) natural killer (NK) and CAR T-cell product candidates to preclinical phases.

The iPSC platform is designed to enable mass production of off-the-shelf, engineered, homogeneous cell products that can be administered with multiple doses to deliver more effective pharmacologic activity, including in combination with cycles of other cancer treatments, according to Fate.

Fate’s platform involves engineering human iPSCs in a one-time genetic modification event, then selecting a single engineered iPSC for maintenance as a clonal master iPSC line. The company says its clonal master iPSC lines are a renewable source for manufacturing cell therapy products that are well-defined and uniform in composition, can be mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf for patient treatment.

Fate said it will advance candidates created through the collaboration to the filing of an IND application, after which Janssen will have the right to exercise its option for an exclusive license for the development and commercialization of collaboration candidates targeting the tumor-associated antigens.

Fate will have primary responsibility for manufacturing candidates created through the collaboration, with Janssen paying for their cost.

$50M upfront

Janssen agreed to pay Fate $50 million upfront, while another J&J entity, Johnson & Johnson Innovation–JJDC, will purchase newly-issued shares of Fate’s common stock at a price per share of $31.00—a 31% premium over Fate’s closing share price Friday of $22.94.

Janssen also agreed to pay Fate up to $1.8 billion in payments tied to achieving development and regulatory milestones—plus another up to $1.2 billion tied to achieving commercial milestones, as well as double-digit royalties on worldwide commercial sales of products targeting the antigens.

Fate has the right to elect to co-commercialize each collaboration candidate in the United States and share equally in profits and losses in the United States, subject to paying clinical development costs and adjustments in milestone and royalty payments.

Janssen also agreed to reimburse Fate for all activities conducted under the collaboration.

“The collaboration strengthens our financial and operating position through a focused effort of developing cell-based cancer immunotherapies utilizing Janssen’s proprietary antigen binding domains, while enabling us to continue to exploit our deep pipeline of wholly-owned product candidates and further develop our off-the-shelf, iPSC-derived cell-based immunotherapies,” Fate president and CEO Scott Wolchko said Thursday in a statement.

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