Shortly before the bell on Monday morning, Kite Pharma (KITE) announced an immunotherapy collaboration and licensing agreement with one of biotech’s juggernauts, Amgen (AMGN), to advance novel chimeric antigen receptor (CAR) T cell therapies. Under the collaboration, Amgen and Kite will jointly develop and commercialize CAR-T immunotherapies based on Kite’s engineered autologous cell therapy (eACT) platform and Amgen’s array of cancer targets.
Terms of the deal include:
- Kite will receive a $60 million upfront payment from Amgen.
- Kite will be responsible for conducting all preclinical research and cell manufacturing/processing through IND filing. Each company is responsible for funding the clinical development and commercialization of their respective CAR therapeutic candidates.
- Kite is eligible to receive up to $525 million in regulatory and sales milestone payments per Amgen program. Kite is also eligible to receive tiered single-digit sales royalties on each Amgen program.
- Kite is eligible to receive tiered high single- to double-digit royalties for sales and the license of Kite’s intellectual property for CAR-T cell products.
This partnership is a first step for Kite in morphing its business towards a de-risked platform model. Kite has received and is eligible to receive non-dilutive financing in the form of milestone payments, allowing the smaller company to develop their own in-house programs at lower costs. At the same time, the development of Amgen products with Kite technology offers further potential for validation of Kite’s proprietary CAR-T technology.
Kite is scheduled to host a webcast today, January 5, 2014, at 4 PM to discuss the agreement.
With shares trading at about $66/share and with approximately $400m cash on hand, Kite has a fully-diluted market cap of ~$3.02B, and an enterprise value of $2.62B.
One or more of PropThink’s contributors are long AMGN or KITE.
