Fate Inks $100M Deal With Janssen for Stem Cell-Derived Cancer Therapies

Xconomy San Diego — 

Fate Therapeutics has signed an agreement with Janssen Biotech to develop new cancer cell therapies that are derived from stem cells and landed $100 million up front as part of the global collaboration deal.

The San Diego-based biotech has built a pipeline of experimental cell therapies that use induced pluripotent stem cells (iPSCs) to create chimeric antigen receptor (CAR) T-cell and CAR natural killer (NK) cell treatments. Fate (NASDAQ: FATE) has used iPSCs to make clonal cell lines that it likens to the cell lines used to create make monoclonal antibodies and other drugs.

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Sourcing material for cell therapies this way is meant to reduce the manufacturing challenges associated with currently available cell therapy products. The two FDA-approved cell therapies, CAR-Ts, use a patients’ own living cells. “Off-the-shelf” versions in development, which use cells from healthy donors, face similar obstacles when it comes to cost-effective mass production, including variability between batches.

Janssen will provide Fate with proprietary antigen-binding domains for up to four targets associated with antigens that are overexpressed on tumors. Fate will use them to research and develop new preclinical iPSC-derived cell therapy candidates, both CAR-T-cell and CAR NK cell product candidates. Janssen will reimburse Fate for that R&D work.

Once a candidate is submitted to the FDA for permission to move into the clinic, Janssen will have the option to exclusively license it.

SVB Leerink analyst Daina Graybosch, in a research note, called the deal a “major validation” of Fate’s regenerative medicine platforms. The agreement also removes near-term cash concerns for Fate at a time when clinical research across the biotech industry is being delayed by COVID-19 disruptions, she wrote.

Under the deal terms, Fate gets $50 million in cash and $50 million from a sale of newly issued shares of its stock to Janssen parent company Johnson & Johnson (NYSE: JNJ) at $31 per share, a 47 percent premium over Fate’s closing price Thursday of $21.07 apiece.

The deal makes Fate eligible for payments of up to $1.8 billion tied to development and regulatory milestones and up to $1.2 billion if candidates are commercialized, plus royalties. The company also retains the option to co-commercialize each collaboration candidate in the US.

Fate’s stock price popped about 9 percent on the news Friday, reaching nearly $23 per share as of market close.

Previous collaborations Fate has struck include a 2018 deal with Japan’s Ono Pharmaceutical for joint development and commercialization of two off-the-shelf iPSC-derived CAR-Ts, and a four-year deal to help Juno Therapeutics (now part of Bristol Myers Squibb) find small molecules to enhance its T-cell immunotherapies, an agreement that concluded last year.

Fate, which launched in 2007, has four of its own iPSC-derived cell therapies in Phase 1 testing: two targeting blood cancers and two designed to treat advanced solid tumors.

The company also has three iPSC programs in preclinical testing, and two in research. Two of the preclinical programs are on track to be submitted to the FDA for its OK to move into the clinic in the second quarter of this year, Fate said.

In addition, the biotech has developed off-the-shelf cell therapies not derived from iPSCs that use NK cells from healthy donors modified to improve their biological properties and therapeutic function, but according to the company’s latest annual report, it doesn’t plan to further develop those therapies.

Since its initial public offering in 2013, the company has raised about $363 million across three stock sales, the most recent in September 2019.

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