After the U.S. stock markets closed on Thursday, Fate Therapeutics Inc. announced a multiyear global collaboration and option agreement with Janssen Biotech Inc. that starts out at $100 million in cash and quickly escalates to another $3 billion in potential milestones and sales.

The deal calls for Janssen to contribute antigen binding domains for up to four tumor-associated targets, receiving $50 million in cash and another $50 million from the purchase by Johnson & Johnson Innovation – JJDC, Inc. of newly issued shares of Fate’s common stock at $31 per share. Janssen is to reimburse Fate for all collaboration activities.

Fate is eligible to receive up to $1.8 billion if it hits the development and regulatory milestones, plus another $1.2 billion if those commercial milestones are met. Then there’s the potential for double-digit royalties on worldwide commercial sales of any products produced that target the antigens.

Fate’s platform will be used to research and develop preclinical induced pluripotent stem cell (iPSC)-derived chimeric antigen receptor natural killer (NK) and CAR T-cell product candidates. Fate will push the candidates toward IND applications, then Janssen can exercise an option for an exclusive license to develop and commercialize the tumor-associated antigens.

On top of that, Fate, which specializes in developing immunotherapies targeting cancer and immune disorders, can elect to co-commercialize the candidates in the U.S. and equally share in the profits and losses.

Fate had a good day on Wednesday as its stock closed up 4.26% at $21.07. However, in after-hours trading shares soared 22% upwards.

Fate also said it treated its first patient in its phase I trial of FT-596, a candidate engineered with three active anti-tumor modalities for patients with B-cell malignancies and chronic lymphocytic leukemia. FT596 is an off-the-shelf CAR T NK  cell cancer immunotherapy derived from a clonal master iPSC line engineered to express a  CD19-targeting CAR, a l high-affinity 158V, non-cleavable CD16 Fc receptor, and an interleukin-15 receptor fusion (IL-15RF). The hnCD16 Fc receptor enables coincident targeting of additional tumor-associated antigens expressed on cancer cells to overcome antigen escape. IL-15RF is a cytokine complex promoting survival, proliferation and trans-activation of NK cells and CD8 T cells that don’t need systemic cytokine support.

In January, Fate received IND approval from the FDA for FT-516, the company’s off the shelf NK cell cancer immunotherapy for treating solid tumors.

Fate said the COVID-19 pandemic is affecting some of its ongoing clinical trials, inflicting them with potential delays or disruptions in patient enrollment and site initiation. On the whole, the company said it’s committed to its programs and plans.

It plans to submit NDAs for FT-538, its off-the-shelf, iPSC-derived NK cell product candidate for multiple myeloma and for FT-819, its first off-the-shelf, iPSC-derived CAR T-cell product candidate for B-cell malignancies, both in the second quarter of 2020.

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