Fate Therapeutics Inc. inked a multiyear, global collaboration worth up to $3 billion with Janssen Biotech Inc., which calls for the latter to contribute antigen binding domains for up to four tumor-associated targets. Fate receives $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 also is to reimburse Fate for all collaboration activities.

But the big numbers come with Fate’s eligibility to receive up to $1.8 billion if it hits the agreement’s development and regulatory milestones. Plus, there is another $1.2 billion available if commercial milestones are met. Fate could also earn double-digit royalties on worldwide commercial sales of any products that target the antigens.

News sent the stock (NASDAQ:FATE) rising 8.8% in trading April 3 to close at $22.94 per share.

SVB Leerink’s Daina Graybosch praised the collaboration as a validation of Fate’s induced pluripotent stem cell (iPSC), allogenic natural killer (NK) and T-cell platforms by a partner, Janssen, who has plenty of autologous CAR T experience and a decade-plus of internal and external investment in regenerative medicine. The $100 million investment in Fate also will, Graybosch wrote, remove near-term cash concerns in the wake of any COVID-19-related hold-ups. Graybosch used Fate’s FT-596 phase I trial as an example of a study whose data read-out will likely be delayed until 2021.

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

Fate said on April 2, the same day as the Janssen announcement, that it treated its first patient in phase I trial of FT-596, a candidate engineered with three active antitumor modalities for patients with B-cell malignancies and chronic lymphocytic leukemia. FT-596 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 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.

Fate’s platform will be used to research and develop preclinical iPSC-derived CAR 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.

In addition, 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.

In January, Fate received IND approval from the FDA for FT-516, the company’s off-the-shelf NK cell cancer immunotherapy to be studied in combination with monoclonal antibody (MAb) therapy for treating solid tumors. It was the company’s fourth IND from its iPSC product platform cleared by the FDA.

The trial is based on preclinical proof-of-concept work showing iPSC-derived NK cells expressing hnCD16 were shown to have superior therapeutic properties in vitro, including maintenance of CD16 expression and increased levels of cytokine production upon activation, compared to peripheral blood NK cells sourced from healthy donors. In an in vivo systemic tumor model of human lymphoma, treatment with iPSC-derived hnCD16 NK cells plus an anti-CD20 MAb resulted in a significant improvement in survival (with the median survival exceeding 100 days) compared to treatment with an anti-CD20 MAb alone or in combination with peripheral blood NK cells sourced from healthy donors. Each showed median survival of 35 days. Also, iPSC-derived hnCD16 NK cells plus an anti-HER2 MAb conveyed a survival benefit in a xenograft model of SKOV-3 ovarian carcinoma.

Fate said it plans to submit INDs 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.