Fosun Pharma Fully Acquires Fosun Kite to Strengthen Leadership in Cell Therapy

Sep 15, 2024 15:44 CST Updated 15:44

Fosun Pharmaceutical

Healthcare Industry Group

Fosun Kairos

Developer of Tumor Immune Cell Therapy Technologies and Products

Fosun Pharmaceutical Will Wholly Own Fosun Kite, Undoubtedly a Hot Topic in Today's Industry.

In the CGT circle, there are both supportive voices — believing that as China's CAR-T market continues to grow, it is time to expand equity shares and take bold actions. Meanwhile, some have raised doubts, such as "how much self-research innovation capability does Fosun Kite have after Kite Pharma's withdrawal," and so on...

To address industry doubts, the reporter from Tongxiyi recently reviewed the event and conducted an exclusive interview with Fosun Pharmaceutical. They focused on narrating the ins and outs of this transaction, supplementing a lot of information that had been overlooked by the media and the industry, and responded to future specific plans. Notably, one can see Fosun Pharmaceutical's confidence and determination in leading the cell therapy field behind this announcement.

SubmitEasy Background BriefStatement

In January 2017, Fosun Pharmaceutical announced that it would establish a joint venture with Kite Pharma.(i.e., Fosun Kite), the introduction of Kite Pharma's CAR-T treatment product KTE-C19 in China will bring globally leading treatment options to lymphoma patients. Fosun Pharmaceutical and Kite Pharma will each hold 50% equity in this subsidiary.

KTE-C19 was named axicabtagene ciloleucel according to the common naming principles for gene-modified cell therapies.（axi-cel）, known in Chinese as Axicabtagene Ciloleucel Injection. The drug was approved for marketing in China on June 22, 2021, becoming the first CAR-T cell therapy product approved in China for treating adult patients with relapsed or refractory large B-cell lymphoma who have received two or more lines of systemic therapy.

June 2023, Yikaida^®New Indication Approved: For the treatment of adult large B-cell lymphoma that is ineffective with first-line immunochemotherapy or relapses within 12 months after first-line immunochemotherapy, it is the only CAR-T product in China for this indication at that time.

In 2023, the global sales of Axicabtagene Ciloleucel Injection Yescarta reached 1.498 billion US dollars, making it the best-selling CAR-T product worldwide. According to Fosun Pharmaceutical's financial report, since its market launch until the end of 2023, the product has benefited more than 600 lymphoma patients in China.

However, in China, the commercialization path for CAR-T products is particularly long. In 2023, Fosun Kite achieved revenue of 240 million yuan, but the development road for China's CAR-T companies remains arduous and far from over.

On September 13, Fosun Pharmaceutical announced its plan to acquire the 50% equity interest in Fosun Kite held by Kite Pharma through a cash payment. Upon completion of this transfer, Fosun Pharmaceutical will hold 100% of Fosun Kite's equity and intends to further increase capital as the sole shareholder. Additionally, Fosun Kite Biotechnology Co., Ltd., a wholly-owned subsidiary of Fosun Pharmaceutical, is proposed to be renamed Fosun Kite Biotechnology Co., Ltd. (Fosun Caribou), which will serve as Fosun Pharmaceutical’s core platform for cell therapy technology, continuing to focus on the field of cancer immunotherapy.

Fosun Pharmaceutical's sudden major move seems to indicate that China's CAR-T field may be on the verge of significant changes.

Fosun Pharmaceutical Answers Journalists' Questions

Q: Why does Fosun Pharmaceutical choose to hold 100% ownership of Fosun Kite and will further increase investment?

A：Since establishing a strategic partnership with Kite Pharma in 2017, the two parties have worked closely together to advance CAR-T technology and the cell therapy product Yikaida.^®In China's rapid development. Fosun Pharmaceutical firmly believes in the promising future of cell therapy, and therefore expressed its hope to further increase its stake in Fosun Kite. After the completion of this equity transfer,Fosun Kite will serve as the core platform for Fosun Pharmaceutical's cell therapy technology., further broaden the application of cell therapy in fields such as oncology and autoimmune diseases, promote CAR-T cell therapy products to benefit more patients, and meet unmet clinical needs.

After the completion of this equity transfer, Fosun Pharmaceutical will increase its capital in Fosun Kite. The capital increase will be used to support Fosun Kite's subsequent product development and operations.

In addition, Fosun Pharmaceutical has been implementing a strategy of asset reallocation and business focus in recent years, increasing its stake in core assets. This transaction is also a落地of this strategic direction.

Q: Could you please specify the structure of this transaction?

A：As announced, Fosun Pharmaceutical Industry will acquire 50% of the equity in Fosun Kite held by Kite Pharma through a proposed cash investment. After the completion of this transfer, Fosun Pharmaceutical will hold 100% of the equity in Fosun Kite. In addition to the 50% equity transfer, on the same day as the signing of the "Equity Transfer Agreement," Fosun Kite and Kite Pharma comprehensively revised and restated the original licensing agreement, reaching an "Amended and Restated Licensing Agreement." According to the licensing agreement, Fosun Kite shall pay Kite Pharma up to US$35 million in sales milestones based on the achievement of annual net sales of licensed products. Additionally, for all licensed products within the licensed territory, Fosun Kite shall pay Kite Pharma royalties ranging from 7% to 13% of the annual net sales. The completion of this transaction is subject to the fulfillment of all the aforementioned agreement arrangements.

Q: These amounts seem to have been overlooked by most people. Based on the 2017 collaboration with Kite Pharma, what adjustments were made to the agreements in this equity transfer? What is the subsequent cooperation model?

A：Fosun Pharmaceutical Industry and Kite Pharma signed the "Original Joint Venture Contract" in 2017, which will terminate after the equity transfer.

At the same time, Fosun Kite has comprehensively amended and restated the original license agreement reached with Kite Pharma in 2017, and entered into an "Amended and Restated License Agreement". Fosun Kite has been granted a license by Kite Pharma in the region.(That is, within China, including Hong Kong and Macao)And Fields(Cancer Treatment)Exclusively developed, produced, and commercialized Axi-Cel in China(i.e., Fosun Kite's marketed product "Yikaida")^®”）And Brexu-Cel(i.e., Fosun Kite's R&D project FKC889)And use the agreed proprietary technology for commercial purposes.

Q: How is Fosun Kite's subsequent product self-research capability at present? After this transaction, as Fosun Pharmaceutical's core CGT platform, what new developments will there be?

A：Fosun Kite has been striving to enhance its self-research capabilities. The company has built a full-chain CAR-T professional team and talent pipeline, including early research, clinical development, regulatory registration, production and quality, procurement and supply. Currently, the company's production, quality, and supply chain teams already possess extensive experience in the commercial production of CAR-T, ensuring high-quality product supply.

At the same time, after this transaction, Fosun Kite plans to be renamed "Fosun Kite Biotechnology Co., Ltd.", which will serve as Fosun Pharmaceutical's core platform for cell therapy technology, continuing to focus on the field of tumor immunotherapy. Fosun Pharmaceutical will also maintain a long-term strategic partnership with Kite Pharma through a licensing cooperation model.

Q: The commercialization path of CAR-T therapy products in China is not easy. What are Fosun Pharmaceutical's next steps to advance the commercialization of CAR-T products?

A：As the first CAR-T cell therapy product approved in China, Yikaida^®Marking the beginning of China's CAR-T treatment era, it fills the gap in the domestic lymphoma-related treatment field and becomes the first and currently the only CAR-T cell therapy product approved for second-line indications in China.

The clinical trial application for the third indication of Axicabtagene Ciloleucel Injection has been approved in China, targeting patients with relapsed/refractory indolent non-Hodgkin lymphoma.(r/r iNHL, including follicular lymphoma and marginal zone lymphoma)Adult patients. Currently, this indication is in the bridging clinical trial stage in China.

As of now, Fosun Kite has established more than 170 Yikaida centers across 28 provinces, municipalities, and autonomous regions in China.^®High-standard treatment centers, and promote Yikaida^®Included in more than 110 urban惠民保projects and over 80 commercial health insurance programs, further extending the benefits of innovative cell therapies to more patients and helping them regain hope for survival.

Following this transaction, Fosun Kite will embark on new development opportunities. Fosun Kite is currently actively promoting accessibility and recovery, and has pioneered Yikai Da in China.^®Under the payment plan based on therapeutic value, a new development path for the payment model of high-value innovative drugs in China has been explored. Currently, among the patients whose efficacy can be evaluated in this project, complete remission has been achieved.（CR）Exceeding 58%, further enhancing the company's confidence in Yikai Da.^®Confidence in the product and determination to promote innovative payment.

In the future, Fosun Kite will continue to serve as the core platform for cell therapy technology under Fosun Pharmaceutical. It will fully leverage its autonomy and flexibility in innovative R&D, further deepen product innovation, strive to enhance its capabilities in innovative R&D and industrialization, focus on improving the accessibility of high-value innovative drugs, unleash its innovative potential, and bring hope of a cure to more cancer patients worldwide.

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