Fosun Pharma Acquires Full Control of Fosun Kite for $27M, Strengthening CAR-T Leadership in China

PharmaCircle learned that, recently, Fosun Pharmaceutical:

(1) The controlling subsidiary, Shanghai Fosun Pharmaceutical Development Co., Ltd., plans to pay 27 million US dollars in cash to acquire the 50% equity interest in Fosun Kite Biotechnology Co., Ltd. held by Kite Pharma (hereinafter referred to as "this transfer"). After the delivery of the equity interest, the original joint venture contract between Shanghai Fosun Pharmaceutical Development Co., Ltd. and Kite Pharma regarding Fosun Kite Biotechnology Co., Ltd. will be terminated. Upon completion of this transfer, Shanghai Fosun Pharmaceutical Development Co., Ltd. will hold 100% of the equity interest in Fosun Kite Biotechnology Co., Ltd., and Fosun Kite Biotechnology Co., Ltd. will be included in the scope of consolidated financial statements of subsidiaries within the Group.

The consideration for this transfer, referencing the unaudited net asset book value of Fosun Kite as of July 31, 2024, which amounts to RMB 369.19 million, has been determined by both parties through negotiation to be USD 27 million.

(2) After the completion of this transfer, Fosun Pharmaceutical Development Co., Ltd. intends to make a cash contribution of 10 million US dollars or equivalent RMB as the sole shareholder to increase the capital of Fosun Kite Biotechnology Co., Ltd. (hereinafter referred to as "Subsequent Capital Increase").

To continue the existing product licensing collaboration after the termination of the original joint venture contract, on the same day as the signing of the "Equity Transfer Agreement," Fosun Kite and Kite Pharma comprehensively amended and restated the original licensing agreement signed in 2017, reaching the "Amended and Restated Licensing Agreement." According to this agreement, Fosun Kite has been granted an exclusive license by Kite Pharma within the territory (namely, within China, including Hong Kong and Macao) and field (cancer treatment) to develop, manufacture, and commercialize Axi-Cel (the marketed product Yikaida by Fosun Kite) and Brexu-Cel (FKC889, a research project by Fosun Kite), as well as to use the agreed proprietary technology for commercial purposes.

Transaction Follow-up Details

Fosun Kite Biotechnology Co., Ltd. is primarily engaged in the research, development, production, and commercialization of cell therapy products. Its first CAR-T cell therapy product, Yikaida (Axicabtagene Ciloleucel Injection), was approved for marketing in China (excluding Hong Kong, Macao, and Taiwan regions, hereinafter the same) in June 2021, becoming the first approved CAR-T cell therapy product in China. As of the date of this announcement, the approved indications include: (1) treatment of adult patients with relapsed or refractory large B-cell lymphoma (LBCL) after receiving second-line or later systemic therapy; (2) treatment of adult patients with LBCL who are refractory to or relapse within 12 months after first-line immunochemotherapy. Its third indication (for the treatment of adult patients with relapsed or refractory indolent non-Hodgkin lymphoma (r/r iNHL), including follicular lymphoma and marginal zone lymphoma) is currently in the bridging clinical trial phase in China and has been included in the breakthrough therapy designation program. In addition, the first indication (for the treatment of adult patients with relapsed or refractory mantle cell lymphoma (r/r MCL) after receiving second-line or subsequent therapy) and the second indication (relapsed or refractory adult precursor B-cell acute lymphoblastic leukemia, adult r/r ALL) of Fosun Kite's second CAR-T cell therapy product, FKC889, were approved to conduct clinical trials in China in 2022. As of the date of this announcement, these indications are in the bridging clinical trial phase in China.

Pharnex Cloud Data www.pharnexcloud.com

As audited by the Shanghai Branch of Ernst & Young Hua Ming LLP (Special General Partnership), as of December 31, 2023, Fosun Kite Biotechnology Co., Ltd.'s total assets amounted to RMB 987.28 million, owner's equity was RMB 161.16 million, and total liabilities were RMB 826.12 million.In 2023, Fosun Kite achieved operating revenue of RMB 242.54 million and a net profit of RMB -353.25 million.According to the management report of Fosun Kite (unaudited), as of July 31, 2024, Fosun Kite's total assets amounted to RMB 931.41 million, owner's equity was RMB 369.19 million, and total liabilities were RMB 562.21 million.From January to July 2024, Fosun Kite Biotechnology Co., Ltd. achieved operating revenue of RMB 188.6 million and a net profit of RMB -192.58 million.。

The author speculates that, in terms of revenue and profit as well as cash flow conditions, the current transfer valuation is indeed relatively reasonable and not considered high.

Pharnex Cloud Data (www.pharnexcloud.com)Display: As of now, the CAR-T cell therapy products approved in the Chinese market include Fosun Kite's Axicabtagene Ciloleucel Injection, Wuxi Jumo's Relmacabtagene Autoleucel Injection, IASO Biotherapeutics' Equecabtagene Autoleucel Injection (Innovent Biologics has become an 18% shareholder of IASO Bio, which holds all rights to this product), Hekang Bio's Nacibartgene Autoleucel Injection, CARsgen Therapeutics' Zevocabtagene Autoleucel Injection (in collaboration with Huadong Medicine), and the most recently approved Legend Biotech’s Ciltacabtagene Autoleucel. (Three target CD19, three target BCMA)

According to reports,Fosun Kite is the largest variety of CAR-T commercialization in China's pharmaceutical market.. Benefiting a total of 700 patients as of the first half of 2024. Currently,Launch Pay-by-OutcomePlan. In the future, Fosun Kite will be renamed Fosun Kire.

Relevant company public disclosure;

Fosun Pharmaceutical;

https://www.fosunpharma.com/；

https://www.fosunpharma.com/investor/materials.html；

https://data.eastmoney.com/notices/detail/600196/AN202409131639875857.html；

https://data.eastmoney.com/notices/stock/600196.html; etc.

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