Exclusive: Following $80M Investment, Fosun Pharma May Add $140M to Bring in Two Additional Cell Therapy Technologies from Kite Pharma

On January 16, Fosun Pharmaceutical held a launch ceremony for its strategic cooperation with Kite Pharma, announcing the establishment of a joint venture in China to introduce Kite’s cancer treatment technologies and products, thereby bringing globally leading therapeutic options to Chinese patients with lymphoma.

Earlier, Fosun Pharmaceutical announced that it would invest up to $80 million to establish a joint venture with Kite to explore the market for T-cell immunotherapy for cancer in China (including mainland China, Hong Kong, and Macau). The first product planned to be introduced through this collaboration is KTE-C19 therapy, an investigational chimeric antigen receptor (CAR) T-cell therapy product designed to treat relapsed or refractory B-cell lymphoma and leukemia, which is currently in the clinical development stage. Additionally, Fosun Pharmaceutical will deepen its cooperation with Kite Biopharma, potentially introducing two other products, KITE-439 and KITE-718, which are still in the preclinical research phase.

Fosun Pharmaceutical stated to VCBeat (WeChat ID: vcbeat) that one of the primary indications for the newly introduced KTE-C19 therapy is diffuse large B-cell lymphoma (DLBCL), which is among the most prevalent, highly aggressive, and rapidly progressing subtypes of lymphoma. Clinical treatment options for patients with chemotherapy-refractory DLBCL are extremely limited, and historical prognosis data have been very poor. Current data suggest that this product can deliver remarkably significant therapeutic efficacy, making its clinical approval highly likely. While risk factors are inevitable, Kite Pharma has demonstrated the most rapid progress in cell therapy over the past two years. Following the establishment of the joint venture, both parties will leverage their respective strengths beyond product-level collaboration to build the joint venture into a leading research, development, and manufacturing platform for oncology T-cell therapies in China. This initiative aims to continuously enhance independent R&D capabilities, keep pace with the most advanced global technologies, and steadily strengthen core competencies. Continuous innovation remains a steadfast commitment of Fosun Pharmaceutical, enabling the company to respond calmly and effectively even in the face of risks.

In its announcement on January 12, Fosun Pharmaceutical stated that the joint venture may continue to introduce follow-on products from Kite Pharma’s pipeline in the future, including KITE-439—a TCR cell therapy product expressing a T-cell receptor directly targeting the human papillomavirus type 16 E7 oncoprotein—and KITE-718. Will the details of subsequent collaborations (including those for KTE-439 and KTE-718) be similar to this current round of cooperation?

To our knowledge, within seven years from the date of establishment of the joint venture, the New Company may exercise an option for either of the follow-on products (namely, KITE-439 and KITE-718), subject to the unanimous consent of the New Company’s Board of Directors. These two products are currently in the preclinical development stage, and their specific therapeutic areas will be determined based on the progress of research and development. The total fees payable by the New Company to Kite for the follow-on products (namely, KITE-439 and KITE-718), including license fees and all milestone payments but excluding sales royalties, are estimated at USD 140 million. Other specific licensing terms for the follow-on products (namely, KITE-439 and KITE-718) remain to be determined through further negotiations between the New Company and Kite and the execution of relevant agreements.

Data indicates that China is the world’s second-largest pharmaceutical market after the United States. With rising incidence and mortality rates, cancer has become the leading cause of death in China, with over 4 million new cases and 2.8 million cancer-related deaths annually. The five-year survival rates for several cancers prevalent in China are significantly lower than those in the U.S., with disparities approaching 40% for cervical cancer, lymphoma, and leukemia. According to the latest projections, there are nearly 73,000 newly diagnosed cases of non-Hodgkin lymphoma (NHL) in China each year. Among these, diffuse large B-cell lymphoma (DLBCL), the most common subtype, is one of the most aggressive and rapidly progressing forms of lymphoma, affecting the largest number of patients. Clinical options for patients with refractory disease are very limited, representing a substantial unmet medical need. In response, Fosun Pharmaceutical has chosen to enter the field of cancer treatment in China by introducing new technologies—a strategy akin to “exchanging market access for technology.” Beyond recognizing the revenue-generating potential of this sector, fostering its own technological capabilities is a key strategic objective.

In fact, Fosun Pharmaceutical began laying the groundwork for monoclonal antibody drug R&D as early as 2009 and has since emerged as a leading enterprise in China’s pharmaceutical industry. Through its monoclonal antibody R&D platform, Henlius, Fosun Pharmaceutical has achieved significant progress in multiple oncology areas, including lymphoma and breast cancer. The first candidate in its pipeline for the indication of non-Hodgkin lymphoma and the second candidate for the indication of breast cancer have both entered Phase III clinical trials. The initial introduction of KTE-C19 will strongly complement CD20-targeted monoclonal antibody therapies, covering the entire spectrum of B-cell lymphoma treatment and providing Chinese patients with a comprehensive solution.

Kite Pharma, a partner in this collaboration, boasts multiple cutting-edge research initiatives and strong technological advantages in the field of cellular immunotherapy. The “co-development and priority commercialization rights” acquired by Fosun Pharmaceutical will pave the way for its rapid expansion in the Chinese market.

“We are committed to providing China’s cancer patients with globally leading tumor immunocellular therapy technologies,” said Arie Belldegrun, Chairman, President and Chief Executive Officer of Kite Pharma. “The establishment of the joint venture accelerates Kite Pharma’s entry into China, a critically important market, and helps us achieve our key objective of expanding our global impact. Fosun Pharmaceutical is a leading innovative biopharmaceutical company in China and an active market developer, making it the ideal partner for advancing the commercialization of our KTE-C19 product in China. We look forward to our combined efforts meeting the substantial unmet treatment needs in the Chinese market.”

“There is a huge unmet need in the field of cancer treatment in China. The collaboration with Kite Pharma is highly significant, marking an important and strategic step for Fosun Pharmaceutical in establishing a T-cell immunotherapy platform in China, which will help us provide globally leading cancer treatments to patients in need,” said Chen Qiyu, Chairman of Fosun Pharmaceutical. “Furthermore, Kite Pharma’s oncology immune cell therapy products demonstrate significant synergy with Fosun Pharmaceutical’s existing portfolio.”

For Fosun Pharmaceutical, which has long been engaged in aggressive acquisitions in the biopharmaceutical technology sector, this latest introduction marks merely the starting point, rather than the endpoint, of its pharmaceutical investments in 2017.

Fosun Pharmaceutical has previously demonstrated its commitment to investing in the field of biopharmaceutical technology. For instance, in 2016, it invested RMB 1.261 billion to acquire approximately 86.08% equity stake in Gland Pharma, an Indian injectable pharmaceutical company, setting a record for the largest overseas acquisition by a Chinese pharmaceutical enterprise last year. In September 2016, Fosun Pharmaceutical further invested USD 40 million to establish a joint venture with Intuitive Surgical, the U.S.-based manufacturer of the da Vinci Surgical System, targeting innovative robotic-assisted catheter technologies for the early diagnosis and treatment of lung cancer.

Fosun Pharmaceutical stated to VCBeat (WeChat ID: vcbeat) that innovative R&D has entered the era of precision medicine. In recent years, Fosun Pharmaceutical has continuously increased its R&D investment, with innovative research targets increasingly focused on this field. Particularly in addressing oncology challenges, Fosun Pharmaceutical keeps pace with cutting-edge global technologies, striving to provide patients with the most comprehensive and optimal diagnostic, therapeutic techniques, and treatment regimens.

Meanwhile, Fosun Pharmaceutical has been continuously exploring new collaboration models in its effort to build a closed-loop ecosystem for precision oncology care. The company has gradually shifted from traditional product licensing-in arrangements to collaborative models encompassing joint R&D, manufacturing, and commercialization, thereby engaging more deeply in the development of globally leading technologies. In late 2016, Fosun Pharmaceutical and Intuitive Surgical, Inc., the global leader in robot-assisted minimally invasive surgery, announced the formal launch of a strategic partnership. They established a joint venture in Shanghai primarily focused on the R&D, manufacturing, and sales of innovative products based on robot-assisted catheter technology for the early diagnosis and treatment of lung cancer. This initiative will provide physicians with innovative tools for precise diagnosis and treatment, thereby enhancing medical care standards and benefiting patients with lung cancer.

Chen Qiyu, Chairman of Fosun Pharmaceutical, also stated publicly that the company has been undergoing a comprehensive transformation over the past two years. First, it is driving organizational change with technological innovation as its core development engine. Second, its innovation model emphasizes a “China + US” strategy. Specifically, while Fosun Pharmaceutical had previously invested heavily in its pharmaceutical business, it has established a clear innovation roadmap in this sector over the past decade and will continue to increase its investment in pharmaceutical innovation. Leveraging China’s abundant pool of technical professionals and R&D scientists, as well as its vast clinical data resources, Fosun will focus on introducing and implementing new technologies in the Chinese market.

Industry insiders note that from 2016 to the current collaboration with Kite, Fosun Pharmaceutical’s strategic logic in biopharmaceutical technology is clearly evident: acquiring or investing in leading companies within niche sectors to gain access to their technologies, and then leveraging synergies with its existing business layout to enhance its internal “blood-making” capabilities. Meanwhile, foreign technology firms are also keen to collaborate with Fosun, as its domestic resources enable rapid commercialization of their products and technologies in China. In effect, Fosun Pharmaceutical serves as a “grafting bridge,” benefiting from this process as well.