Major Changes in the Field of Cell Therapy in China
Fosun Pharma (Stock Code: 600196.SH; 02196.HK) announced today that it will fully acquire its joint venture with Kite Pharma, Fosun Kite, and inject additional capital after the completion of the acquisition. Fosun Kite owns China's first approved CAR-T product.
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<h2>Fosun Pharma Fully Acquires Fosun Kite and Injects Capital</h2>
Established in 2017 with joint investment from Fosun Pharma and Kite Pharma, Fosun Kite is primarily engaged in the research, production, and commercialization of oncology immunocellular therapy products.
According to the announcement released on September 13, Fosun Pharma will acquire Kite Pharma's 50% stake in Fosun Kite for $27 million, making it a wholly-owned subsidiary.
Following the completion of this transaction, Fosun Pharma plans to further invest $10 million or the equivalent in RMB to inject capital into Fosun Kite, further enhancing its cell therapy business.
It is worth noting that after the transaction, Fosun Kite will be renamed Fosun Kite. Fosun Pharma stated that Fosun Kite will serve as the core platform for its cell therapy technology, continuing to focus on the field of oncology immunotherapy. Additionally, Fosun Kite will be included in the consolidated financial statements of Fosun Pharma.
<h2>Continued Collaboration with Kite</h2>
Despite Kite Pharma's exit from the equity structure of the joint venture, the collaboration between the two parties continues.
Simultaneous with the equity transaction, Fosun Kite and Kite Pharma signed a revised license agreement. Under the new agreement, Fosun Kite retains the exclusive rights to develop, produce, and commercialize two important products in mainland China, Hong Kong, and Macau: the marketed CAR-T therapy Yescarta® (axicabtagene ciloleucel) and the investigational product FKC889 (brexucabtagene autoleucel).
Yescarta is China's first approved CAR-T product, approved in June 2021 for the treatment of relapsed/refractory large B-cell lymphoma in the second line and above. In June 2023, the product was approved for first-line treatment failure in patients with large B-cell lymphoma, becoming the only CAR-T product in China with indications for second-line treatment. Currently, the third indication for Yescarta—clinical trials for relapsed/refractory indolent non-Hodgkin lymphoma—has been approved in China.
FKC889 is Fosun Kite's second CAR-T product, developed based on Brexu-Cel technology transfer. It is currently undergoing bridging trials in China for two indications: relapsed/refractory mantle cell lymphoma and relapsed/refractory adult precursor B-cell acute lymphoblastic leukemia.
The new license agreement includes certain milestone clauses
Fosun Kite needs to make a one-time milestone payment of $10 million, plus a maximum of $25 million in sales milestone payments. In addition, Fosun Kite also needs to pay annual royalty fees of 7%-13% for net sales of licensed products in the licensed territory, and 2%-4% for global sales of pipeline products.
It is worth mentioning that the agreement also sets a key milestone: if FKC889 fails to obtain the first registration approval from the China National Medical Products Administration within 3 years after the agreement is signed, Kite Pharma has the right to terminate the license for that product. This clause will undoubtedly bring some time pressure to Fosun Kite.
<h2>Fosun Kite will be more flexible in the Chinese market in the future</h2>
Eddie Wu, Chairman of Fosun Pharma, commented on the transaction: &#34;Since establishing a strategic partnership with Kite Pharma in 2017, both parties have worked closely together to promote the rapid development of CAR-T technology and cell therapy product Yescarta® in China. Fosun Pharma is optimistic about the development prospects of cell therapy and will continue to advance the construction of a globally leading technology platform.&#34;
Daniel Zhang, CEO of Fosun Pharma and Chairman of Fosun Kite, emphasized the company's future direction: &#34;As a pioneer in the Chinese CAR-T field, Fosun Kite is striving to innovate the diagnosis and treatment paradigm, exploring more innovative possibilities. In the future, Fosun Kite will continue to focus on unmet clinical needs, striving to make CAR-T cell therapy products more accessible and curative, benefiting more patients.&#34;
Currently, Fosun Kite has established more than 170 Yescarta® high-standard treatment centers in 28 provinces and cities nationwide, and has promoted the inclusion of the product in over 110 city-level medical insurance projects and over 80 commercial health insurance projects, greatly improving the accessibility of the product. The company has also innovatively introduced a payment model based on efficacy, exploring new paths for pricing and payment of high-value innovative drugs.
In terms of efficacy, real-world data from a multicenter study in China released in 2023 shows that Yescarta® has comparable efficacy in Chinese patients to global data, with a 12-month overall survival rate of up to 84.3%, a best overall response rate of 83.2%, a best complete response rate of 58.4%, and better safety.
Currently, 6 CAR-T products have been approved domestically, and market competition is gradually intensifying.
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This transaction will undoubtedly allow Fosun Pharma to occupy a more advantageous position in the rapidly growing cell therapy market in China. With Fosun Kite becoming its wholly-owned subsidiary, Fosun Pharma will be able to more flexibly allocate resources, accelerate product development, and commercialization processes.
However, challenges also come along: how to maintain the pace of technological innovation without direct involvement from Kite Pharma, and how to maintain a leading position in the increasingly competitive market will be important issues that Fosun Pharma needs to address

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Fosun Kite's CAR-T product will have a more flexible market strategy in China

- Fosun Pharma (stock codes: 600196.SH; 02196.HK) announces the full acquisition of its joint venture Fosun Kite with Kite Pharma, boosting China's first approved CAR-T product.
- The acquisition involves purchasing Kite Pharma's 50% stake in Fosun Kite for $27 million and injecting an additional $10 million post-acquisition, enhancing Fosun's cell therapy business.
- Despite Kite Pharma's exit from the joint venture, Fosun Kite retains rights to key products under a revised licensing agreement, aiming to advance CAR-T therapies in China's competitive market.

Fosun Pharma to fully acquire Fosun Kite