Gilead and Xilio recently announced an exclusive license agreement to develop and commercialize Xilio’s XTX301, a Phase 1 tumor-activated IL-12 program.

Waltham, Massachusetts-based Xilio Therapeutics is a clinical-stage biotechnology company that is developing tumor-activated immuno-oncology therapies. It is using a tumor-activated platform to build tumor-activated molecules, including antibodies, cytokines, bispecifics and cell engagers. Each of the molecules optimize the therapeutic index and localize anti-tumor activity within a tumor microenvironment.

XTX301 is currently being evaluated in a Phase 1 dose escalation trial in patients with advanced solid tumors.

“Xilio’s novel tumor-activation platform naturally complements Gilead’s clinical development program in difficult-to-treat cancers and expands our focus in immuno-oncology,” Dr. Bill Grossman, senior vice president of Oncology Clinical Development, Gilead Sciences, said in a news release. “We believe IL-12 has the potential to treat a broad range of tumor types and are excited to partner with Xilio to advance XTX301, a tumor-activated IL-12, as a monotherapy and a combination therapy across a variety of solid tumors.”

More details about the agreement

Xilio granted Gilead an exclusive global license to develop and commercialize XTX301. In return, Xilio will receive $43.4 million in upfront payments, including a cash payment of $40 million and an initial equity investment by Gilead of $13.5 million in Xilio common stock at a premium.

Additionally, Xilio will be eligible to receive up to $604 million in contingent payments, including equity investments from Gilead, a transition fee and specified development, regulatory and sales-based milestones. Xilio will be eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.

The biotech company will be responsible for conducting clinical development of XTX301 in the Phase 1 clinical through by expanding doses. Gilead can elect to transition responsibilities for the development and commercialization of XTX301 to itself once Xilio has a specified clinical data package for the therapy. The transition fee is $75 million and subject to the terms and agreements. Xilio is also eligible to receive up to a total of $29 million in additional equity investments and development milestone payments prior to the potential transition fee.

“Gilead’s confidence in our tumor-activated technology, combined with their deep expertise in developing and commercializing novel immuno-oncology products, will enable us to accelerate and expand the development of XTX301, our tumor-activated IL-12,” said René Russo, president and CEO of Xilio. “We look forward to collaborating with Gilead as we seek to deliver on the potential for XTX301 to provide a meaningful benefit for a range of tumor types, including immunologically cold tumors, while overcoming the severe toxicities historically associated with IL-12.”

Gilead said it does not exclude acquired IPR&D expenses from its non-GAAP financial measures. The transaction is expected to reduce its GAAP and non-GAAP 2024 earnings per share by approximately $0.03 – $0.04.