Gilead Sciences and clinical-stage biotechnology company Xilio Therapeutics have entered into a licence agreement, worth up to $647.5m, for the latter’s XTX301, a Phase 1 Interleukin 12 (IL-12) programme.

As per the agreement, Gilead Sciences will receive an exclusive global licence to develop and commercialise the drug candidate.

Xilio Therapeutics will be entitled to $43.5m in upfront payments. The amount includes a cash payment of $30m and an initial equity investment by Gilead Sciences of $13.5m in Xilio Therapeutics’ common stock at a purchase price of $1.97 per share.

The clinical-stage biotech firm can get up to $604m in additional contingent payments. This includes three additional equity investments by Gilead Sciences, a transition fee of $75m, and specified milestone-related payments pertaining to development, regulatory, and sales.

Additionally, Xilio Therapeutics will receive tiered royalties on annual global net product sales. The company will also oversee the clinical development of XTX301 in the ongoing Phase 1 study through dose expansion.

Subject to the terms of the agreement and Gilead Sciences’ payment of the transition fee, the pharma major may choose to assume responsibility for the development and marketing of XTX301. This will be after Xilio Therapeutics delivers a specific clinical data package for the drug candidate.

Gilead Sciences oncology clinical development senior vice president Bill Grossman said: “Xilio’s novel tumour-activation platform naturally complements Gilead’s clinical development programme in difficult-to-treat cancers and expands our focus in immuno-oncology.

“We believe IL-12 has the potential to treat a broad range of tumour types and are excited to partner with Xilio to advance XTX301, a tumour-activated IL-12, as a monotherapy and a combination therapy across a variety of solid tumours.”

XTX301 is a tumour-activated IL-12 designed to accelerate anti-tumour immunity and treat various cancers.

Its safety and tolerability are currently being evaluated as a monotherapy in Phase 1 dose escalation trial of patients with advanced solid tumours.

Xilio Therapeutics president and CEO René Russo said: “Gilead’s confidence in our tumour-activated technology, combined with their deep expertise in developing and commercialising novel immuno-oncology products, will enable us to accelerate and expand the development of XTX301, our tumour-activated IL-12.”