Deal Architectures from Landmark Partnerships
Structures That Align Incentives and Create Value
Article 9 of 10 in a series on cell therapy partnership strategy.
Cell therapy deals differ structurally from traditional pharma licensing. The ongoing manufacturing relationship, the complexity of technology transfer, and the joint investments required for commercial success create partnership dynamics that standard deal templates don't capture.
The Legend-Janssen Model: Profit-Sharing Partnership
The Legend Biotech-Janssen partnership for Carvykti established a new archetype for cell therapy deals.
Structure: $350 million upfront. $1.35 billion in potential milestones. 50/50 profit sharing on global commercial sales. Joint development with shared costs. Legend retained significant manufacturing involvement.
Why it worked: The structure aligned incentives around manufacturing quality and commercial success. Legend's ongoing manufacturing role meant they captured value from their operational excellence. Neither party could optimize their return by extracting value from the other.
Key insight: Profit-sharing structures are appropriate when both parties contribute essential capabilities that must remain engaged post-deal.
The AstraZeneca-Gracell Model: Platform Acquisition
AstraZeneca's $1.2 billion acquisition of Gracell Biotechnologies represented outright acquisition to secure platform technology.
Structure: $1.0 billion upfront cash payment plus $0.2 billion in contingent value rights (CVRs) tied to regulatory milestones. Full acquisition bringing FasT CAR-T manufacturing platform and pipeline in-house.
Why it worked: AstraZeneca wanted manufacturing capability, not just products. Full acquisition provided complete control and eliminated coordination costs.
"Platform acquisitions justify premiums that product acquisitions don't. The value isn't a single asset—it's optionality across a portfolio."
The Kite-Daiichi Sankyo Model: Geographic Licensing
The Kite (Gilead) - Daiichi Sankyo partnership for Yescarta in Japan illustrates both the appeal and complexity of geographic licensing.
Structure: $50 million upfront. Up to $200 million in milestones. Low-to-mid double-digit royalties on Japan sales.
Key insight: Geographic licensing in cell therapy requires realistic assessment of manufacturing transfer complexity. Geographic deals aren't clean handoffs—they're sustained collaborations.
The BeiGene-Novartis Model: Stage-Gated Premium
The BeiGene-Novartis partnership demonstrated stage-appropriate deal structuring for clinical-stage assets with existing China data.
Structure: $650 million upfront—the largest for a single-asset immuno-oncology deal at announcement. Up to $1.55 billion in additional milestones. Total potential value $2.2 billion.
Key insight: China data generation can command premium deal terms for ex-China rights. The ability to run large, rapid trials in China and demonstrate clinical activity de-risks global development.
Alternative Structures Worth Considering
Virtual Joint Ventures. Shared governance and economics without separate legal entity formation.
Bridging Option Structures. Partner funds a bridging study. Upon successful bridging, partner has option to license at pre-negotiated terms.
Manufacturing Milestone Focus. Milestone structures weighted toward manufacturing achievements rather than clinical milestones.
Pipeline Options. Rights to first negotiation or first refusal on subsequent pipeline candidates.
Structuring Principles
Match structure to ongoing involvement. Deals requiring sustained collaboration benefit from profit-sharing or JV structures.
Price manufacturing separately. Manufacturing capability has value independent of specific assets.
Account for technology transfer risk. Cell therapy technology transfer is harder than it appears.
Retain flexibility for the unknown. Cell therapy is evolving rapidly. Option structures and flexible milestone definitions provide adaptability.
The landmark deals examined here succeeded because their structures matched their strategic objectives. For dealmakers entering cell therapy negotiations, the first question shouldn't be "what are comparable deal terms?" It should be "what relationship structure will make this partnership succeed?"
Next in series: Strategic Entry Points for New Cell Therapy Acquirers
Previous: Beyond Autologous
For advisory on cell therapy partnership strategy, contact Kerlann Advisory.