FOSTER CITY, Calif. - Gilead Sciences, Inc. (NASDAQ:GILD) and Xilio Therapeutics, Inc. (NASDAQ:XLO) have entered into an exclusive licensing agreement to develop and commercialize Xilio's tumor-activated interleukin-12 (IL-12) program, including its clinical-stage molecule XTX301. The partnership aims to enhance Gilead's portfolio in the immuno-oncology space and utilize Xilio's tumor-activation technology to address a variety of solid tumors.
Under the agreement, Gilead will make an upfront payment of $43.5 million, including $30 million in cash and a $13.5 million equity investment in Xilio's common stock. Xilio could further receive up to $604 million in potential payments, including additional equity investments, a transition fee, and development, regulatory, and sales milestones, as well as tiered royalties on global net sales.
XTX301 is currently undergoing a Phase 1 dose escalation trial in patients with advanced solid tumors. The molecule is designed to stimulate anti-tumor immunity and convert immunologically "cold" tumors into an inflamed state, potentially without the severe toxicities associated with IL-12.
Bill Grossman, MD, PhD, Senior Vice President of Oncology Clinical Development at Gilead Sciences, expressed optimism about the partnership with Xilio and the potential of XTX301 to treat a broad range of tumors. René Russo, Pharm.D., President and CEO of Xilio, also highlighted the opportunity to accelerate the development of XTX301 with Gilead's expertise.
The financial impact of the transaction is expected to reduce Gilead's GAAP and non-GAAP 2024 EPS by approximately $0.03 to $0.04. Xilio will continue the clinical development of XTX301 through dose expansion, after which Gilead can assume further development and commercialization responsibilities upon delivery of a specified clinical data package and payment of a $75 million transition fee.
Both companies have a history of advancing innovative medicines, with Gilead focusing on life-threatening diseases such as HIV, hepatitis, COVID-19, and cancer, and Xilio developing tumor-activated therapies to enhance cancer treatment outcomes.
The information for this report is based on a press release statement.
InvestingPro Insights
As Gilead Sciences (NASDAQ:GILD) embarks on a new partnership with Xilio Therapeutics to bolster its immuno-oncology portfolio, investors may find it noteworthy that Gilead has been a consistent performer in the biotechnology space. With a market capitalization of $90.95 billion, Gilead is a heavyweight in the industry, reflecting its substantial revenue and profitability.
One of the key InvestingPro Tips for Gilead is its track record of raising its dividend for 9 consecutive years, which could be particularly appealing to income-focused investors. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, with an adjusted P/E ratio for the last twelve months as of Q4 2023 standing at 12.09. This suggests that the stock may be undervalued given its earnings potential, a factor that can be crucial for value investors.
From the financial metrics perspective, Gilead boasts a strong free cash flow yield, as implied by its valuation, and maintains a robust gross profit margin of 77.8% for the last twelve months as of Q4 2023. These figures underscore the company's financial health and its ability to generate cash, which is a positive sign for stakeholders considering the company's investment in new ventures like the XTX301 program.
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