Xenetic Biosciences to Acquire Personalized CAR T Platform

March 4, 2019

Xenetic Biosciences, Inc. (NASDAQ: XBIO), a clinical-stage biopharmaceutical company focused on the discovery, research and development of next-generation biologic drugs and novel orphan oncology therapeutics, announced on 3/4/19 its agreement to acquire the novel CAR T ("Chimeric Antigen Receptor T Cell") platform technology, called "XCART," a proximity-based screening platform capable of identifying CAR constructs that can target patient-specific tumor neoantigens, with a demonstrated proof of mechanism in B-cell Non-Hodgkin lymphomas. The XCART technology, developed by The Scripps Research Institute ("Scripps") in collaboration with the Shemyakin-Ovchinnikov Institute of Bioorganic Chemistry, is believed to have the potential to significantly enhance the safety and efficacy of cell therapy for B-cell lymphomas by generating patient- and tumor-specific CAR T cells. The acquisition is subject to conditions typical for a transaction of this kind, including appropriate stockholder approvals, and is expected to close in the first half of 2019.

"This acquisition is a transformative step in the strategic evolution of Xenetic," commented Jeffrey Eisenberg, Chief Executive Officer of Xenetic. "With this novel and differentiated CAR T technology, we are now positioned in a field that is at the forefront in the development of new oncology therapeutics, which we believe will drive significant value for shareholders. The XCART platform was designed to target personalized, patient-specific tumor neoantigens and has demonstrated promising preclinical data in an area of significant unmet medical need. Our R&D efforts will focus initially on leveraging the XCART platform to develop cell-based therapeutics for the treatment of B-cell Non-Hodgkin lymphomas, an initial global market opportunity estimated to exceed $5 billion per year."

The XCART technology platform was designed by its originators to utilize an established screening technique to identify peptide ligands that bind specifically to the unique B-cell receptor ("BCR") on the surface of an individual patient's malignant tumor cells. The peptide is then inserted into the antigen-binding domain of a CAR, and a subsequent transduction/transfection process is used to engineer the patient's T cells into a CAR T format which redirects the patient's T cells to attack the tumor. Essentially, the XCART screening platform is the inverse of a typical CAR T screening protocol wherein libraries of highly specific antibody domains are screened against a given target. In the case of XCART screening, the target is itself an antibody domain, and hence highly specific by its nature. The XCART technology creates the possibility of personalized treatment of lymphomas utilizing a CAR with an antigen-binding domain that should only recognize, and only be recognized by, the unique BCR of a particular patient's B-cell lymphoma.

An expected result for XCART is limited off-tumor toxicities, such as B-cell aplasia. Xenetic's clinical development program will seek to confirm the early preclinical results, and to demonstrate a more attractive safety profile than existing therapies.

Under the terms of the transaction, Xenetic will acquire all outstanding shares of Hesperix S.A., a newly-formed Swiss entity to which all XCART owners and inventors other than Scripps have assigned their rights to XCART, and will exclusively license Scripps' rights in the technology, in exchange for an aggregate 7,500,000 shares of Xenetic common stock.




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