Sutro Biopharma, located in South San Francisco, has entered into a strategic collaboration and option agreement with Celgene to discover and develop multispecific antibodies and antibody drug conjugates (ADCs). This new agreement follows the December 2012 collaboration between the two companies and focuses on the field of immuno-oncology, while further broadening the Sutro platform for discovery, development and manufacture of best-in-class biotherapeutics.

The scope of the collaboration allows the parties to systematically interrogate the immuno-oncology space, including established targets, such as PD-1 and PD-L1, as well as novel targets, using Sutro’s cell-free biologics development platforms, Xpress CF and Xpress CF+.

After an initial period, Celgene will have the exclusive option to acquire Sutro, including rights to all Sutro-owned programs at that time, on pre-specified terms. Sutro will receive upfront payments totaling $95 million, which include an equity investment. Sutro also may receive up to an additional $90 million during the initial research term, including payments for manufacturing-related and productivity milestones.

Celgene has the option to extend the collaboration beyond the initial research term in exchange for an additional payment. Across all product candidates, Sutro is eligible to receive more than $1 billion in total payments upon achievement of clinical and regulatory milestones for product candidates and royalties on product sales.

Sutro will be responsible for discovery and early preclinical development of all collaboration multispecific antibodies and ADCs, as well as the manufacturing of preclinical product candidates. The collaboration also contemplates a clinical and commercial supply agreement between Sutro and Celgene for collaboration products.

Celgene may assume responsibility for global development and commercialization and will have worldwide rights to all collaboration products, with the exception of certain collaboration products for which Sutro retains U.S. development and commercialization rights, in the event Celgene does not exercise its option to acquire Sutro.