KITE PHARMA, INC. FORM 10-Q. (Quarterly Report) Filed 05/08/17 for the Period Ending 03/31/17

Transcription

1 KITE PHARMA, INC. FORM 10-Q (Quarterly Report) Filed 05/08/17 for the Period Ending 03/31/17 Address 2225 COLORADO AVENUE SANTA MONICA, CA Telephone (310) CIK Symbol KITE SIC Code Biological Products, Except Diagnostic Substances Industry Biotechnology & Medical Research Sector Healthcare Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

2 (Mark One) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2017 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: KITE PHARMA, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 2225 Colorado Avenue Santa Monica, California (Address of Principal Executive Offices) (310) (Registrant s Telephone Number, Including Area Code) (Zip Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

3 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x As of May 4, 2017, there were 56,545,959 shares of the registrant s common stock, par value $0.001 per share, outstanding.

4 KITE PHARMA, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2017 INDEX Part I Financial Information 4 Item 1. Financial Statements 4 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations and Comprehensive Loss 5 Condensed Consolidated Statements of Cash Flows 6 Notes to the Condensed Consolidated Financial Statements 7 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3. Quantitative and Qualitative Disclosures About Market Risk 36 Item 4. Controls and Procedures 36 Part II Other Information 38 Item 1. Legal Proceedings 38 Item 1A. Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 67 Item 3. Defaults Upon Senior Securities 67 Item 4. Mine Safety Disclosures 68 Item 5. Other Information 68 Item 6. Exhibits 69 Signatures 70 Page Trademarks and Trade Names Kite Pharma, Inc. (including its subsidiaries, referred to as Kite, the Company, we, our, or us ) has common law, unregistered trademarks for Kite based on use of the trademarks in the United States. This Quarterly Report on Form 10-Q, or this Quarterly Report, contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report, including logos, artwork and other visual displays, may appear without the or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

5 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ASSETS Current assets KITE PHARMA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) MARCH 31, 2017 (UNAUDITED) DECEMBER 31, 2016 Cash and cash equivalents $ 565,153 $ 114,561 Marketable securities 238, ,861 Prepaid expenses and other current assets 15,200 12,974 Total current assets 819, ,396 Restricted cash and investments 17,883 10,669 Property and equipment, net 46,241 44,409 Intangible assets, net 6,033 6,946 Goodwill 24,840 24,452 Other assets 9,518 10,432 Total assets $ 923,743 $ 524,304 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 13,214 $ 10,660 Accrued expenses and other current liabilities 26,492 29,482 Deferred revenue 39,886 15,000 Total current liabilities 79,592 55,142 Deferred revenue, less current portion 38,177 19,779 Contingent consideration 14,575 14,218 Other non-current liabilities 11,301 7,195 Total liabilities 143,645 96,334 COMMITMENTS AND CONTINGENCIES (NOTE 11) STOCKHOLDERS' EQUITY Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2017 and December 31, 2016 Common stock, $0.001 par value, 200,000,000 shares authorized, 56,392,507 and 50,083,355 shares issued and outstanding, excluding 200,000 and 298,758 shares subject to repurchase at March 31, 2017 and December 31, 2016, respectively Additional paid-in capital 1,297, ,564 Accumulated other comprehensive loss (686) (917) Accumulated deficit (517,126) (426,727) Total stockholders' equity 780, ,970 Total liabilities and stockholders' equity $ 923,743 $ 524,304 See accompanying notes. 4

6 KITE PHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share amounts) (Unaudited) THREE MONTHS ENDED MARCH 31, Revenues $ 9,836 $ 5,127 Operating expenses: Research and development 65,906 34,414 General and administrative 35,842 16,683 Total operating expenses 101,748 51,097 Loss from operations (91,912) (45,970) Other income (expense): Interest income 1, Interest expense (4) Other income (expense), net Total other income (expense), net 1, Loss before income taxes (90,460) (45,125) Benefit from income taxes 61 1,209 Net loss $ (90,399) $ (43,916) Net loss per share, basic and diluted $ (1.74) $ (0.90) Weighted-average shares outstanding, basic and diluted 51,839,500 48,831,797 Comprehensive loss: Net loss $ (90,399) $ (43,916) Foreign currency translation adjustments Unrealized gain on available-for-sale securities, net Comprehensive loss $ (90,168) $ (42,671) See accompanying notes. 5

7 KITE PHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Cash flows from operating activities: THREE MONTHS ENDED MARCH 31, Net loss $ (90,399) $ (43,916) Adjustment to reconcile net loss to net cash from operating activities: Depreciation and amortization 3,206 1,901 Stock-based compensation 24,076 14,864 Amortization on marketable securities Fair value adjustment of contingent consideration Loss from equity method investee 478 Other (264) (313) Changes in operating assets and liabilities: Deferred revenue 43,325 (3,360) Deferred rent 3, Prepaid expenses and other current assets (1,766) 1,297 Other assets Accounts payable 2,282 (141) Accrued expenses and liabilities (3,773) (428) Due to related party Net cash used in operating activities (17,807) (29,168) Cash flows from investing activities: Purchases of marketable securities (197,556) Sales and maturities of marketable securities 53,555 42,002 Purchase of property and equipment (2,374) (9,452) Net cash provided by (used in) investing activities 51,181 (165,006) Cash flows from financing activities: Principal payments on capital lease obligations (44) (44) Proceeds from issuance of common stock, net of issuance costs 399,869 Proceeds from employee stock purchase plan Proceeds from exercise of stock options 16, Net cash provided by financing activities 417, Effect of exchange rate changes on cash Net change in cash and cash equivalents 450,592 (193,242) Cash and cash equivalents at beginning of period 114, ,843 Cash and cash equivalents at end of period $ 565,153 $ 199,601 Supplemental schedule of cash flows information: Proceeds from employee stock plan received in advance of issuance $ 590 $ 305 See accompanying notes. 6

8 NOTE 1 BUSINESS AND NATURE OF OPERATIONS Nature of Operations KITE PHARMA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2017 (Unaudited) Kite was incorporated on June 1, 2009 in the State of Delaware and is headquartered in Santa Monica, California. The Company is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel cancer immunotherapy products designed to harness the power of a patient s own immune system to eradicate cancer cells. The Company is developing multiple product candidates using its engineered autologous cell therapy, which involves the genetic engineering of T cells to express either chimeric antigen receptors ( CARs ) or T cell receptors ( TCRs ). Since commencing operations, the Company has devoted substantially all of its efforts to securing intellectual property rights, performing research and development activities, including conducting clinical trials and manufacturing activities, hiring personnel, preparing for the potential commercial launch of its lead product candidate, KTE-C19, and raising capital to support and expand these activities. On March 17, 2015, the Company acquired T-Cell Factory B.V. ( TCF ), a Dutch company, for the opportunity to expand the Company s pipeline of TCR-based product candidates. TCF has been renamed Kite Pharma EU B.V. ( Kite Pharma EU ). NOTE 2 BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ( GAAP ). The consolidated financial statements include the accounts of Kite and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated during consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company s management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. Interim results are not necessarily indicative of results for the full fiscal year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in the Company s Annual Report on Form 10-K for the year ended December 31, In 2016, the Company identified that the three months ended March 31, 2016 activities related to the Company s employee stock purchase plan of $0.5 million had been presented in cash flows from operating activities instead of cash flows from financing activities. The Company corrected the previously presented cash flows for these items and in doing so, the condensed consolidated statements of cash flows for the three months ended March 31, 2016 were adjusted to increase the net cash used in operating activities by $0.5 million, and increase the net cash provided from financing activities by $ 0.5 million. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements. The Company has not generated any revenue from the sale of products since its inception. The Company has experienced net losses since its inception and has an accumulated deficit of $517.1 million and $426.7 million as of March 31, 2017 and December 31, 2016, respectively. The Company expects to incur losses and have negative net cash flows from operating activities as it prepares for potential commercialization of its lead product candidate, KTE-C19, and as it expands its portfolio and engages in further research and development activities, particularly conducting pre-clinical studies and clinical trials. The success of the Company depends on its ability to develop its technologies to the point of U.S. Food and Drug Administration ( FDA ) approval and subsequent revenue generation or through the sale, merger, or other transfer of all or substantially all of the Company s assets and, accordingly, to raise enough capital to finance these developmental efforts. In the future, management may need to raise additional capital to finance the continued operating and capital requirements of the Company. Any amounts raised may be used for the further development and commercialization of product candidates, to acquire additional product licenses and for other working capital purposes. There can be no assurances that the Company will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. If the Company cannot obtain adequate working capital, it will be forced to reevaluate its planned business operations. 7

9 NOTE 3 SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Estimates are made in these consolidated financial statements, which included but are not limited to contingent consideration, stock-based compensation expense, accrued expenses, revenue, acquisition-date fair value and subsequent fair value estimates used to assess potential impairment of long-lived assets, including goodwill and intangible assets, and income taxes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist primarily of money market funds, bank money market accounts, certificates of deposit, and U.S. treasury securities, and are stated at cost, which approximates fair value. Restricted Cash and Investments The Company has amounts that are posted as secured collateral in connection with letters of credit relating to the Company s leases of its commercial manufacturing and support facilities. These amounts reported as restricted cash totaled $3.7 million and have been included within the restricted cash and investments caption at March 31, 2017 and December 31, In November 2016, the Company pledged $7.0 million of government-related debt securities against a $5.5 million letter of credit to secure a lease agreement entered into in November See Note 11 for further discussion. These investments have been included within the restricted cash and investments caption at March 31, 2017 and December 31, The letter of credit amount was increased by $5.5 million in January 2017, resulting in an additional $7.2 million of government-related debt securities pledged as collateral. These investments have been included within the restricted cash and investments caption at March 31, Marketable Securities The Company's marketable securities have been classified as available-for-sale and are carried at fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other income (expense), net. The cost of securities sold is based on the specific-identification method. Interest on marketable securities is included in interest income. Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and marketable securities. The primary objectives for the Company s investment portfolio are the preservation of capital and the maintenance of liquidity. The Company does not enter into any investment transaction for trading or speculative purposes. The Company s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the U.S. government and U.S. government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer. The Company maintains cash balances in excess of amounts insured by the FDIC and concentrated within a limited number of financial institutions. The accounts are monitored by management to mitigate the risk. Foreign Currencies As a result of a business combination, the Company now operates in multiple currencies. Related to the wholly-owned subsidiary, Kite Pharma EU, the Company has determined that based on the nature of the transactions occurring within this entity, the functional currency of the subsidiary is the Euro, and accordingly, any net assets of Kite Pharma EU, including goodwill and identifiable intangible assets, are translated into U.S. dollars at the rates prevailing as of the balance sheet dates. The operating results of Kite Pharma EU are translated into U.S. dollars using the average exchange rates for the period 8

10 correlating with those operating results. Any translation impact is included as a component of accumulated other comprehensive loss on the condensed consolidated balance sheets. Income Taxes The Company provides for income taxes based on pretax income, if any, and applicable tax rates available in the various jurisdictions in which it operates. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. A valuation allowance is recorded to reduce the Company s deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits (UTBs) is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. It is the Company s policy to recognize both accrued interest and penalties, if any, related to UTBs in income tax expense. See Note 9 for further discussion related to income taxes. Equity Investments and Business Combinations For equity investments in other companies, the Company utilizes the cost method of accounting when it does not have the ability to exercise significant influence over the investee. For equity investments where the Company has the ability to exercise significant influence, the Company utilizes the equity method of accounting in accordance with ASC Topic 323, Investments Equity Method and Joint Ventures. For business combinations, the Company utilizes the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. These standards require that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The allocation of the purchase price is dependent upon certain valuations and other studies. Acquisition costs are expensed as incurred. The Company recognizes separately from goodwill the fair value of assets acquired and the liabilities assumed. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the acquisition date fair values of the assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the Company s estimates are subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of the assets acquired and liabilities assumed, with the corresponding offset to goodwill in the period in which the amounts are determined. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company s condensed consolidated statements of operations. Contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date and remeasured at their fair values each subsequent reporting period until the related contingencies are resolved. The resulting changes in fair values are recorded as general and administrative expense in the condensed consolidated statements of operations. Changes in fair values reflect changes to the Company s assumptions regarding probabilities of successful achievement of related milestones, the timing in which the milestones are expected to be achieved, and the discount rate used to estimate the fair value of the obligation. See Note 4 for further discussion. Goodwill and Other Intangible Assets Certain intangible assets were acquired as part of a business combination, and have been capitalized at their acquisition date fair value. Acquired definite life intangible assets are amortized using the straight-line method over their respective estimated useful lives. The Company evaluates the potential impairment of intangible assets if events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Goodwill is not amortized but is evaluated for impairment within the Company s single reporting unit on an annual basis, during the fourth quarter, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of the Company s reporting unit below its carrying amount. 9

11 Property and Equipment Property and equipment is recorded at historical cost, net of accumulated depreciation, amortization and, if applicable, impairment charges. The Company reviews its property and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Depreciation is provided over the assets useful lives on a straight-line basis, generally over three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or lease terms. See Note 5 for further discussion regarding property and equipment. Patent Costs The costs related to acquiring patents and to prosecuting and maintaining intellectual property rights are recorded as general and administrative expense as incurred due to the uncertainty surrounding the drug development process and the uncertainty of future benefits. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following as of March 31, 2017 and December 31, 2016, respectively (in thousands): MARCH 31, 2017 DECEMBER 31, 2016 Accrued compensation costs $ 8,634 $ 14,492 Accrued professional and consulting services 4,191 3,632 Accrued research and development costs 5,506 3,215 Accrued clinical expenses 3,391 4,647 Deferred rent, current 791 1,163 Accrued related party costs Accrued other expenses 2,987 1,642 Total accrued expenses and other current liabilities $ 26,492 $ 29,482 Revenues As of March 31, 2017, the Company s revenue has been exclusively generated from its collaboration and license agreements with Amgen, Inc. ( Amgen ), Daiichi Sankyo Company, Limited ( Daiichi ), and Leukemia & Lymphoma Society, Inc. ( LLS ). See Note 6 for more information related to the Amgen research collaboration and license agreement (the Amgen Agreement ), the Daiichi Sankyo collaboration and license agreement (the DS Agreement ), and the LLS research, development and commercialization agreement (the LLS Agreement ). Under the Amgen Agreement, the Company received an upfront payment of $60.0 million from Amgen in February Amgen will fund the research and development costs for all programs with certain limitations through any investigational new drug application ( IND ) filing. Each company will then be responsible for clinical development and commercialization of their respective therapeutic candidates, including all related expenses. The Company will be responsible for the manufacturing and processing of Amgen program product candidates for a certain period following the completion of any Phase 2 clinical trials under a separately negotiated supply agreement, should Amgen choose not to transition manufacturing to itself or to a mutually agreed upon designee of Amgen. The Company applied the FASB Accounting Standards Update No , Multiple-Deliverable Revenue Arrangements, in evaluating the appropriate accounting for the upfront payment and research funding under the Amgen Agreement. In accordance with this guidance, the Company concluded that the Amgen Agreement should be accounted for as a single unit of accounting and recognize the Amgen Agreement consideration in the same manner as the final deliverable, which is research service. The $60.0 million upfront payment was recorded as deferred revenue and is being recognized over a four year period, which is the estimated period of performance for the research service under this agreement. In addition, the Amgen research funding relating to Amgen targets, which is due as the related services are performed under the Amgen Agreement, is recorded as revenue on a time and material basis, with the corresponding cost of revenue recorded as research and development expense in the condensed consolidated statements of operations. Under certain circumstances, the Company may be required to reimburse Amgen for research and development services for Company targets. The Company will defer the recognition of revenue related to research and development services billed until 10

12 the potential reimbursement contingency has lapsed. Any costs reimbursed by Amgen that relate to a Company program that progresses to an IND filing are recorded as deferred revenue until either an IND is filed and we are required to reimburse Amgen for such expenses, or the program ends without an IND filing, at which point the revenue would be recognized. During the three months ended March 31, 2017 and 2016, the Company recognized $5.5 million and $5.0 million of revenue under the Amgen Agreement, respectively. As of March 31, 2017, the Company had deferred revenue relating to the Amgen Agreement of $32.4 million, of which $5.1 million relates to Kite programs that would be paid back to Amgen in the event that the Kite programs progress to an IND filing. Under the DS Agreement, the Company received an upfront payment of $50.0 million from Daiichi in January At the inception of the DS Agreement, the Company s significant deliverables consisted of an exclusive license to develop and commercialize KTE-C19 in Japan and providing certain technical assistance and technology transfer services related to the manufacturing of the licensed product. The Company concluded that the license is not a separate unit of accounting because Daiichi cannot obtain a benefit from the license rights for their intended purpose without the manufacturing technology transfer. Therefore, such deliverables were considered a single unit of accounting. Consequently, the $50.0 million upfront payment was initially recorded in deferred revenue and is being recognized ratably as revenue over the related technology transfer period, which is initially determined to be approximately two years. Additionally, the Company will be responsible for any clinical manufacturing and supply of the licensed product should clinical trials begin before the end of the technology transfer period. The Company has concluded that the options to license any additional product candidates are substantive options, and were not considered deliverables at the inception of the DS Agreement since Daiichi is not contractually obligated to exercise the options. Additionally, as a result of the uncertain outcome of the discovery, research and development activities, the Company is at risk with respect to whether Daiichi will exercise the options to license any additional product candidates. Moreover, the Company has concluded that the options are not priced at a significant and incremental discount. Accordingly, the options to other product candidates are not considered deliverables and the associated option fees are not included in allocable arrangement consideration. During the three months ended March 31, 2017 the Company recognized $4.2 million of revenue under the DS Agreement. As of March 31, 2017, the Company had deferred revenue relating to the DS Agreement of $45.6 million. In the future, the Company may be eligible for development, regulatory and commercial milestone payments under the Amgen Agreement and the DS Agreement. The Company recognizes revenue related to the milestones under the Amgen Agreement and the DS Agreement in accordance with the Accounting Standards Codification , Milestone Method of Revenue Recognition ( ASC ). At the inception of the arrangement the Company evaluates whether each milestone is substantive and at risk. This evaluation includes an assessment of whether: (i) the consideration is commensurate with either the Company s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the Company s performance to achieve the milestone; (ii) the consideration relates solely to past performance; and (iii) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company has concluded that all of the development and regulatory milestones pursuant to its collaboration with Amgen are substantive and at risk. Thus, in accordance with ASC , revenue will be recognized in its entirety upon successful accomplishment of the milestone, assuming all other revenue recognition criteria are met. The Company has concluded that one of the development milestones pursuant to the DS Agreement is not considered substantive because the milestone does not meet the criteria above. Accordingly, such milestone would be recognized as revenue over the remaining period of performance obligation, if any, following the achievement of the milestone. Milestones related to sales-based activities may be triggered upon meeting net sales benchmarks. Under the Amgen Agreement and DS Agreement, the achievement of these commercial milestones is solely dependent on Amgen s and Daiichi s performance, and there are no continuing performance obligations from the Company. These commercial milestones would be achieved after the completion of the Company s performance obligations. Revenue from commercial milestone payments will be accounted for as royalties and recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met. During the three months ended March 31, 2017 and 2016, the Company recognized $0.2 million and $0.1 million of revenue under the LLS Agreement related to research and development activities and achievement of clinical milestones. 11

13 General and Administrative Expenses General and administrative expenses consist primarily of salaries and other staff-related costs, including stock-based compensation, for personnel in executive, commercial, finance, accounting, legal, investor relations, facilities, patent prosecution, business development and human resources functions. Other significant costs include costs relating to preparing for the potential commercial launch of KTE-C19, facilities and overhead costs, sublicense royalties, legal fees relating to corporate and patent matters, insurance, public company expenses relating to maintaining compliance with NASDAQ listing rules and SEC requirements, investor relations costs, fees for accounting and consulting services, and other general and administrative costs. General and administrative costs are expensed as incurred, and the Company accrues for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers, and adjusting its accruals as actual costs become known. Research and Development Expenses Research and development costs are expensed as incurred. Expenses related to collaborative research and development activities approximate the revenue recognized under these agreements. Research and development costs consist primarily of salaries, benefits, and other staff-related costs including associated stock-based compensation, laboratory supplies, facilities and overhead costs, clinical trial and related clinical manufacturing costs, costs related to manufacturing preparations, fees paid to other entities that conduct certain research and development activities on our behalf and payments made pursuant to license agreements. Clinical trial and other development costs incurred by third parties are expensed as the contracted work is performed. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from its external service providers. The Company adjusts its accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are achieved. Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the required service period, which is generally equal to the vesting period. Stock-based compensation is recognized only for those awards that are ultimately expected to vest. Common stock, stock options, restricted stock units ( RSUs ) and warrants or other equity instruments issued to non-employees, including consultants and members of the Company s Scientific Advisory Board as consideration for goods or services received by the Company, are accounted for based on the fair value of the equity instruments issued unless the fair value of the consideration received can be more reliably measured. The fair value of stock options is determined using the Black-Scholes option-pricing model. The fair value of any awards issued to nonemployees is marked to market each period and recorded as expense over the vesting period. The fair value of an RSU equals the closing price of our common stock on the grant date. Proceeds from options exercised by employees prior to vesting pursuant to an early exercise provision, the related shares of which the Company has the option to repurchase prior to the vesting date should employment of the early exercised option holder be terminated, are recognized as a liability until the shares vest. Net Loss per Common Share Basic net loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding. Diluted net loss per common share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The following table sets forth potentially dilutive securities that were excluded from the calculation of diluted net loss per common share because including them would have had an anti-dilutive effect for the quarters ended: March 31, Warrants to purchase common stock 97, ,444 Unvested restricted stock units 1,049, ,471 Unvested early exercise options 200, ,169 Options to purchase common stock 9,272,301 8,054,247 Total 10,619,695 9,476,331 12

14 The unvested early exercised options represent stock options that were exercised pursuant to an early exercise provision in the option agreements of certain employees. The Company has the option to repurchase these shares if they do not vest prior to the termination of these employees. The following table summarizes the calculation of unaudited basic and diluted net loss per common share for the periods presented (in thousands, except share and per share amounts): Numerator: THREE MONTHS ENDED MARCH 31, Net loss $ (90,399) $ (43,916) Denominator: Weighted-average common shares outstanding 52,087,782 49,872,095 Less: weighted-average unvested common shares subject to repurchase (248,282) (1,040,298) Weighted-average shares used to compute net loss per share, basic and diluted 51,839,500 48,831,797 Net loss per common share, basic and diluted $ (1.74) $ (0.90) Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ( FASB ) issued ASU , Revenue From Contracts With Customers (Topic 606), amended by ASU which supersedes most current revenue recognition guidance, including industry-specific guidance. The new standard provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard allows for two methods of adoption: (a) full retrospective adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the new standard is recognized as an adjustment to the opening retained earnings balance. The guidance becomes effective on January 1, 2018 and early adoption is permitted. The Company expects to adopt ASU in the first quarter of 2018 and is currently determining the transition method it will adopt. The adoption of ASU may have a material effect on our financial statements. To date, we have derived our revenues from a limited number of license and collaboration agreements. The consideration we are eligible to receive under these agreements includes upfront payments, research and development funding, milestone payments and royalties. Each of our license and collaboration agreements has unique terms that will need to be evaluated separately under the new standard. We have started our preliminary assessment of our active license and collaboration agreements. ASU differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments. Accordingly, we expect that our evaluation of the accounting for collaboration agreements under the new revenue standard could identify material changes from the current accounting treatment. For example, we currently recognize milestone revenue using the milestone method specified in ASC , which generally results in the recognition of milestone revenue in the period that the milestone event is achieved. However, under the new accounting standard, it is possible to start to recognize milestone revenue before the milestone is achieved if management determines with a high degree of certainty that amounts recorded as revenues will not have to be reversed when the uncertainty associated with the variable consideration is subsequently resolved. In addition, the current accounting standards include a presumption that revenue from upfront non-refundable fees are recognized ratably over the performance period, unless another attribution method is determined to more closely approximate the delivery of the goods or services to the customer. The new accounting standard will require entities to determine an appropriate attribution method using either output or input methods and does not include a presumption that entities would default to a ratable attribution approach. These factors could materially impact the amount and timing of our revenue recognition from our license and collaboration agreements under the new revenue standard. In January 2016, the FASB issued ASU , Financial Instruments, which amends the accounting and disclosures of financial instruments and includes a provision that equity investments not accounted for under the equity method of accounting 13

15 to be measured at fair value, with changes in fair value recognized in current earnings. This standard becomes effective on January 1, 2018 and early adoption is permitted. The Company does not believe the adoption of this standard will have a material impact on its financial position or results of operations. In February 2016, the FASB issued ASU , Leases (Topic 842), which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. Lessees are required to be classified as either operating or finance on the income statements based on criteria that are largely similar to those applied in current lease accounting. The guidance becomes effective on January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact that the adoption of this update will have on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No , Investments - Equity Method and Joint Ventures (Topic 323). The new standard no longer requires that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an adjustment must be made to the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The Company elected to early adopt the new standard during the quarter ended June 30, 2016 and the adoption of this standard did not have a material impact on the Company's financial position or results of operations. In March 2016, the FASB issued ASU , Compensation - Stock Compensation (Topic 718), to simplify various aspects of the accounting for share-based payments, which provides that all of the tax effects related to share-based payments are recorded as part of the provision for income taxes, allows entities to withhold an amount up to the employees maximum individual tax rate in the relevant jurisdiction, allows entities to estimate the effect of forfeitures or recognized forfeitures when they occur, amends the presentation of the excess tax benefits from employee share-based payments to be included in cash flows from operating activities instead of cash flows from financing activities as under previous guidance, as well as that the cash paid to taxing authorities arising from the withholding of shares from employees be included in cash flows from financing activities instead of cash flows from operating activities as under previous guidance. This standard became effective for fiscal years beginning after December 15, 2016 and interim periods within those annual periods. Early adoption was permitted, and the Company elected to adopt this standard during the three months ended March 31, Since the Company has incurred net losses since its inception and maintains a full valuation allowance on its net deferred tax assets, adoption of the new guidance had no significant impact on the Company s condensed consolidated financial statements or its cash flow presentation for the three months ended March 31, 2017 and 2016, respectively. In June 2016, the FASB issued ASU , Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The guidance becomes effective on January 1, The Company is currently evaluating the potential impact this update may have on its financial position and results of operations. In August 2016, the FASB issued ASU , Statement of Cash Flows (Topic 230), which provides greater clarity to preparers on the treatment of certain items within an entity s statement of cash flows. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance becomes effective on January 1, 2018 and early adoption is permitted. The Company elected to adopt the new standard during the quarter ended September 30, The early adoption of this standard did not have a material impact on the Company's financial position or results of operations. In October 2016, the FASB issued ASU , Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which changes the accounting for income tax effects of intra-entity transfers of assets other than inventory. Under the new guidance, entities should recognize the income tax consequences on an intra-entry transfer of an asset other than inventory when the transfer occurs. The guidance becomes effective on January 1, 2018 and early adoption is permitted. The Company is currently evaluating the potential impact this guidance may have on its financial position and results of operations. In November 2016, the FASB issued ASU , Statement of Cash Flows (Topic 230): Restricted Cash, which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents and when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance becomes effective on January 1, 2018 and early adoption is permitted. The Company expects to adopt this standard in the first quarter of 2018 and does not expect the adoption of this standard to have a material impact on its financial position or results of operations. 14

16 In January 2017, the FASB issued ASU , Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides additional guidance on evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The standard requires an entity to evaluate if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the new guidance would define this as an asset acquisition; otherwise, the entity would then evaluate whether the asset meets the requirement that a business include, at a minimum, an input and substantive process that together significantly contribute to the ability to create outputs. The standard becomes effective on January 1, 2018, with early adoption permitted. The standard would be applied prospectively to any transaction occurring on or after the adoption date. The Company is currently evaluating the impact that this new standard may have on its financial position and results of operations. In January 2017, the FASB issued ASU , Intangibles-Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit s goodwill. Instead, entities will record an impairment loss based on the excess of a reporting unit s carrying amount over its fair value, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard becomes effective on January 1, 2020 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on the Company s financial statements. NOTE 4 FAIR VALUE MEASUREMENTS AND INVESTMENTS IN MARKETABLE SECURITIES The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows: Level1: Level2: Level3: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities; Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Unobservable inputs that reflect the reporting entity s own assumptions. The carrying amounts of the Company s prepaid expenses, other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of the short term nature of these instruments. No transfers between levels have occurred during the periods presented. 15

17 Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of March 31, 2017 is as follows (in thousands): Assets: Balance as of March 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Fair Value Measurements Using Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted cash and investments $ 17,883 $ 3,664 $ 14,219 $ Money market funds (1) 439, ,961 Corporate debt securities (2) 144, ,815 Government sponsored entities and U.S. Treasuries 134, ,060 Total assets $ 736,719 $ 443,625 $ 293,094 $ Liabilities: Contingent consideration $ 14,575 $ $ $ 14,575 (1) Included within cash and cash equivalents on the Company s condensed consolidated balance sheets. (2) $40.0 million of corporate debt securities had an original maturity of less than 90 days, and were included within cash and cash equivalents on the Company s condensed consolidated balance sheets. Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of December 31, 2016 is as follows (in thousands): Assets: Balance as of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Fair Value Measurements Using Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted cash $ 3,662 $ 3,662 $ $ Money market funds (1) 82,364 82,364 Commercial paper 1,500 1,500 Corporate debt securities 131, ,061 Government sponsored entities and U.S. Treasuries (2) 174, ,307 Total $ 392,894 $ 86,026 $ 306,868 $ Liabilities: Contingent consideration $ 14,218 $ $ $ 14,218 (1) Included within cash and cash equivalents on the Company s condensed consolidated balance sheets. (2) $7.0 million of government-related debt securities have been pledged against a letter of credit to secure a lease agreement entered in November See Note 11 for further discussion. Amounts in the tables above exclude bank account cash of $85.2 million and $32.2 million as of March 31, 2017 and December 31, 2016, respectively. The Company s investments in money market funds are valued based on publicly available quoted market prices for identical securities as of March 31, The Company determines the fair value of corporate bonds and other government-sponsored enterprise related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or prices for similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers. 16

18 Additionally, in connection with the acquisition of Kite Pharma EU, the Company has agreed to pay additional amounts based on the achievement of certain milestones. This contingent consideration obligation is recorded at its estimated fair value, and is revalued at each reporting period until the related contingency is resolved. The fair value measurements of this obligation are based on significant inputs not observable in the market (a Level 3 measurement within the fair value hierarchy) and are reviewed periodically by management. These inputs include the estimated probabilities and timing of achieving specified development and sales milestones, as well as the discount rate used to determine the present value of these milestones. Contingent consideration may change significantly as development progresses and additional data are obtained. Significant changes that would increase or decrease the probabilities or timing of achieving the development and sales milestones would result in a corresponding increase or decrease in the fair value of the contingent consideration obligations, which would be recognized in general and administrative expense in the condensed consolidated statements of operations. During the three months ended March 31, 2017, the Company recorded $0.1 million as a general and administrative expense related to the change in the fair value of the contingent consideration. During the three ended March 31, 2016, the Company recorded $0.1 million related to the change in the fair value of the contingent consideration, which was based on the passage of time, as interest expense. This amount has been reclassified to general and administrative expense to conform to the current year presentation. Investments classified as available-for-sale at March 31, 2017 consisted of the following (in thousands): Marketable Securities: Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Estimated Fair Value Corporate debt securities (1) 1 year or less $ 102,664 $ 16 $ (43) $ 102,637 Corporate debt securities 1-2 years 24, (57) 24,558 Corporate debt securities More than 2 years 17,810 (190) 17,620 Government sponsored entities and U.S. Treasuries 1 year or less 58,768 (49) 58,719 Government sponsored entities and U.S. Treasuries 1-2 years 52,653 2 (157) 52,498 Government sponsored entities and U.S. Treasuries More than 2 years 23,016 (173) 22,843 Total available-for-sale securities $ 279,470 $ 74 $ (669) $ 278,875 (1) $40.0 million of corporate debt securities had an original maturity of less than 90 days, and were included within cash and cash equivalents on the Company s condensed consolidated balance sheets. Investments classified as available-for-sale at December 31, 2016 consisted of the following (in thousands): Marketable Securities: Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Estimated Fair Value Commercial paper 1 year or less $ 1,500 $ $ $ 1,500 Corporate debt securities 1 year or less 69,511 8 (57) 69,462 Corporate debt securities 1-2 years 40, (124) 40,145 Corporate debt securities More than 2 years 21,744 (290) 21,454 Government sponsored entities and U.S. Treasuries 1 year or less 66,552 3 (17) 66,538 Government sponsored entities and U.S. Treasuries 1-2 years 61,973 5 (122) 61,856 Government sponsored entities and U.S. Treasuries More than 2 years 39,110 (204) 38,906 Total available-for-sale securities $ 300,631 $ 44 $ (814) $ 299,861 The Company has classified all of its available-for-sale investment securities, including those with maturities beyond one year, as current assets on the accompanying condensed consolidated balance sheets based on the highly liquid nature of these investment securities and because these investment securities are considered available for use in current operations. The Company recognizes realized gains or losses on sales of available-for-sale securities as other income (expense), net. Unrealized gains and losses on available for-sale securities are included as a component of comprehensive loss. At March 31, 2017, the aggregate fair value of securities held by the Company in an unrealized loss position was $193.5 million, which 17

19 consisted of 94 securities. Of these securities, one security has been in an unrealized loss position for more than twelve months, but has an unrealized loss of approximately $2,200. At December 31, 2016, the aggregate fair value of securities held by the Company in an unrealized loss position was $229.9 million, which consisted of 118 securities. Of these securities, two securities have been in an unrealized loss position for more than twelve months, but have an aggregate unrealized loss of less than $2,000. The Company reviews its available-for-sale securities for other-than-temporary declines in fair value below its cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors include the length of time and extent to which fair value has been less than the cost basis and adverse conditions related specifically to the security, and the intent to sell, or whether the Company will more likely than not be required to sell, the security before recovery of its amortized cost basis. The Company s assessment of whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security. At March 31, 2017, the Company believes its cost basis for its available-for-sale investments were recoverable in all material aspects. NOTE 5 PROPERTY AND EQUIPMENT Property and equipment, consists of the following as of March 31, 2017 and December 31, 2016 (in thousands): MARCH 31, 2017 DECEMBER 31, 2016 Laboratory equipment $ 19,293 $ 19,000 Computer equipment and software 5,573 5,380 Office equipment and furniture 2,902 2,747 Leasehold improvements 25,247 25,140 Construction in progress 3, ,384 52,402 Less: accumulated depreciation and amortization (10,143) (7,993) Property and equipment, net $ 46,241 $ 44,409 Depreciation and amortization expense was $2.2 million and $0.8 million for the three months ended March 31, 2017 and 2016, respectively. Amortization related to assets under capital leases were included in the depreciation and amortization expense noted above. The net book value of assets under capital leases at March 31, 2017 and December 31, 2016 was $0.2 million and $0.2 million respectively, net of accumulated depreciation of $0.3 million and $0.3 million, respectively. NOTE 6 LICENSE AND COLLABORATION AGREEMENTS 2012 National Cancer Institute ("NCI") Cooperative Research and Development Agreement In August 2012, the Company entered into a Cooperative Research and Development Agreement (the CRADA ) with the U.S. Department of Health and Human Services, as represented by the NCI for the research and development of novel engineered peripheral blood autologous T cell therapeutics for the treatment of multiple cancer indications. The CRADA had a five -year term commencing August 31, 2012 and expiring on August 30, On February 24, 2015, the Company amended the CRADA by expanding the research plan to include (1) the research and development of the next generation of TCR-based product candidates that are engineered to recognize neo-antigens, which are specific to the unique genetic profile of a patient s own tumor, (2) the optimization of new methods to manufacture this next generation of TCR-based product candidates and (3) the advancement of CAR-based product candidates for the treatment of clear cell renal cell carcinoma and TCR-based product candidates for the treatment of certain epithelial tumors such as lung and colorectal cancer. To support the additional research activities under the amended CRADA, beginning in the first quarter of 2015, the Company s quarterly payments to the NCI increased from $250,000 to $750,000. Total expenses recognized under the CRADA were $0.8 million and $0.8 million for the three months ended March 31, 2017 and 2016, respectively. Pursuant to the terms of the CRADA, the Company has agreed to hold the NCI harmless and to indemnify the NCI from all liabilities, demands, damages, expenses and losses arising out of the Company s use for any purpose of the data generated, materials produced or inventions discovered in whole or in part by NCI employees under the CRADA, unless due to their negligence or willful misconduct. The CRADA may be terminated at any time upon the mutual written consent of the Company 18

20 and NCI. The Company or NCI may unilaterally terminate the CRADA at any time by providing written notice at least 60 days before the desired termination date. Pursuant to the terms of the CRADA, the Company has an option to elect to negotiate an exclusive or nonexclusive commercialization license to any inventions discovered in the performance of the CRADA, whether solely by an NCI employee or jointly with a Company employee for which a patent application has been filed. The parties jointly own any inventions and materials that are jointly produced by employees of both parties in the course of performing activities under the CRADA. Cabaret License Agreement On December 12, 2013, the Company entered into an exclusive, worldwide license agreement, including the right to grant sublicenses, with Cabaret Biotech Ltd. ( Cabaret ) and Dr. Zelig Eshhar relating to certain intellectual property and know-how (the Licensed IP ) owned or controlled by Cabaret (the Cabaret License ) for use in the treatment of oncology and such other fields as may be agreed to by the parties. Should Cabaret propose to enter into an agreement with a third party relating to the use of the Licensed IP outside of oncology ( Additional Indications ), then Cabaret shall notify the Company in writing and the Company shall have a 60 -day right of first negotiation to acquire a license to the Licensed IP in such Additional Indications. Pursuant to the Cabaret License, the Company shall be required to make cash milestone payments upon successful completion of clinical and regulatory milestones in the United States and certain major European countries relating to each product covered by the Cabaret License (each, a Cabaret Licensed Product ). The aggregate potential milestone payments are $3.9 million for each of the first two Cabaret Licensed Products, of which $3.0 million is due only after marketing approval in the United States and at least one major European country. Thereafter, for each subsequent Cabaret Licensed Product such aggregate milestone payments shall be reduced to $2.7 million. The Company has also agreed to pay Cabaret royalties on net sales of Cabaret Licensed Products at rates in the mid-single digits. To the extent the Company enters into a sublicensing agreement relating to a Cabaret Licensed Product, the Company is required to pay Cabaret a percentage of all non-royalty income received as well as payment on Cabaret s behalf of any applicable taxes due, which percentage will decrease based upon the stage of development of the Cabaret Licensed Product at the time of sublicensing. The Company has agreed to defend, indemnify and hold Dr. Eshhar, Cabaret, its affiliates, directors, officers, employees and agents, and if applicable certain other parties, harmless from all losses, liabilities, damages and expenses (including attorneys fees and costs) incurred as a result of any claim, demand, action or proceeding to the extent resulting from (a) any breach of the Cabaret License by the Company or its sublicensees, (b) the gross negligence or willful misconduct of the Company or its sublicensees in the performance of its obligations under this Cabaret License, or (c) the manufacture, development, use or sale of Cabaret Licensed Products by the Company or its sublicensees, except in each case to the extent arising from the gross negligence or willful misconduct of Cabaret or Dr. Eshhar or the breach of this Agreement by Dr. Eshhar or Cabaret. The Cabaret License expires on a product-by-product and country-by-country basis on the date on which the Company, its affiliates and sublicensees permanently cease to research, develop, sell and commercialize the Cabaret Licensed Products in such country. Either party may terminate the Cabaret License in the event of a material breach of the agreement that remains uncured following the date that is 60 days from the date that the breaching party is provided with written notice by the non-breaching party. Additionally, the Company may terminate the Cabaret License at its sole discretion at any time upon 30 days written notice to Cabaret and Dr. Eshhar. Due to the receipt of the $60.0 million upfront license payment from Amgen in connection with the Amgen Agreement, in April 2015 the Company paid $13.8 million to Cabaret as a sublicense fee, which includes $1.8 million of applicable taxes paid on Cabaret s behalf as required under the Cabaret License. As of March 31, 2017, a $3.5 million deferred asset was recorded under the other current assets caption on the condensed consolidated balance sheets, and a $2.8 million non-current deferred asset was recorded under the other assets caption of the condensed consolidated balance sheets. Both of these amounts will be recognized as sublicense fee expense within general and administrative expense on a straight-line basis over the same period as the recognition of the upfront license payment from the Amgen Agreement. For the three months ended March 31, 2017 and 2016, the Company recorded $0.9 million and $0.9 million in sublicense fee expense related to the Cabaret license, respectively. 19

21 December 2014 National Institutes of Health ( NIH ) License Agreement Pursuant to a patent license agreement with the NIH, dated December 31, 2014, the Company holds an exclusive, worldwide license to certain intellectual property related to TCR-based product candidates that target HPV antigens E6 and E7 of the HPV subtype 16. Pursuant to the terms of this license, the Company paid the NIH a cash payment in the aggregate amount of $350,000 in February The Company is required to make performance-based payments upon successful completion of clinical and regulatory benchmarks relating to the licensed products. The aggregate potential benchmark payments for each licensed product are $6.0 million, of which aggregate payments of $5.0 million are due only after marketing approval in the United States or in Europe, Japan, China or India. The first benchmark payment of $50,000 will be due upon the commencement of the Company s first sponsored Phase 1 clinical trial. In addition, the Company is required to pay the NIH one-time benchmark payments following aggregate net sales of up to $1.0 billion of licensed products. The aggregate potential amount of these benchmark payments is $7.0 million. The Company must also pay the NIH royalties on net sales of products covered by this license at rates in the midsingle digits. To the extent the Company enters into a sublicensing agreement relating to a licensed product, the Company is required to pay the NIH a percentage of all consideration received from a sublicensee, which percentage will decrease based on the stage of development of the licensed product at the time of the sublicense. Any such sublicense payment is subject to a certain cap. The license will expire upon expiration of the last patent contained in the licensed patent rights, unless terminated earlier. None of the applications included in the NIH licensed patent rights have issued yet. Any patents issuing from these applications will have a base expiration date no earlier than The NIH may terminate or modify the license in the event of a material breach, including if the Company does not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event. The Company may terminate the license, or any portion thereof, at its sole discretion at any time upon 60 days written notice to the NIH. In addition, the NIH has the right to require the Company to sublicense the rights to the product candidates covered by the license upon certain conditions, including if the Company is not reasonably satisfying required health and safety needs or if the Company is not satisfying requirements for public use as specified by federal regulations. October 2015 NIH License Agreement Pursuant to a patent license agreement with the NIH, dated October 1, 2015, the Company holds an exclusive, worldwide license to certain intellectual property related to TCRbased product candidates directed against MAGE A3 and A3/A6 antigens for the treatment of tumors expressing MAGE. Pursuant to the terms of this license, the Company paid the NIH a cash payment in the aggregate amount of $1.2 million in November The Company is also required to make performance-based payments upon successful completion of clinical and regulatory benchmarks relating to the licensed products. The aggregate potential benchmark payments for each licensed product are $8.4 million, of which aggregate payments of $6.0 million are due only after marketing approval in the United States or in Europe, Japan, China or India. Also, a benchmark payment of $150,000 is due upon the commencement of the Company s first sponsored Phase 1 clinical trial for each licensed product in each indication. In addition, the Company is required to pay the NIH one-time benchmark payments following aggregate net sales of up to $1.0 billion of licensed products. The aggregate potential amount of these benchmark payments is $12.0 million. The Company must also pay the NIH royalties on net sales of products covered by this license at rates in the mid-single digits. To the extent the Company enters into a sublicensing agreement relating to a licensed product, the Company is required to pay the NIH a percentage of all consideration received from a sublicensee, which percentage will decrease based on the stage of development of the licensed product at the time of the sublicense. Any such sublicense payment is subject to a certain cap. The license will expire upon expiration of the last patent contained in the licensed patent rights, unless terminated earlier. None of the applications included in the NIH licensed patent rights have issued yet. Any patents issuing from these applications will have a base expiration date no earlier than The NIH may terminate or modify the license in the event of a material breach, including if the Company does not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event. The Company may terminate the license, or any portion thereof, at its sole discretion at any time upon 60 days written notice to the NIH. In addition, the NIH has the right to require the Company to sublicense the rights to the product candidates covered by the license upon certain conditions, including if the Company is not reasonably satisfying required health and safety needs or if the Company is not satisfying requirements for public use as specified by federal regulations. 20

22 Amgen Research Collaboration and License Agreement On December 31, 2014, the Company entered into the Amgen Agreement, pursuant to which the Company and Amgen expect to develop and commercialize CAR-based product candidates directed against a number of Amgen cancer targets. Under the terms of the Amgen Agreement, the Company and Amgen will jointly create preclinical development plans through IND filing with the FDA for the research and development of CAR-based product candidates that target certain antigens expressed on the cell surface of various cancers. The Company and Amgen expect to progress multiple Amgen programs, each consisting of the development of one or more CAR-based product candidates directed against a certain Amgen selected cancer target. The Company and Amgen also expect to progress multiple Company programs, each consisting of the development of one or more CAR-based product candidates directed against a certain Company selected cancer target. Under certain circumstances, the collaboration may be expanded to include the research and development of other product candidates. The Company received an upfront payment of $60.0 million from Amgen in February 2015 as partial consideration for the rights granted to Amgen by the Company for access to the Company platform technology and the Company undertaking preclinical development under certain programs. Amgen will fund the research and development costs for all programs with certain limitations through any IND filing. The Company will reimburse Amgen for the research and development costs for any Company program that progresses to an IND filing, to the extent that Amgen had previously paid the Company for any such research and development costs. Each party will then be responsible for clinical development and commercialization of their respective therapeutic candidates, including all related expenses. The Company will be responsible for the manufacturing and processing of Amgen program product candidates for a certain period following the completion of any Phase 2 clinical trials under a separately negotiated supply agreement, should Amgen choose not to transition manufacturing to itself or to a mutually agreed upon designee of Amgen. The Company will be eligible to receive up to a $100.0 million milestone payment upon receipt of the first marketing approval for the first Amgen product from each Amgen program to achieve approval and up to $425.0 million in commercial milestone payments for each Amgen program, based on the Amgen program products meeting certain net sales benchmarks in a calendar year, plus tiered high single to low double digit royalties for sales and the license of the Company s intellectual property for CAR-based product candidates. Amgen will be eligible to receive a $100 million milestone payment upon receipt of the first marketing approval for the first Company product from each Company program to achieve approval and up to $425.0 million in commercial milestone payments for each Company program, based on the Company program products meeting certain net sales benchmarks in a calendar year, plus tiered single digit sales royalties. The Company does not expect any milestones to be achieved or paid until 2021 at the earliest, as all of the collaboration product candidates are currently in the pre-clinical stage. In addition, Amgen has a one-time option to convert a Company program to an Amgen program for a fee of $35.0 million at any time on or prior to the 60th day after the later of (a) delivery of a final report with data for use in an IND and (b) filing of the IND for a Company product candidate from a Company program and delivery of such IND to Amgen. This option shall exclude the first and second Company programs for which the Company has filed an IND on the Company program product candidate. In addition to the milestones described above that would be applicable to the converted Company program, the Company shall be eligible to receive additional milestones of $50.0 million upon the initiation of the first Phase 3 clinical trial for the first product from the converted Company program and $50.0 million upon receipt of marketing approval for a second indication from the converted Company program. The term of the Amgen Agreement will continue on a target-by-target basis until the later of (1) the date on which the product candidates directed against the target are no longer covered by certain intellectual property rights, (2) the loss of certain regulatory exclusivity and (3) a defined term from the first commercial sale of the first product candidate directed against the target. Either party may terminate the agreement on a target-by-target basis with respect to its own programs with prior written notice. Either party may also terminate the agreement with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice. LLS Research, Development and Commercialization Agreement On June 30, 2015, the Company and LLS entered into a research, development and commercialization agreement to enhance the development of the Company s lead product candidate, KTE-C19. Under the agreement, LLS agreed to contribute up to $2.5 million through its Therapy Acceleration Program to help fund the Company s Phase 1-2 clinical trial of KTE-C19. Under the LLS Agreement, the Company is required to make certain regulatory and commercial milestone payments to LLS, up to a maximum aggregate amount of $6.3 million, based on the development progress of KTE-C19, or upon certain other events, including the out-licensing to a third party of the rights to develop or commercialize KTE-C19, or if the Company combines with or is sold to another company. During the three months ended March 31, 2017, the Company recognized expense of $3.1 million upon the achievement of a regulatory milestone. Additionally, due to the receipt of the $50.0 million upfront license fee under the DS Agreement, the Company paid LLS $1.0 million as a sublicense fee, which is being 21

23 recognized as a sublicense fee expense within general and administrative expense on a straight-line basis over the same period as the recognition of the upfront license payment from the DS Agreement. Alpine Immune Sciences, Inc. ( AIS ) License and Research Agreement On October 26, 2015, the Company and AIS entered into an exclusive, worldwide license and research agreement to research, develop, and commercialize engineered autologous T cell therapies incorporating two programs from AIS transmembrane immunomodulatory protein ( TIP ) technology. Under the terms of the Agreement, AIS will conduct initial research to deliver two program TIPs with certain pre-defined characteristics. The Company will then conduct further research on the program TIPs with the goal of demonstrating proof-of-concept. If successful, the Company would further engineer the program TIPs into certain CAR and TCR product candidates that would potentially enhance anti-tumor response. Pursuant to the Agreement, the Company paid AIS a $5.0 million upfront payment and paid $0.5 million in additional payments to support AIS research. The Company recorded $4.4 million to research and development expense, which includes $0.5 million as an accrued liability that was recognized as research and development expense for certain research and development activities which were performed during AIS will be eligible to receive up to $530.0 million in total milestone payments based on the successful completion of research, clinical and regulatory milestones relating to both program TIPs. At the Company s option, a portion of the milestones may be paid in shares of the Company s common stock. AIS will also be eligible to receive a low single digit royalty for sales on a licensed product-by-licensed product and country-by-country basis, until the later of (i) the date on which the licensed product is no longer covered by certain intellectual property rights, and (ii) a defined term from the first commercial sale of the licensed product. The Company may terminate the agreement with prior written notice after a defined research term. Either party may also terminate the agreement upon certain insolvency events of the other party, or with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice. Cell Design Labs, Inc. ("Cell Design Labs") Research Collaboration and License Agreement On June 1, 2016, the Company entered into a Research Collaboration and License Agreement with Cell Design Labs for the development of next generation CAR-based product candidates that incorporate Cell Design Labs molecular on/off switch technology. Under the terms of the agreement, Cell Design Labs is responsible for developing the on/off switches for the Company s CAR T cell pipeline. The Company has exclusive worldwide rights to develop and commercialize CAR-based product candidates containing Cell Design Labs on/off switches directed to certain targets that are associated with acute myeloid leukemia. The Company also has the exclusive option for a pre-defined period to develop and commercialize CAR-based product candidates containing on/off switches directed to certain targets that are associated with B-cell malignancies. See Note 10 for further discussion. Daiichi Sankyo Collaboration and License Agreement In January 2017, the Company entered into the DS Agreement pursuant to which the Company has granted to Daiichi an exclusive license to develop, manufacture and commercialize KTE-C19 in Japan. In addition, under the DS Agreement, Daiichi has a certain period of time to exclusively license in Japan, at its option, additional Kite product candidates that proceed to a U.S. IND filing over the next three years. In connection with the execution of the DS Agreement, Daiichi made an upfront non-refundable payment to Kite of $50.0 million. Kite will be eligible to receive future payments totaling up to $20.0 million upon the achievement of development milestones and $180.0 million upon the achievement of commercial sales-based milestones relating to KTE-C19 and future royalties. In addition, for each additional product candidate for which Daiichi exercises its option to acquire an exclusive license, the option exercise and milestone payments to the Company could total up to $200.0 million. The Company does not expect any milestones to be achieved or paid until the second half of 2018, at the earliest, as the licensed product is currently in the pre-clinical stage in Japan. Under the terms of the DS Agreement, the Company will provide technical assistance and technology transfer services related to the licensed product and will be responsible for any clinical manufacturing and supply of the licensed product until the completion of the technical transfer, at which time Daiichi will be responsible for manufacturing and supply of the product. Daiichi will also be responsible for the development, regulatory approval filings, and commercialization activities of the licensed product in Japan. The term of the DS Agreement will continue on a licensed product-by-licensed product basis until Daiichi permanently ceases at its sole discretion all development, manufacture and commercialization of such licensed product in Japan. Either party may 22

24 also terminate the agreement with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice, or in the event of the other party s bankruptcy. The Company may terminate the DS Agreement if Daiichi challenges certain of the Company s patents. Daiichi may terminate the DS Agreement with respect to a licensed product if the Company later acquires additional necessary intellectual property for such licensed product, and a license or sublicense to such intellectual property is not available to Daiichi on terms that Daiichi deems to be commercially reasonable. Establishment of Fosun Kite Biotechnology In January 2017, the Company entered into a co-operative joint venture contract agreement (the JV Agreement ) with Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. ( Fosun Pharma ) pursuant to which the parties agreed to establish a joint venture company for the purpose of developing, manufacturing and commercializing KTE- C19 in the mainland of the People s Republic of China, the Hong Kong Special Administration Region and the Macau Special Administration Region (together, the China Market ). As of March 31, 2017, the joint venture company was not established and no consideration under the joint venture agreement had been exchanged. In April 2017, the joint venture company, Fosun Kite Biotechnology Co., Ltd. ( Fosun Kite Biotechnology ) was established and obtained its business license in China. Within 20 business days of the establishment of Fosun Kite Biotechnology, Fosun Pharma will contribute the RMB equivalent of $60.0 million in cash to the joint venture company and Kite will contribute certain exclusive commercial rights set forth in the Product and Know-How License Agreement, between the Company and Fosun Kite Biotechnology. In addition, pursuant to the Technology License Agreement, between the Company and Fosun Kite Biotechnology, the Company will receive a $40.0 million upfront payment from Fosun Kite Biotechnology and, in exchange for the contribution of certain intellectual property rights to KTE-C19, will also be entitled to (a) regulatory and commercial milestone payments of up to $35.0 million and (b) mid-single digit sales royalties, subject to certain conditions. The Company and Fosun Pharma will each own 50% of Fosun Kite Biotechnology, with 60% of the profits allocated to Fosun Pharma and 40% allocated to the Company. The term of the JV Agreement is 20 years from the date that the JV Company was established, subject to extension by mutual agreement of the parties. NOTE 7 STOCKHOLDERS EQUITY In March 2017, the Company sold 5,462,500 shares of its common stock, which included 712,500 shares pursuant to the full exercise of the underwriters' option, in an underwritten public offering at a price of $75.00 per share, which resulted in gross proceeds of approximately $409.7 million. Net proceeds to the Company after deducting fees, commissions, and other expenses related to the offering were approximately $399.7 million. NOTE 8 STOCK BASED COMPENSATION Employee Stock Purchase Plan Under the 2014 Employee Stock Purchase Plan ( ESPP ), employees can purchase shares of our common stock based on a percentage of their compensation subject to certain limits. The purchase price per share is equal to the lower of 85% of the fair market value of our common stock on the offering date or the purchase date. The ESPP offers a two - year look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. ESPP purchases are settled with common stock from the ESPP's authorized and available pool of shares. At inception of the ESPP in June 2014, 360,000 shares of our common stock may be sold pursuant to purchase rights under the ESPP, subject to adjustment for stock splits, stock dividends, and comparable restructuring activities. The ESPP also includes an evergreen feature, which provides that an additional number of shares will automatically be added to the shares authorized for issuance under the ESPP on January 1st of each year, beginning on the first January 1 immediately following the effective date of June 19, 2014 and ending on (and including) January 1, The number of shares added each calendar year will be the lesser of (a) 1% of the total number of shares of the Company s capital stock (including all classes of the Company s common stock) outstanding on December 31st of the preceding calendar year, and (b) 720,000 shares. However, the Board may decide to approve a lower number of shares (including no shares) before January 1 of any year. The stock purchasable under the ESPP will be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. If a purchase right under the ESPP terminates without having been exercised in full, any shares not purchased under that purchase right will again become available for issuance under the ESPP. In January 2016, the maximum number of common shares issuable under the ESPP was increased by 497,630 to 1,297,984 in accordance with the evergreen feature of the ESPP. In January 2017, the maximum number of common shares issuable under the ESPP was increased by 503,821 to 1,801,805 in accordance with the evergreen feature of the ESPP. During the three months ended March 31, 2017 and 2016, the Company issued 32,869 shares and 34,608 shares under the ESPP, respectively. Stock compensation expense related to the ESPP was $0.4 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively. 23

25 Restricted Stock Units and Stock Options Eligible employees may receive a grant of RSUs annually with the size and type of award generally determined by the employee s salary grade and performance level. In addition, certain management and professional level employees typically receive stock options and RSU grants upon commencement of employment. Eligible employees may also receive a grant of stock options annually. Non-employee members of our Board of Directors will receive a grant of RSUs and stock options annually and any future new directors are expected to receive a grant of RSUs and stock options. The Company s RSU and stock option grants provide for accelerated or continued vesting in certain circumstances as defined in the plans and related grant agreements, including a termination in connection with a change in control. RSUs generally vest in equal amounts on each of the first four anniversaries of the grant date. Stock options generally vest in a 25% increment upon the first anniversary of the grant date, and in equal monthly amounts for the three years following the one year anniversary of the grant date. In 2009, the Company established an equity incentive plan (the Plan ) pursuant to which incentives may be granted to officers, employees, directors, consultants and advisors. Incentives under the Plan may be granted in any one or a combination of the following forms: (a) incentive stock options and non-statutory stock options; (b) stock appreciation rights; (c) stock awards; (d) restricted stock; and (e) performance shares. The Plan is administered by the Board of Directors of the Company or a committee appointed by the Board of Directors, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. In June 2014, the Board of Directors approved an amendment and restatement of the Plan, increasing the shares of common stock issuable under the Plan to 9,150,000 shares as well as allowing for an automatic annual increase (the evergreen provision ) to the shares issuable under the Plan to the lower of (i) 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; or (ii) a lower number determined by the Board of Directors (which can also be zero ). The term of any stock option granted under the Plan cannot exceed 10 years. Options shall not have an exercise price less than 100% of the fair market value of the Company s common stock on the grant date, and generally vest over a period of four years. If the individual possesses more than 10% of the combined voting power of all classes of stock of the Company, the exercise price shall not be less than 110% of the fair market value of a common share of stock on the date of grant. In January 2016, the number of shares of common stock available for issuance under the Plan was automatically increased in accordance with the evergreen provision by 2,488,153 shares of common stock, for a total number of shares of common stock issuable under the Plan of 13,839,925 shares. In January 2017, the number of shares of common stock available for issuance under the Plan was automatically increased in accordance with the evergreen provision by 2,519,105 shares of common stock, for a total number of shares of common stock issuable under the Plan of 16,359,030 shares. A summary of the status of the options issued under the Plan as of March 31, 2017, and information with respect to the changes in options outstanding is as follows: OUTSTANDING STOCK OPTIONS WEIGHTED- AVERAGE EXERCISE PRICE WEIGHTED- AVERAGE REMAINING CONTRACTUAL LIFE (YEARS) AGGREGATE INTRINSIC VALUE Balance at January 1, ,728,030 $ $ 117,247,537 Granted under the Plans 230, Exercised (619,739) Surrendered/Cancelled (66,250) Balance at March 31, ,272,301 $ $ 346,430,339 Exercisable at March 31, ,777,418 $ $ 179,329,456 The fair value of each stock option granted has been determined using the Black-Scholes option pricing model. The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows: 24

26 THREE MONTHS ENDED MARCH 31, Risk-free interest rate 2.03% % 1.39% % Expected volatility 69.2% % 67.9% % Stock price $ $83.89 $ $61.92 Expected life years years Expected dividend yield 0% 0% For employees and directors, the expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. For other service providers, the expected life was calculated using the contractual term of the award. The Company's estimate of expected volatility was based on the average volatilities of a sampling of five companies with similar attributes to the Company, including: industry, stage of life cycle, size and financial leverage for a period matching the expected term assumption and its own historical and implied future volatility. The risk-free interest rate is based on a U.S. Treasury instrument whose term is consistent with the expected life of the stock options. In addition to the assumptions above, the Company estimated expected forfeitures and is recognizing share-based compensation expense for those equity awards expected to vest. Stock-based compensation for the three months ended March 31, 2017 and 2016 is as follows (in thousands): THREE MONTHS ENDED MARCH 31, Research and development $ 12,657 $ 8,479 General and administrative 11,419 6,385 Total $ 24,076 $ 14,864 The weighted-average grant date fair value per share of options granted under the Plan was $52.50 and $31.15 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, total compensation expense not yet recognized related to stock option grants amounted to approximately $213.6 million which will be recognized over a weighted average period of 2.5 years. Additionally, 200,000 options that were early exercised for total proceeds of $0.1 million were unvested, and were recorded as a current liability on the condensed consolidated balance sheets. 25

27 The following table summarizes information about stock options outstanding as of March 31, 2017 : OUTSTANDING EXERCISABLE WEIGHTED- AVERAGE WEIGHTED- WEIGHTED- REMAINING AVERAGE AVERAGE EXERCISE PRICE TOTAL SHARES CONTRACTUAL LIFE EXERCISE PRICE TOTAL SHARES EXERCISE PRICE ,594, $ ,321,784 $ ,215, , ,224, , , , ,106, , , , ,185, , , , , , , ,272, $ ,777,418 $ The following table summarizes information about RSU activity for the three months ended March 31, 2017 : OUTSTANDING RESTRICTED STOCK UNITS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE WEIGHTED- AVERAGE RECOGNITION PERIOD (YEARS) AGGREGATE INTRINSIC VALUE Unvested shares as of January 1, ,491 $ $ 33,607,176 Granted 354, Vested (46,020) Forfeited (8,625) Balance at March 31, ,049,711 $ $ 82,391,816 NOTE 9 INCOME TAXES As of March 31, 2017, the Company recorded an income tax benefit of $61,000. The Company s income tax benefit is related to current year income on securities recorded to other comprehensive income under the intraperiod allocation rules in ASC As of March 31, 2017, the Company continues to maintain a full valuation allowance against deferred tax assets for all jurisdictions. In evaluating the need for a valuation allowance, the Company considers all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, forecasts of future taxable income, and tax planning strategies. The Company has cumulative global pretax accounting losses for the years ended 2016, 2015 and 2014, and for the three months ended March 31, The Company will continue to assess the extent to which its deferred tax assets may be realized in the future, and will adjust the valuation allowance as needed. The Company s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company does not have any interest or penalties related to uncertain tax positions in income tax expense for the three months ended March 31, The Company files income tax returns in federal, state, and foreign jurisdictions. The Company is currently subject to examination for all years since its inception. NOTE 10 RELATED PARTIES Two River Consulting On June 1, 2009, the Company entered into a services agreement with Two River Consulting, LLC ( TRC ) to provide various clinical development, operational, managerial, administrative, accounting and financial services to the Company. The Company s Chairman of the Board of Directors, CEO and President, a director of the Company, and the Company s Secretary 26

28 are each partners of TRC. The costs incurred for these services were $75,000 and $75,000 for the three months ended March 31, 2017, and 2016, respectively. In addition, from time to time, some of the Company s expenses are paid by TRC. The Company reimburses TRC for these expenses and no interest is charged on the outstanding balance. Reimbursable expenses were $11,000 and $16,121 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 and December 31, 2016, the Company had a payable to TRC of $86,000 and $87,500, respectively. The amounts are recorded as accrued expenses and other current liabilities on the condensed consolidated balance sheets. All balances owed as of December 31, 2016 were paid in full during the first quarter of 2017 and all balances owed as of March 31, 2017 are expected to be paid in full during the second quarter of In connection with a 2013 financing, the Company issued to certain designees of Riverbank, a FINRA member broker dealer and a related party controlled by certain officers and/or directors of the Company, which acted as placement agent for the Company, Series A Warrants to purchase 148,146 Series A Preferred Shares, which were converted to warrants that are exercisable for shares of common stock at an exercise price equal to $2.04 as a result of the IPO and the conversion of the then outstanding Series A Preferred Shares into common stock. As of March 31, 2017, 97,683 warrants remain outstanding, which are exercisable until May Cell Design Labs The Company accounts for its equity investments under the cost method of accounting when it does not have the ability to exercise significant influence over the investees. For investments where the Company has the ability to exercise significant influence, the equity method of accounting is used. Significant influence is generally deemed to exist if the Company's ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee's board of directors or any significant business relationships that may exist with the investee, are also considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment is recorded at cost in the condensed consolidated balance sheets under the other assets caption, and adjusted for dividends received and our share of the investee's earnings or losses, together with other-than-temporary impairments which are recorded in the condensed consolidated statements of operations. The Company s total equity investment in Cell Design Labs as of December 31, 2015 was $1.0 million which was accounted for as a cost method investment. On June 1, 2016, the Company entered into a research collaboration and license agreement with Cell Design Labs to develop on/off switches for the Company s CAR T cell pipeline. Pursuant to the agreement, the Company paid Cell Design Labs a $2.0 million upfront payment and will pay up to an additional $9.0 million during the research and development term to support Cell Design Labs research. The Company previously made a $1.0 million equity investment in Cell Design Labs in December 2015 and, in connection with entering into the agreement, the Company made an additional equity investment in Cell Design Labs of approximately $6.0 million in June Cell Design Labs will be eligible to receive up to $56.5 million in total milestone payments based on the successful completion of research, clinical, regulatory and commercial milestones. Cell Design Labs will also be eligible to receive tiered single digit royalties for sales on a licensed product-by-licensed product and country-by-country basis, until the date on which the licensed product is no longer covered by certain intellectual property rights. The Company may terminate the agreement with prior written notice. Either party may also terminate the agreement upon certain insolvency events of the other party, or with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice. Upon making the additional equity investment in June 2016, the Company reassessed its ability to exert influence over Cell Design Labs by quantitatively assessing its overall ownership position in Cell Design Labs and the number of voting seats it had on the Cell Design Labs board of directors, as well as by qualitatively assessing the effect of its research collaboration on the investee. Due to the Company's increased ownership interest, which remains less than 20%, the Company obtaining a seat on Cell Design Labs board of directors, and the Company entering into a research collaboration and license agreement with Cell Design Labs, the Company prospectively applied the equity method of accounting to this investment, which is included in the other assets caption within the condensed consolidated balance sheets. The carrying amount of the Company s investment in Cell Design Labs was $6.1 million as of March 31, During the three months ended March 31, 2017, the Company expensed $1.5 million related to the research and development activities conducted by Cell Design Labs under the research collaboration and license agreement, of which $0.9 million remains outstanding as of March 31, 2017 and is included in the accrued expenses and other current liabilities caption on the condensed consolidated balance sheets. 27

29 During the three months ended March 31, 2017, the Company recognized a $0.5 million expense, to reflect its share of Cell Design Labs net loss. This amount was included in general and administrative expense within the condensed consolidated statements of operations. NOTE 11 COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company s request in such capacities. The Company s maximum exposure under these arrangements is unknown as of March 31, 2017 and December 31, The Company does not anticipate recognizing any significant losses relating to these arrangements. In the ordinary course of business, the Company is also involved in various legal proceedings and other matters including those discussed in this Note that are complex in nature and have outcomes that are difficult to predict. The Company would record accruals for loss contingencies to the extent that it concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of any liability that has been accrued previously. The Company is facing one patent infringement lawsuit as of March 31, Juno Therapeutics, Inc. ( Juno ) and Memorial Sloan Kettering Cancer and Sloan Kettering Institute for Cancer Research ( MSK ) filed a patent infringement lawsuit against the Company on December 19, 2016 in the U.S. District Court of Appeals for the District of Delaware. Juno and MSK are claiming that KTE-C19, upon commercialization, will infringe an MSK patent licensed by Juno relating to certain CAR compositions of matter. On February 23, 2017, the Company filed a motion to dismiss this lawsuit based upon lack of subject matter jurisdiction. The Company had previously filed a petition with the United States Patent and Trademark Office ( USPTO ) to institute an inter partes review ( IPR ) proceeding requesting a determination that the claims in the MSK patent are unpatentable. On December 16, 2016, the USPTO Patent Trial and Appeal Board declined to revoke the MSK patent. The Company filed a Notice of Appeal to this decision on February 16, The lawsuit is at the early stages of the legal process and has not progressed sufficiently through discovery and/or development of important factual information and legal issues to enable the Company to estimate a range of possible loss, if any. While it is not possible to accurately predict or determine the eventual outcome of the IPR appeal and the lawsuit, an adverse determination could have a material adverse effect on the Company's condensed consolidated results of operations, financial position or cash flows. Regardless of outcome, litigation can also have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Leases In May 2013, the Company entered into a lease agreement for a facility to be used for administrative and research and development activities. The lease commenced on June 15, 2013 and has a 10 -year initial term expiring on June 15, The lease also provides for rent abatements and scheduled increases in base rent. The lease also contains options for the Company to extend the lease upon its initial expiration. In January 2015, the Company entered into a lease agreement for manufacturing and processing of engineered autologous cell therapy, research and development, and office space in Santa Monica, California. The lease has a 10 -year term commencing on February 1, Upon certain conditions, the Company has two options to extend the lease each for an additional five years. The Company is required to remit base rent of $46,906 per month, which will increase at a rate of 3% per year. The lease provided a contribution from the landlord towards leasehold improvements of $0.7 million, which the Company had received as of December 31, In February 2015, the Company entered into a lease agreement for a manufacturing facility in El Segundo which is adjacent to Los Angeles International Airport. The lease has a 10-year and seven month term commencing on January 1, Upon certain conditions, the Company has two options to extend the lease, each for an additional five years. The Company paid $124,183 upon execution of the lease and is required to remit base rent of $124,183 per month, which will increase at a rate of 3% per year and are subject to lease abatement terms. The Company also has an option to expand the lease for additional square footage at the same rent per square foot as the base premises, which option must be exercised prior to July 1, The lease provided a contribution from the landlord towards leasehold improvements of $2.6 million, which the Company has received as of December 31,

30 In June 2015, the Company entered into a sublease agreement for office space in Santa Monica, California. The lease has a term of 26 months commencing on June 22, The Company is required to remit base rent of $50,389 from July 1, 2016 to the end of the lease term. In July 2016, the Company entered into a lease agreement for the lease of primarily office space in El Segundo, which is adjacent to the Company s manufacturing facility. The lease has a nine year and six month term commencing on February 1, Upon certain conditions, the Company has two options to extend the lease, each for an additional five years. The Company paid $176,400 upon execution of the lease and is required to remit base rent of $176,400 per month, which will increase at a rate of approximately 3% per year, subject to certain lease abatement terms. Pursuant to the lease, the landlord will contribute an aggregate of $4.2 million toward the tenant improvements for the leased space. On November 4, 2016, the Company entered into a lease agreement for primarily office space in Santa Monica to serve as the Company's future headquarters, with a lease term of fifteen years. Subject to lease commencement and certain lease abatement terms, the Company is required to remit base rent of $876,205 per month, which will increase at a rate of approximately 3% per year for the first ten years and then 3.5% per year during years eleven through fifteen. The Company posted a customary letter of credit in the amount of $5.5 million as a security deposit, which was secured by government securities with a value of $7.0 million. The customary letter of credit amount increased by $5.5 million in January 2017, which was secured by additional government securities with a value of $7.2 million. The amount of the letter of credit may be subject to reductions during the term of the lease beginning in the fourth year of the lease term. Pursuant to the lease, the landlord will contribute an aggregate of $17.5 million toward the tenant improvements for the leased space. Rent expense charged to operations was $5.2 million and $1.0 million for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 the Company has incurred expenses eligible for tenant improvement allowances from its landlords of $3.4 million and received the same amount from its landlords. These landlord incentives are recorded as deferred rent, and are recognized as reductions to rent expense over the term of the respective leases. The Company has recorded corresponding other current deferred rent liabilities and other non-current deferred rent liabilities related to these tenant improvement allowances within the condensed consolidated balance sheets and recognized a reduction in rent expense of $0.1 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively as a result of the tenant improvement allowances. 29

31 ITEM 2. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Thefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationsshouldbereadinconjunctionwithourunauditedcondensedfinancialstatementsand relatednotesincludedinthisquarterlyreportonform10-q,orquarterlyreport,andtheauditedfinancialstatementsandnotestheretoasofandfortheyearended December31,2016andtherelatedManagement sdiscussionandanalysisoffinancialconditionandresultsofoperations,bothofwhicharecontainedinourannualreport onform10-kfortheyearendeddecember31,2016,orannualreport,whichhasbeenfiledwiththesecuritiesandexchangecommission,orsec.unlessthecontextrequires otherwise,referencesinthisquarterlyreportto we, us, our and"kite"refertokitepharma,inc.anditssubsidiaries. Forward-Looking Statements Theinformationinthisdiscussioncontainsforward-lookingstatementsandinformationwithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,orthe SecuritiesAct,andSection21EoftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,whicharesubjecttothe safeharbor createdbythosesections.these forward-lookingstatementsinclude,butarenotlimitedto,statementsconcerningourstrategy,futureoperations,futurefinancialposition,futurerevenues,projectedcosts, prospectsandplansandobjectivesofmanagement.thewords anticipates, believes, estimates, expects, intends, may, plans, projects, will, would and similarexpressionsareintendedtoidentifyforward-lookingstatements,althoughnotallforward-lookingstatementscontaintheseidentifyingwords.wemaynotactually achievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatementsandyoushouldnotplaceunduerelianceonourforward-lookingstatements.actual resultsoreventscoulddiffermateriallyfromtheplans,intentionsandexpectationsdisclosedintheforward-lookingstatementsthatwemake.theseforward-lookingstatements involverisksanduncertaintiesthatcouldcauseouractualresultstodiffermateriallyfromthoseintheforward-lookingstatements,including,withoutlimitation,therisksset forthinpartii,item1a, RiskFactors inthisquarterlyreportandinourotherfilingswiththesec.theforward-lookingstatementsareapplicableonlyasofthedateon whichtheyaremade,andwedonotassumeanyobligationtoupdateanyforward-lookingstatements. OVERVIEW We are a clinical-stage biopharmaceutical company focused on the development and commercialization of novel cancer immunotherapy products designed to harness the power of a patient s own immune system to target and kill cancer cells. We do this using our engineered autologous cell therapy, which we believe is a transformational approach to the treatment of cancer. Our therapy involves the genetic engineering of T cells to express either chimeric antigen receptors, or CARs, or T cell receptors, or TCRs. These modified T cells are designed to recognize and attack cancer cells. Our lead product candidate, KTE-C19, is a CAR-based therapy that targets the CD19 antigen, a protein expressed on the cell surface of B-cell lymphomas and leukemias. The United States Adopted Name for KTE-C19 is axicabtagene ciloleucel. Since the second half of 2015, we have been conducting a Phase 2 clinical trial (ZUMA-1) of axicabtagene ciloleucel in patients with relapsed or refractory aggressive diffuse large B cell lymphoma, or DLBCL, primary mediastinal B cell lymphoma, or PMBCL, or transformed follicular lymphoma, or TFL. DLBCL, PMBCL and TFL are types of aggressive non-hodgkin lymphoma, or NHL. Based on the results from the primary analysis of ZUMA-1, we completed our submission of a Biologics License Application, or BLA, in March 2017 to the U.S. Food and Drug Administration, or FDA, for the approval of axicabtagene ciloleucel for the treatment of patients with relapsed or refractory aggressive B-cell NHL, who are ineligible for autologous stem cell transplant, or ASCT. We plan to commercially launch axicabtagene ciloleucel in 2017, if approved. We are conducting other clinical studies of KTE-C19 for additional hematological indications. We are also advancing other CAR- and TCR-based product candidates, including KITE-718, a TCR-based therapy targeting a MAGE A3/A6 antigen for the treatment of MAGE A3/A6 positive cancers including non-small cell lung cancer, or NSCLC, and bladder cancer. We filed an investigational new drug application, or IND, to initiate a Phase 1 clinical trial of KITE-718 at the end of 2016 and plan to open the clinical trial for patient enrollment in the first half of Recent Developments 2017 American Association for Cancer Research Annual Meeting In April 2017 at the American Association for Cancer Research, or AACR, Annual Meeting, we announced positive data from the primary analysis of ZUMA-1 for axicabtagene ciloleucel. The study met the primary endpoint of objective response rate, or ORR, recorded after a single infusion of axicabtagene ciloleucel, with 82% (p < ). 30

32 ZUMA-1 enrolled patients with aggressive NHL into two cohorts. The first cohort included patients with DLBCL, and the second cohort included patients with TFL and PMBCL. The two cohorts included 111 enrolled patients of whom 101 were successfully treated with axicabtagene ciloleucel. ZUMA-1 patients were heavily pretreated and generally representative of those in the SCHOLAR-1 pooled analysis of refractory aggressive NHL. The key ZUMA-1 patient characteristics are below: Stage III/IV disease (85%); Refractory to chemotherapy, no prior ASCT (79%); Relapsed within 12 months of ASCT (21%); Received three or more lines of prior therapy (69%); and Refractory to two consecutive lines of prior therapy (54%). The following table shows response data from the two cohorts of ZUMA-1 including the month six ORR and complete response, or CR, as well as ongoing response rates at the primary analysis data cut-off. ORR (%) DLBCL (n=77) CR (%) ORR (%) TFL/PMBCL (n=24) CR (%) ORR (%) Combined (n=101) Response Month Ongoing ORR was generally consistent in key subgroups. ORR in patients who are refractory to second or greater line of therapy was 83% and 76% in patients who relapsed within 12 month of ASCT. With a median follow-up of 8.7 months, the median overall survival, or OS, has not yet been reached. The median duration of response was 8.2 months and has not yet been reached for patients with a CR. In the SCHOLAR-1 pooled analysis, the median OS was estimated to be 6.6 months with only 8% achieving CR with currently available therapies. As previously reported, the most common grade 3 or higher adverse events included anemia (43%), neutropenia (39%), decreased neutrophil count (32%), febrile neutropenia (31%), decreased white blood cell count (29%), thrombocytopenia (24%), encephalopathy (21%) and decreased lymphocyte count (20%). Grade 3 or higher cytokine release syndrome, or CRS, was observed in 13% of patients and neurologic events were observed in 28% of patients. There were three deaths reported in the primary analysis not due to disease progression. Two events, one hemophagocytic lymphohistiocytosis and one cardiac arrest in the setting of CRS, were deemed related to axicabtagene ciloleucel. The third case, a pulmonary embolism, was deemed unrelated. Axicabtagene ciloleucel was successfully manufactured from heavily pretreated patients with a broad range of baseline T cell numbers. Of the enrolled patients in the two cohorts of ZUMA-1, axicabtagene ciloleucel was successfully manufactured 99% of the time from a single apheresis. Objective responses were observed across a wide range of product CD4:CD8 ratios and were associated with higher levels of anti-cd19 CAR T cells in the blood. Immune signatures of CRS and neurological events were identified. We also presented new data at AACR from preclinical studies related to KITE-585, a fully human anti-b cell maturation antigen, or BCMA, CAR-based product candidate. We plan to file an IND in the third quarter of 2017 and initiate a Phase 1 clinical trial by the end of 2017 of KITE-585 for the treatment of multiple myeloma. Additional ZUMA Clinical Trials In September 2016, we initiated a safety expansion cohort to evaluate an adverse event mitigation strategy by using levetiracetam, an anticonvulsant, and tocilizumab, an IL-6 receptor inhibitor, prophylactically. In April 2017, we completed the enrollment in the U.S. portion of this cohort and treated 30 patients in total as planned. We expect to treat additional patients in Europe in this cohort. Of the 30 patients treated, two patients experienced grade 3 CRS. One of these patients also experienced multi-organ failure, and a neurologic event that subsequently progressed to a fatal grade 5 cerebral edema that was deemed related to axicabtagene ciloleucel. This patient had shown inadequate responses to both first and second line therapies and had rapidly progressive and symptomatic disease at the time of treatment with axicabtagene ciloleucel. This was the first grade 5 cerebral edema event that has occurred in approximately 200 patients who have been treated in the ZUMA clinical trials. 31 CR (%)

33 In May 2017, we initiated ZUMA-5, a Phase 2 clinical trial in patients with relapsed or refractory indolent NHL, or inhl, and ZUMA-9, our expanded access study to provide axicabtagene ciloleucel to appropriate patients with relapsed or refractory aggressive B-cell NHL, who are ineligible for ASCT. We expect to enroll approximately 50 patients with relapsed or refractory inhl in ZUMA-5 with the primary endpoint of ORR. Establishment of Fosun Kite Biotechnology On April 10, 2017, Fosun Kite Biotechnology Co., Ltd., or Fosun Kite Biotechnology, our joint venture company with Fosun Pharmaceutical Industrial Development Co., Ltd., was officially registered and obtained its business license in China. Fosun Kite Biotechnology plans to develop, manufacture and commercialize axicabtagene ciloleucel in the mainland of the People s Republic of China, the Hong Kong Special Administration Region and the Macau Special Administration Region. OUR RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENTS We have three CRADAs through which we are funding the research and development of product candidates utilizing CARs and TCRs for the treatment of advanced solid and hematological malignancies. Under the CRADAs, we have an exclusive option to negotiate commercial licenses from the NIH to intellectual property relating to CAR- and TCR-based product candidates developed in the course of the CRADA research plans. We have entered into multiple license agreements with the NIH and have entered into multiple other license and collaboration agreements with commercial entities. For additional information regarding our significant collaborations and license agreements, see Note 6 to our financial statements appearing elsewhere in this Quarterly Report. COMPONENTS OF OPERATING RESULTS Revenues As of March 31, 2017, our revenue has been exclusively generated from our collaboration and license agreements with Amgen, Inc., or Amgen, Daiichi Sankyo Company, Limited, or Daiichi, and Leukemia & Lymphoma Society, Inc., or LLS. See Notes 3 and 6 to our financial statements appearing elsewhere in this Quarterly Report for more information related to our recognition of revenue and the Amgen research collaboration and license agreement, or the Amgen Agreement, the Daiichi Sankyo collaboration and license agreement, or the DS Agreement, and the LLS research, development and commercialization agreement, or the LLS Agreement. In the future, we may generate revenue from a combination of product sales, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extent any are successfully commercialized. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, will be materially adversely affected. Research and Development Expenses Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, benefits, and other staff-related costs including associated stock-based compensation, laboratory supplies, facilities and overhead costs, clinical trial and related clinical manufacturing costs, costs related to manufacturing preparations, fees paid to other entities that conduct certain research and development activities on our behalf and payments made pursuant to license agreements. Clinical trial and other development costs incurred by third parties are expensed as the contracted work is performed. We accrue for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from our external service providers. We adjust our accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are achieved. 32

34 Under certain circumstances, we may be required to reimburse Amgen for research and development services. We will defer the recognition of revenue related to research and development services billed until the potential reimbursement contingency has lapsed. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase over the next several years as our ZUMA clinical program progresses and as we seek to initiate clinical trials of additional product candidates. We also expect to incur increased research and development expenses as we selectively identify and develop additional product candidates. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include, but are not limited to, the following: per patient trial costs; the number of patients that participate in the trials; the number of sites included in the trials; the countries in which the trials are conducted; the length of time required to enroll eligible patients; the number of doses that patients receive; the drop-out or discontinuation rates of patients; potential additional safety monitoring or other studies requested by regulatory agencies; the duration of patient follow-up; and the efficacy and safety profile of the product candidates. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate s commercial potential. Because our product candidates are still in clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of product candidates or whether, or when, we may achieve profitability. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements. General and Administrative Expenses General and administrative expenses consist primarily of salaries and other staff-related costs, including stock-based compensation, for personnel in executive, commercial, finance, accounting, legal, investor relations, facilities, business development and human resources functions. Other significant costs include costs relating to preparing for the potential commercial launch of KTE-C19, facilities and overhead costs, sublicense royalty expenses, legal fees relating to corporate and patent matters, insurance, public company expenses relating to maintaining compliance with NASDAQ listing rules and SEC requirements, investor relations costs, fees for accounting and consulting services, and other general and administrative costs. General and administrative costs are expensed as incurred, and we accrue for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from our service providers, and adjusting our accruals as actual costs become known. We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, potential commercialization of our product candidates and the increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel, continuing the development of our commercial infrastructure, and fees to outside consultants, lawyers and accountants, among other expenses. The increased costs associated with being a public company include expenses related to services associated with maintaining compliance with NASDAQ listing rules and SEC requirements, insurance and investor relations costs. 33

35 Critical Accounting Policies and Significant Judgments and Estimates The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We discussed accounting policies and assumptions that involve a higher degree of judgment and complexity in Note 3 to our financial statements in our Annual Report. There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Annual Report. RESULTS OF OPERATIONS Comparison of the Three Months Ended March 31, 2017 and 2016 The following table sets forth our results of operations for the three months ended March 31, 2017 and 2016 : THREE MONTHS ENDED MARCH 31, CHANGE $ (unaudited, in thousands) Revenues $ 9,836 $ 5,127 $ 4,709 Operating expenses: Research and development 65,906 34,414 31,492 General and administrative 35,842 16,683 19,159 Total operating expenses 101,748 51,097 50,651 Loss from operations (91,912) (45,970) (45,942) Other income (expense): Interest income 1, Interest expense (4) (4) Other income (expense), net Total other income (expense), net 1, Loss before income taxes (90,460) (45,125) (45,335) Benefit from income taxes 61 1,209 (1,148) Net loss $ (90,399) $ (43,916) $ (46,483) Revenue Revenue was $9.8 million and $5.1 million for the three months ended March 31, 2017 and 2016, respectively. The increase in revenue during this period of $4.7 million was due to $4.2 million of revenue recognized under the Daiichi Agreement and $0.5 million of increased revenue recognized under the Amgen Agreement. ResearchandDevelopmentExpenses Research and development expenses were $65.9 million and $34.4 million for the three months ended March 31, 2017 and 2016, respectively. The increase in research and development expenses during this period of $31.5 million was primarily due to: $12.6 million in costs from an increase in headcount and related costs for our research and development personnel, including increased stock based compensation expense of $4.2 million, to support increased clinical trial activities, including clinical manufacturing, and activities related to preparing for commercial manufacturing; $10.0 million in costs related to research and clinical development activities, including from our clinical trials and licensing and collaborations, including a $3.1 million milestone payment to LLS; 34

36 $5.5 million of expenses related to facilities and overhead, depreciation and amortization, and other expenses; and $3.4 million in costs related to expanded clinical manufacturing activities and preparation for commercial manufacturing. GeneralandAdministrativeExpenses General and administrative expenses were $35.8 million and $16.7 million for the three months ended March 31, 2017 and 2016, respectively. The increase in general and administrative expenses during this period of $19.2 million was primarily due to: $10.0 million in costs resulting from increased headcount and personnel related costs, including increased stock based compensation expense of $5.0 million, to support our growing business and for preparation of commercial launch; and $9.2 million of expense related to increased pre-commercial activities and higher consulting and other costs to support our growing business. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2017, we had $565.2 million in cash and cash equivalents, and $238.9 million in marketable securities. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. We have funded our operations principally from the sale of common stock, and through our licensing and collaborations. In 2015, we received an upfront payment of $60.0 million from Amgen, and raised approximately $300.7 million in net proceeds from our follow-on offering of common shares. We received an upfront payment of $50.0 million from Daiichi Sankyo in January 2017, and raised an additional $399.7 million in net proceeds from our follow-on offering of common shares, after deducting fees, commissions, and other expenses related to the offering in March We have incurred losses since our inception in 2009 and, as of March 31, 2017, we had an accumulated deficit of $517.1 million. Our product candidates may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. As a result, until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, costs relating to preparing for the potential commercial launch of KTE-C19, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs. Cash Flows The following table sets forth the significant sources and uses of cash for the periods set forth below: Net cash provided by (used in): THREE MONTHS ENDED MARCH 31, (unaudited, in thousands) Operating activities $ (17,807) $ (29,168) Investing activities 51,181 (165,006) Financing activities 417, Effect of exchange rate changes on cash Net change in cash and cash equivalents $ 450,592 $ (193,242) OperatingActivities Net cash used in operating activities was $17.8 million during the three months ended March 31, 2017 as compared to $29.2 million in cash used in operating activities during the three months ended March 31, The decrease in net cash used in operating activities of $11.4 million between the three months ended March 31, 2017 and 2016 was primarily the result of cash received from Daiichi as an upfront payment related to the DS Agreement in the three months ended March 31, 2017, partially offset by increased operating expenses due to additional headcount, facilities related costs, and other research and development and clinical activities during the three months ended March 31, 2017 as compared to the three months ended March 31,

37 InvestingActivities Net cash provided by investing activities was $51.2 million during the three months ended March 31, 2017 as compared to $165.0 million of cash used by investing activities during the three months ended March 31, The net increase in cash provided by investing activities of $216.2 million between the three months ended March 31, 2017 and 2016 was primarily the result of the transactional activity related to our marketable securities portfolio, partially offset by capital expenditures related to our clinical and commercial manufacturing facilities. FinancingActivities Net cash provided by financing activities was $417.2 million during the three months ended March 31, 2017 as compared to $0.9 million in cash provided by financing activities during the three months ended March 31, The increase in cash provided by financing activities of $416.3 million between the three months ended March 31, 2017 and 2016 was primarily the result of the $399.9 million in net proceeds received from our follow-on offering and higher proceeds from exercise of stock options during the three months ended March 31, Off-Balance Sheet Arrangements During the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Fluctuation Risk Some of the securities in which we invest have market risk in that a change in prevailing interest rates may cause the principal amount of the marketable securities to fluctuate. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. As of March 31, 2017, we had $565.2 million in cash and cash equivalents, and $238.9 million in marketable securities. Our cash equivalents and marketable securities are comprised of certificates of deposit, commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. The primary objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the income we receive from our marketable securities without significantly increasing risk. We have established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. Our available for sale securities are subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at March 31, 2017, the net fair value of our interest-sensitive marketable securities would have resulted in a hypothetical decline of approximately $2.4 million. Inflation Risk Inflation generally may affect us by increasing our cost of labor and clinical trial costs. Inflation has not had a material effect on our business, financial condition or results of operations during the three months ended March 31, 2017 and 2016, respectively. Foreign Currency Exchange Risk The majority of our transactions occur in U.S. dollars. However, we do have certain transactions and future potential milestones, including potential contingent consideration payments pursuant to the terms of our TCF acquisition, that are denominated in Euros, and we therefore are subject to foreign exchange risk. Additionally, our subsidiary Kite Pharma EU operates with the Euro as its functional currency. The fluctuation in the value of the U.S. dollar against the Euro affects the reported amounts of revenues, expenses, assets and liabilities. As we expand our international operations, our exposure to exchange rate fluctuations will increase. We currently do not participate in any foreign currency hedging activities. Our other income (expense) is also impacted by the re-measurement of our U.S. Dollar denominated intercompany loans and by any cash held by our overseas subsidiaries in a currency other than its functional currency. An immediate 10% adverse change in foreign exchange rates would result in a foreign currency loss of approximately $4.0 million. Future changes in the U.S. dollar and Euro exchange rate may result in future recognition of exchange rate losses or higher than expected operating expenses as we fund the operations of our subsidiary. 36

38 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d- 15(e) of the Exchange Act) as of March 31, 2017, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 37

39 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Certain of the legal proceedings in which we are involved are discussed in Note 11 to our financial statements appearing elsewhere in this Quarterly Report and hereby incorporated by reference. Item 1A. Risk Factors Aninvestmentinsharesofourcommonstockinvolvesahighdegreeofrisk.Youshouldcarefullyconsiderthefollowingriskfactors,aswellastheotherinformationinthis report,beforedecidingwhethertopurchase,holdorsellsharesofourcommonstock.theoccurrenceofanyofthefollowingriskscouldharmourbusiness,financialcondition, resultsofoperationsandgrowthprospectsorcauseouractualresultstodiffermateriallyfromthosecontainedinforward-lookingstatementswehavemadeinthisreportand thosewemaymakefromtimetotime.youshouldconsideralloftheriskfactorsdescribedwhenevaluatingourbusiness.theriskfactorssetforthbelowthataremarkedwithan asterisk(*)containchangestothesimilarlytitledriskfactorsincludedinitem1aofourannualreportonform10-kfortheyearendeddecember31,2016,orannualreport, whichhasbeenfiledwiththesecuritiesandexchangecommission,orsec. Risks Related to Our Business and Industry We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.* We are a clinical-stage biopharmaceutical company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred losses in each period since our inception in June For the years ended December 31, 2016 and 2015, we reported a net loss of $267.1 million and $101.7 million, respectively. For the three months ended March 31, 2017 and 2016, we reported a net loss of $90.4 million and $43.9 million, respectively. As of March 31, 2017, we had an accumulated deficit of $517.1 million. We expect to continue to incur significant expenditures for the foreseeable future, and we expect these expenditures to increase as we plan for the potential commercial launch of our lead product candidate, KTE-C19, and as we continue our research and development of, and seek regulatory approvals for, product candidates based on our engineered autologous cell therapy. Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to develop and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders equity and working capital. Our engineered autologous cell therapy represents a novel approach to cancer treatment that creates significant challenges for us. Our therapy involves (1) harvesting T cells from the patient s blood, (2) engineering T cells to express cancer-specific receptors, (3) increasing the number of engineered T cells and (4) infusing the functional cancer-specific T cells back into the patient. Advancing this novel and personalized therapy creates significant challenges for us, including: educating medical personnel regarding the potential side effect profile of our therapy, such as the potential adverse side effects related to cytokine release syndrome, or CRS, neurotoxicity and B-cell aplasia; using medicines to manage adverse side effects of our therapy, such as tocilizumab and corticosteroids, which may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment; sourcing clinical and, if approved, commercial supplies for the materials used to manufacture and process our product candidates; developing a robust and reliable process, while limiting contamination risks, for engineering a patient s T cells exvivoand infusing the engineered T cells back into the patient; conditioning patients with chemotherapy in advance of administering our product candidates, which may increase the risk of adverse side effects; obtaining regulatory approval, as the U.S. Food and Drug Administration, or FDA, and other regulatory authorities have limited experience with commercial development of T cell therapies for cancer; and 38

40 establishing sales and marketing capabilities upon obtaining any regulatory approval to gain market acceptance of a novel therapy. In addition, we use manufacturing and processing approaches to produce engineered T cells that are based on the original approach used by our collaborator, the National Cancer Institute, or NCI. While the NCI has and is expected to use CAR- and TCR-based therapies in clinical trials that we are funding under Cooperative Research and Development Agreements, or CRADAs, we cannot be sure that our engineered T cell therapy will obtain the same safety and efficacy results as those obtained or may be obtained by the NCI using its own original production methods. Our business is highly dependent on the success of KTE-C19, our lead product candidate. If we are unable to obtain approval for KTE-C19 and effectively commercialize KTE-C19 for the treatment of patients in its approved indications, our business would be significantly harmed.* Our business and future success depends on our ability to obtain regulatory approval of and then successfully commercialize our lead product candidate, KTE-C19. We completed a Biologics License Application, or BLA, submission to the FDA in March 2017 for the approval of KTE-C19 as a treatment for patients with relapsed or refractory aggressive B-cell non-hodgkin lymphoma, or NHL, who are ineligible for autologous stem cell transplant, or ASCT. If the FDA does not accept or approve our BLA submission, our business would be significantly harmed. If approved, KTE-C19 will be our only product approved for marketing and our ability to generate revenue from product sales is dependent on our ability to effectively commercialize KTE-C19. Our plans for commercial operations, marketing and account management, and access may fail and we may not be able to fully realize the commercial potential of KTE-C19 for a number of reasons, including: we may not be able to obtain and maintain regulatory approval to market KTE-C19 for the indication we are seeking and for additional indications, such as relapsed or refractory mantle cell lymphoma, or MCL, and acute lymphoblastic leukemia, or ALL; additional follow-up results from our ZUMA clinical trials or any required post-approval studies may fail to verify the clinical benefit of KTE-C19 in some or all of any approved indications, which could result in the withdrawal of KTE-C19 from the market; the use of engineered T cells as a potential cancer treatment is a recent development and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers and others in the medical community; we may not be able to establish or demonstrate in the medical community the safety and efficacy of KTE-C19 and its potential advantages over and side effects compared to existing and future therapeutics; physicians may be reluctant to prescribe KTE-C19 until results from any required post-approval studies are available or other long term efficacy and safety data exists; if the FDA does not accept our request for regular approval, but provides accelerated approval, pre-approval of promotional materials would be required, which could adversely impact how we market and sell KTE-C19; the estimated incidence rate of new patients in any KTE-C19 approved indications may be lower than our projections; new competitive therapies may be approved for marketing by regulatory authorities in KTE-C19 s labeled indications; our commercial manufacturing facility may not pass pre-approval FDA inspection; we may not be able to manufacture adequate commercial supplies of KTE-C19 or obtain raw materials to meet demand or at an acceptable cost; we may be unable to scale our employee base to meet demands; we may be unable to manage the logistics of providing patient-by-patient therapy on a commercial scale; our Kite Konnect and associated technology platform, which will track orders from patient enrollment to the collection of the patient s cells to infusion of KTE-C19, may not be sufficiently developed by the time of launch or may face technical issues post-launch; we may be unable to develop an adequate in-house marketing organization and sales force; if any approval is received sooner than expected, we may not be ready to launch KTE-C19 or meet demand; KTE-C19 may receive adverse reimbursement and coverage policies from government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators or may be subject to pricing pressures enacted by industry organizations; there may be changed or increased regulatory restrictions; and we may not have adequate financial or other resources to effectively commercialize KTE-C19. To ensure that any site collecting patient white blood cells, known as apheresis centers, is prepared to ship cells to our manufacturing facility, we plan to conduct quality certifications of each apheresis center. Accordingly, while our commercial 39

41 plan is to target over 70 key transplant and lymphoma centers over a 12-month period post-launch, the related apheresis centers may not participate in the certification or we may be unable to complete certification in a timely manner or at all. In addition, because KTE-C19 is our most advanced product candidate, and because our other product candidates are based on similar technology, if KTE-C19 encounters safety, efficacy, manufacturing, regulatory or commercialization difficulties, our development plans and business would be significantly harmed. Our product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.* Undesirable or unacceptable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. In the ZUMA clinical trials, the most common grade 3 or higher adverse events resulted from CRS and neurologic events, and have also included anemia, neutropenia, decreased neutrophil count, febrile neutropenia, decreased white blood cell count, thrombocytopenia, encephalopathy and decreased lymphocyte count. As reported, patients have experienced grade 5 adverse events related to KTE-C19 and future patients may also experience grade 5 adverse events. These adverse events may include, among others, hemophagocytic lymphohistiocytosis, cardiac arrest, severe CRS, and cerebral edema. As we treat a larger number of patients with KTE-C19 in the ZUMA clinical trials, and, if approved, commercially, new less common side effects may also emerge. Patients in our clinical trial of KITE-718 and the NCI clinical trials of the TCR-based product candidates are expected to receive interleukin-2, or IL-2, which is associated with toxicities such as capillary leak syndrome, hypotension, impaired kidney and liver function, and mental status changes. While we believe we have optimized KITE-718 from the NCI's anti-mage A3/A6 TCR, our optimizations may have adverse outcomes for patients. For instance, we plan to shorten the manufacturing time to eight to ten days and use IL-7/IL-15 plus a protein kinase B (AKT) inhibitor. However, cell products manufactured using IL-7/IL-15 and AKT inhibitor have not been administered in humans to date and may have an adverse impact on efficacy or safety. If unacceptable toxicities arise in the development of our product candidates, we or the NCI could suspend or terminate our trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff, particularly outside of the NCI as toxicities resulting from personalized T cell therapy are not normally encountered in the general patient population and by medical personnel. We have trained and expect to have to train medical personnel using CAR- or TCR-based product candidates to understand the side effect profile of our product candidates for both our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient deaths. Any of these occurrences may harm our business, financial condition and prospects significantly. The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small. The FDA often approves new therapies initially only for use in patients with relapsed or refractory metastatic disease. We expect to initially seek approval of KTE-C19 and our other product candidates in this setting. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval in earlier lines of treatment and potentially as a first line therapy, but there is no guarantee that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we will have to conduct additional clinical trials. Our projections of both the number of people who have the cancers we are targeting, as well as the subset of people with these cancers in a position to receive second or later lines of therapy, and who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates. For instance, we expect our lead product candidate, 40

42 KTE-C19, to initially target a small patient population that suffers from aggressive NHL and ALL. Even if we obtain significant market share for our product candidates, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications. Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay regulatory approval and commercialization. Before obtaining regulatory approvals for the commercial sale of our product candidates, including KTE-C19, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, including in any post-approval studies of KTE-C19. We expect there may be greater variability in results for products processed and administered on a patient-by-patient basis, like engineered autologous cell therapy, than for off-the-shelf products, like many drugs. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy, insufficient durability of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that commence clinical trials are never approved as products. We designed our Phase 1-2 (ZUMA-1) single-arm multicenter clinical trial of KTE-C19 primarily to assess safety and efficacy in patients with refractory diffuse large B cell lymphoma, or DLBCL, primary mediastinal B cell lymphoma, or PMBCL, and transformed follicular lymphoma, or TFL. The results from the primary analysis of ZUMA-1 as well as from the NCI clinical trials of anti-cd19 CAR T cell therapy may not predict results for any required post-approval trial of KTE-C19 or in our other clinical trials of KTE-C19 in different indications. Our ongoing clinical trials of KTE-C19 may be halted prior to completion if there is an unacceptable safety risk for patients. In addition, for ZUMA-1 and any future trials that may be completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, approval of our product candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates. We may not be able to file investigational new drug applications, or INDs, to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed. We expect to submit an IND for KITE-585 and IND amendments for additional studies of KTE-C19 in 2017 and INDs for KITE-796 and KITE-439 in However, our timing of filing on the product candidates is dependent on further research. We cannot be sure that submission of an IND or IND amendment will result in the FDA allowing further clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such clinical trials. For instance, the FDA may not allow us to use the NCI clinical trial data to support our INDs. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or clinical trial application, we cannot guarantee that such regulatory authorities will not change their requirements in the future. We have limited experience as a company conducting clinical trials. While we are currently conducting multiple clinical trials of KTE-C19 and plan to initiate a clinical trial of KITE-718 in the first half of 2017, we have limited experience as a company in conducting clinical trials. In part because of this lack of experience, we cannot be certain that our ongoing clinical trials will be completed on time or if the planned clinical trials will begin or be completed on time, if at all. Large-scale trials require significant financial and management resources, and reliance on third-party clinical investigators, contract research organizations, or CROs, or consultants. Relying on third-party clinical investigators or CROs may force us to encounter delays that are outside of our control. 41

43 Monitoring safety of patients receiving our product candidates is challenging, which could adversely affect our ability to obtain regulatory approval and commercialize. For our ongoing clinical trials of KTE-C19 and in our planned sponsored multicenter clinical trials of KTE-C19 and other product candidates, we have and expect to contract with academic medical centers and hospitals experienced in the assessment and management of toxicities arising during clinical trials. Nonetheless, these centers and hospitals may have difficulty observing patients and treating toxicities, which may be more challenging due to personnel changes, inexperience, shift changes, house staff coverage or related issues. This could lead to more severe or prolonged toxicities or even patient deaths, which could result in us or the FDA delaying, suspending or terminating one or more of our clinical trials, and which could jeopardize regulatory approval. We also expect the centers using KTE-C19, if approved, on a commercial basis could similarly have difficulty in managing adverse events. Medicines used at centers to help manage adverse side effects of KTE-C19, such as tocilizumab and corticosteroids, may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment. Use of these medicines may increase with new physicians and centers administering our product candidates. If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. The enrollment of patients depends on many factors, including: the patient eligibility criteria defined in the protocol; the size of the patient population required for analysis of the trial s primary endpoints; the proximity of patients to study sites; the design of the trial; our ability to recruit clinical trial investigators with the appropriate competencies and experience; our ability to obtain and maintain patient consents; and the risk that patients enrolled in clinical trials will drop out of the trials before the manufacturing and infusion of our product candidates or trial completion. In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, some of our clinical trial sites are also being used by some of our competitors, which may reduce the number of patients who are available for our clinical trials in such clinical trial site. Moreover, because our product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy and hematopoietic cell transplantation, rather than enroll patients in any future clinical trial. Delays in patient enrollment may result in increased costs or may affect the timing or outcome of our ongoing clinical trial and planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates. Clinical trials are expensive, time-consuming and difficult to design and implement. Human clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because our product candidates are based on new technology and engineered on a patient-by-patient basis, we expect that they will require extensive research and development and have substantial manufacturing and processing costs. In addition, costs to treat patients with relapsed/refractory cancer and to treat potential side effects that may result from our product candidates can be significant. Accordingly, our clinical trial costs are likely to be significantly higher than for more conventional therapeutic technologies or drug products. In addition, our proposed personalized product candidates involve several complex and costly manufacturing and processing steps, the costs of which will be borne by us. KTE-C19 has received orphan drug status, but we may be unable to maintain or receive the benefits associated with orphan drug status, including market exclusivity. Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition or for which there is no reasonable expectation that the cost of developing and making available in the United States 42

44 a drug or biologic for a disease or condition will be recovered from sales in the United States for that drug or biologic. If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. We have received orphan drug status for KTE-C19 for the treatment of DLBCL, PMBCL, ALL, MCL, chronic lymphocytic leukemia, or CLL, and follicular lymphoma, or FL, but exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure the availability of sufficient quantities of the product to meet the needs of patients with the rare disease or condition. The European Commission has also granted KTE-C19 orphan drug designation for the treatment of DLBCL, PMBCL, ALL, MCL, CLL/small lymphocytic lymphoma, and FL. The designation may provide 10 years of market exclusivity in Europe, but is subject to certain limited exceptions. Even though we have obtained orphan drug designation for KTE-C19 for certain indications, we may be unable to obtain orphan drug designation for our future product candidates and we may not be the first to obtain marketing approval for any particular orphan indication. KTE-C19 has received breakthrough therapy designation in the United States for the treatment of refractory DLBCL, PMBCL and TFL and was granted access to Priority Medicines regulatory support in the European Union for the treatment of refractory DLBCL, but there can be no assurance that such designations will result in expedited review or approval. Breakthrough therapy designation is granted by the FDA and is intended to expedite the development and review of products that treat serious or life-threatening conditions. Access to the Priority Medicines, or PRIME, initiative is granted by the European Medicines Agency, or EMA, to support the development and accelerate the review of new therapies to treat patients with unmet medical need. We have received breakthrough therapy designation for KTE-C19 for the treatment of refractory DLBCL, PMBCL and TFL and received access to PRIME for the treatment of refractory DLBCL, but there can be no assurance that such designations will result in expedited review or approval. The FDA may also rescind the breakthrough therapy designation for KTE-C19 if subsequent data no longer support the designation. Breakthrough therapy designation and access to PRIME does not change the standards for product approval. While we intend to seek breakthrough therapy designation and access to PRIME for other product candidates, we may never receive such designations. Our product candidates may not achieve commercialization and our commercial opportunity may be limited. In addition to KTE-C19, we have developed a broad pipeline of product candidates, including additional TCR- and CAR-based product candidates. However, further development and obtaining regulatory approval for and commercializing additional product candidates will require substantial additional funding and are prone to the risks of failure inherent in medical product development. We cannot provide you any assurance that we will be able to successfully advance any of these additional product candidates through the development process. Even if we receive FDA approval to market additional product candidates for the treatment of cancer, we cannot assure you that any such product candidates will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize additional product candidates, our commercial opportunity will be limited. Moreover, a failure in obtaining regulatory approval of additional product candidates may have a negative effect on the approval process of any other, or result in losing approval of any approved, product candidate. We operate our own clinical manufacturing facility and intend to operate our own commercial manufacturing facility, which will require significant resources and we may fail to successfully operate either or both facilities, which could adversely affect our clinical trials and the commercial viability of our product candidates. We have not yet manufactured our product candidates on a commercial scale, and may not be able to achieve commercial manufacturing and cell processing on our own, including on a patient-by-patient basis, to satisfy demands for any of our product candidates. While we believe the manufacturing and processing approaches are appropriate to support our clinical product development, we have limited experience in managing the T cell engineering process, and our processes may be more difficult or more expensive than the approaches taken by our competitors. We cannot be sure that the manufacturing processes employed by us will result in T cells that will be safe and effective, or have the same clinical properties as those used in any NCI-based T cell therapy. 43

45 We have leased approximately 18,000 square feet near our headquarters in Santa Monica, California, which we use as our primary clinical manufacturing facility and have also leased approximately 43,500 square feet in El Segundo, California to develop our commercial manufacturing facility. We are currently operating our clinical manufacturing facility, but our operations remain subject to review and oversight by the FDA and the FDA could object to our use of our clinical manufacturing facility. While we have completed construction of our commercial manufacturing facility, we must receive approval from the FDA prior to licensure to manufacture our product candidates, which we may never obtain. Even if approved, we would be subject to ongoing periodic unannounced inspection by the FDA, the Drug Enforcement Administration and corresponding state agencies to ensure strict compliance with current good manufacturing practices, or cgmps, and other government regulations. Our license to manufacture product candidates will be subject to continued regulatory review. Our cost of goods development is at an early stage. The actual cost to manufacture and process our product candidates could be greater than we expect and could materially and adversely affect the commercial viability of our product candidates. The manufacture of medical products is complex and requires significant expertise, including the development of advanced manufacturing techniques and process controls. Manufacturers of cell therapy products often encounter difficulties in production, particularly in scaling out and validating initial production and ensuring the absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if contaminants are discovered in our supply of product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that any stability or other issues relating to the manufacture of our product candidates will not occur in the future. We may fail to manage the logistics of collecting and shipping patient material to the manufacturing site and shipping the product candidate back to the patient. Logistical and shipment delays and problems caused by us, our vendors or other factors not in our control, such as weather, could prevent or delay the delivery of product candidates to patients. Additionally, we have to maintain a complex chain of identity and chain of custody with respect to patient material as it moves to the manufacturing facility, through the manufacturing process, and back to the patient. Failure to maintain chain of identity and chain of custody could result in patient death, loss of product or regulatory action. We may also experience manufacturing difficulties due to resource constraints or as a result of labor disputes. If we were to encounter any of these difficulties, our ability to provide our product candidates to patients would be jeopardized. We are partly reliant on the National Cancer Institute for research and development and early clinical testing of certain of our product candidates. A portion of our research and development has been conducted by the NCI under the CRADA entered into in August In January 2016 and June 2016, we entered into additional CRADAs for the research and clinical development of additional engineered T cell therapies, including a fully human CAR-based therapy directed against the CD19 antigen for the treatment of B cell lymphomas and leukemias and TCR-based therapies directed against the HPV-16 E7 oncoprotein and in combination with a checkpoint inhibitor in HPV-16 associated solid tumors. The NCI, with Dr. Steven A. Rosenberg as the principal investigator, is responsible for conducting multiple clinical trials of engineered T cell therapy targeting various antigens in small numbers of patients under the 2012 CRADA. In April 2016, the National Institutes of Health, or NIH, announced that it had initiated an evaluation of all of its facilities producing sterile or infused products for administration to research participants. Preliminary findings identified the NCI cell therapy laboratory that makes products for the clinical trials under the 2012 CRADA as not in compliance with quality and safety standards, and not suitable for the production of sterile or infused products. According to the NIH, there is no evidence that any patients have been harmed, but a rigorous clinical review is being undertaken. While the NCI has begun the screening and enrollment of new patients in affected trials, we are unable to estimate the timing of any complete resolution. While we expect to have the NCI, with Drs. James N. Kochenderfer and Christian Hinrichs as principal investigators, conduct additional clinical trials under the 2016 CRADAs that are unaffected by the NIH facility evaluation, we have limited control over the nature or timing of the NCI s clinical trials and limited visibility into their day-to-day activities, including with respect to how they are providing and administering T cell therapy. For example, the research we are funding constitutes only a small portion of the NCI s overall research. Additionally, other research being conducted by Dr. Rosenberg, Dr. Kochenderfer or Dr. Hinrichs may at times receive higher priority than research on our programs. 44

46 We are dependent on the NIH for licensing intellectual property rights to certain future product candidates. Under each CRADA, we have an exclusive option to negotiate commercial licenses from the NIH to intellectual property relating to CAR- and TCR-based product candidates developed in the course of the CRADA research plan. However, we would have to negotiate with the NIH for such a license. There can be no assurance that we would be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to acquire. Further, to the extent we would like to negotiate a license to a patent filed before the relevant CRADA was entered into, another party may object to the NIH granting us a license during a 15-day public notification period, and the NIH may decide not to grant us the license. Though each CRADA has a five-year term, the NIH review of NCI manufacturing facilities has not reached a final resolution and the NCI may unilaterally terminate any of the CRADAs at any time for any reason or for no reason upon at least 60 days prior written notice. If the NCI unilaterally terminates one or both CRADAs, part or all of the research and development of engineered autologous cell therapy would be suspended, and we may be unable to research, develop and license future product candidates. A variety of risks associated with conducting research and clinical trials abroad and marketing our product candidates internationally could materially adversely affect our business. We plan to initiate a clinical program for KTE-C19 in Europe in the first half of 2017 and ultimately seek regulatory approval of our product candidates outside of the United States. Accordingly, we expect that we will be subject to additional risks related to operating in foreign countries, including: differing regulatory requirements in foreign countries; unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; increased difficulties in managing the logistics and transportation of collecting and shipping patient material to a manufacturing site in the United States and shipping the product candidate back to the patient abroad; import and export requirements and restrictions; economic weakness, including inflation, or political instability in particular foreign economies and markets; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; foreign taxes, including withholding of payroll taxes; foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; difficulties staffing and managing foreign operations; workforce uncertainty in countries where labor unrest is more common than in the United States; differing payor reimbursement regimes, governmental payors or patient self-pay systems, and price controls; potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign regulations; challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and business interruptions resulting from geo-political actions, including war and terrorism. These and other risks associated with our international operations, including the operations of our European subsidiary, Kite Pharma EU B.V. and of our joint venture in China with Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., or Fosun Pharma, may materially adversely affect our ability to attain or maintain profitable operations. 45

47 We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.* The biopharmaceutical industry is characterized by intense competition and rapid innovation. Our competitors may be able to develop other compounds or drugs that are able to achieve similar or better results. Our potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors, either alone or with collaborative partners, may succeed in developing, acquiring or licensing on an exclusive basis drug or biologic products that are more effective, safer, more easily commercialized or less costly than our product candidates or may develop proprietary technologies or secure patent protection that we may need for the development of our technologies and products. We believe the key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, convenience of use, price and reimbursement. Specifically, engineered T cells faces significant competition in both the CAR and TCR technology space from multiple companies. Even if we obtain regulatory approval of our product candidates, the availability and price of our competitors products could limit the demand and the price we are able to charge for our product candidates. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our product candidates, or if physicians switch to other new drug or biologic products or choose to reserve our product candidates for use in limited circumstances. For additional information regarding our competition, see "Item 1. Business-Competition" in our Annual Report. We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on our management, scientific and medical personnel, including our President and Chief Executive Officer, our Executive Vice President of Research & Development and Chief Medical Officer, our Chief Operating Officer, our Chief Commercial Officer, our Executive Vice President of Technical Operations and our Chief Financial Officer. The loss of the services of any of our executive officers, other key employees, and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business. Our strong relationship with the NCI is bolstered by our President and Chief Executive Officer s relationship with Dr. Rosenberg of the NCI. If we lose our President and Chief Executive Officer or if Dr. Rosenberg leaves the NCI, our relationship with the NCI may deteriorate and our business could be harmed. We conduct substantially all of our operations at our facilities in Southern California. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided stock options and restricted stock units, or RSUs, that vest over time. The value to employees of stock options or RSUs that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice. Although we have employment agreements with our key employees, these employment agreements provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice. We do not maintain key man insurance policies on the lives of these individuals or the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel. 46

48 We have grown rapidly and will need to continue to grow the size of our organization, and we may experience difficulties in managing this growth. As our development and commercialization plans and strategies develop, and as we continue to transition into operating as a public company, we have rapidly expanded our employee base and expect to continue to add managerial, operational, sales, research and development, marketing, financial and other personnel. Current and future growth imposes significant added responsibilities on members of management, including: identifying, recruiting, integrating, maintaining and motivating additional employees; managing our internal development efforts effectively, including the clinical and FDA review process for our product candidates, while complying with our contractual obligations to contractors and other third parties; and improving our operational, financial and management controls, reporting systems and procedures. Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage our growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities. We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including substantial aspects of regulatory approval, clinical management, manufacturing and preparation for potential commercial launch. There can be no assurance that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business. There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all. If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals. We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements. We may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy. Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition and results of operations. If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture. For instance, our research collaboration with Amgen Inc., our collaboration with bluebird bio, Inc., our license and research agreement with Alpine Immune Sciences, Inc. and our research collaboration and license agreement with Cell Design Labs, Inc. all require significant research and development commitments that may not result in the development and commercialization of additional product candidates. In addition, our collaboration with GE Global Research may not result in automation technologies that improve engineered T cell manufacturing. We cannot be certain that, following a strategic transaction or license, we will achieve the results, revenue or specific net income that justifies such transaction. 47

49 We may not realize the benefits of acquisitions or other strategic transactions.* We acquired T-Cell Factory B.V., or TCF, on March 17, 2015 and renamed the acquired company Kite Pharma EU B.V. On January 10, 2017, KP EU C.V., our wholly owned indirect subsidiary, entered into a cooperative joint venture agreement with Fosun Pharma for the purpose of developing, manufacturing and commercializing KTE-C19 in the mainland of the People s Republic of China, the Hong Kong Special Administration Region and the Macau Special Administration Region. On January 5, 2017, Kite Pharma EU B.V. entered into a Collaboration and License Agreement with Daiichi Sankyo Company, Limited, or Daiichi Sankyo, pursuant to which we have granted to Daiichi Sankyo an exclusive license to develop and commercialize KTE-C19 in Japan. We actively evaluate various strategic transactions on an ongoing basis. We may acquire other businesses, products or technologies as well as pursue joint ventures or investments in complementary businesses. The success of our strategic transactions, including our acquisition of TCF and partnerships with Fosun Pharma and Daiichi Sankyo, and any future strategic transactions depends on the risks and uncertainties involved including: unanticipated liabilities related to acquired companies or joint ventures; difficulties integrating acquired personnel, technologies and operations into our existing business; retention of key employees; diversion of management time and focus from operating our business to management of strategic alliances or joint ventures or acquisition integration challenges; increases in our expenses and reductions in our cash available for operations and other uses; disruption in our relationships with collaborators or suppliers as a result of such a transaction; and possible write-offs or impairment charges relating to acquired businesses or joint ventures. If any of these risks or uncertainties occur, we may not realize the anticipated benefit of any acquisition or strategic transaction. For example, TCF s TCR-GENErator technology platform may fail to identify TCR-based product candidates that are safe and effective, or at all. Additionally, foreign acquisitions and joint ventures are subject to additional risks, including those related to integration of operations across different cultures and languages, currency risks, potentially adverse tax consequences of overseas operations and the particular economic, political and regulatory risks associated with specific countries. For instance, we owe significant milestone payments to the sellers of TCF in euros, rather than dollars, and we have not hedged these payments. In addition, any payments due to us from our joint venture with Fosun Pharma may be restricted due to governmental or other regulatory controls. We may also face difficulties or be unable to successfully transfer our manufacturing process to China and Japan, which would prevent any development or commercialization of KTE-C19 in China and Japan. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.* Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to continue the clinical development of our product candidates, including KTE-C19. If approved, we may require significant additional amounts in order to launch and commercialize our product candidates. Changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We may require additional capital for the further development and commercialization of our product candidates, including funding our internal manufacturing capabilities and Kite Pharma EU B.V. or our joint venture with Fosun Pharma and may need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate. We cannot be certain that additional funding will be available on acceptable terms, or at all. We have no committed source of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or other research and development initiatives. Our license agreements and CRADAs may also be terminated if we are unable to meet the payment obligations under the agreements. We could be required to seek collaborators for our product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves. 48

50 Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline. Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us. Our internal computer systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches. Despite the implementation of security measures, our internal computer systems, our Kite Konnect technology platform and the systems of our CROs, contractors and consultants are vulnerable to damage from computer viruses and unauthorized access. While we have not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. A failure in the Kite Konnect platform, or any of the associated IT platform solutions, could also result in the loss of product or regulatory action. Likewise, we partly rely on NCI for research and development of our product candidates and other third parties to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed. Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses. Our operations, and those of our CROs and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. In addition, we are reliant on the NCI for conducting research and development of certain of our product candidates. The NCI has been affected by the NIH evaluation of its manufacturing facilities, which is delaying clinical trials of early-stage product candidates under our 2012 CRADA, and the NCI may be further affected by government shutdowns or withdrawn funding. Our ability to manufacture our product candidates could be disrupted if our operations or those of our suppliers are affected by a man-made or natural disaster or other business interruption. Our corporate headquarters, the location of our manufacturer of the viral vector that delivers the CAR gene, and our clinical and commercial manufacturing facilities are located in California near major earthquake faults and fire zones. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and fire zones and being consolidated in certain geographical areas is unknown, but our operations and financial condition could suffer in the event of a major earthquake, fire or other natural disaster. Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, or our business may be found to be not compliant with regulatory standards requirements. We are exposed to the risk of employee fraud or other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to: comply with the laws of the FDA and other similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies, comply with manufacturing standards we have established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws, or report 49

51 financial information or data accurately or to disclose unauthorized activities to us. Similarly, our business could be found to be noncompliant with healthcare regulatory requirements. If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and education programs. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully, offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs; federal civil and criminal false claims laws and civil monetary penalty laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government; the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services; HIPAA, as amended by HITECH and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization; the federal Physician Payment Sunshine Act, created under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, which we refer to collectively as the Affordable Care Act, and its implementing regulations, which require certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. Additionally, we may be subject to state and foreign equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope. For example, we may be subject to the following: state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter employee misconduct or business noncompliance, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Efforts to ensure that our business 50

52 arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. In addition, the approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates. We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products. For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in: decreased demand for our product candidates; injury to our reputation; withdrawal of clinical trial participants; initiation of investigations by regulators; costs to defend the related litigation; a diversion of management s time and our resources; substantial monetary awards to trial participants or patients; product recalls, withdrawals or labeling, marketing or promotional restrictions; loss of revenue; exhaustion of any available insurance and our capital resources; the inability to commercialize any product candidate; and a decline in our share price. Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop, alone or with corporate collaborators. Our insurance policies may also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. While we have obtained clinical trial insurance for our clinical trials of KTE-C19, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise. Our ability to utilize our net operating loss carryforwards and certain other tax attributes will be limited. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an ownership change (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. As of December 31, 2016, we have U.S. and state net operating loss carryforwards of approximately $167.5 million and $468.6 million, respectively. As a result of our private placements and our initial public offering, we triggered two ownership changes, which resulted in a limitation in utilization of pre-change attributes. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. Accordingly, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal and state taxable income may be subject to limitations, which will result in increased future tax liability to us. 51

53 Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.* As widely reported, global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget. At March 31, 2017, we had approximately $565.2 million of cash and cash equivalents and $238.9 million of marketable securities. While we are not aware of any downgrades, material losses or other significant deterioration in the fair value of our cash equivalents and marketable securities since March 31, 2017, no assurance can be given that further deterioration of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents and marketable securities or our ability to meet our financing objectives. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn. Risks Related to Our Reliance on Third Parties We are partly relying on third parties to assist in preparing for commercial launch and to commercialize KTE-C19, if approved. We are partly relying on key collaborators to prepare for commercial launch and for the successful marketing and delivery of KTE-C19, if approved. In particular, we are relying on technology partners to assist in the development of the Kite Konnect technology platform. This platform is critical to ensure positive prescriber and patient experience as well as chain of identity and chain of custody of the product. If the technology platform is incomplete or develops technological issues, we may be unable to launch KTE-C19 or have to suspend sales post-launch. In addition, we expect to rely on apheresis sites, shippers, couriers, and hospitals for the logistical collection of patient white blood cells and ultimate delivery of KTE-C19 to patients. Any disruption or difficulties incurred by any of these vendors could result in product loss and regulatory action and significantly harm our business. We rely and will rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of or commercialize our product candidates. We depend and will depend upon independent investigators and collaborators, such as universities, medical institutions, CROs and strategic partners to conduct our preclinical and clinical trials under agreements with us, including without limitation the NCI. We negotiate budgets and contracts with CROs and study sites, which may result in delays to our development timelines and increased costs. We will rely heavily on these third parties over the course of our clinical trials, and we control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties are required to comply with current good clinical practices, or cgcps, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these cgcps through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties fail to comply with applicable cgcp regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the cgcp regulations. In addition, our clinical trials must be conducted with biologic product produced under cgmps and will require a large number of test patients. Our failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. 52

54 Any third parties conducting our clinical trials are and will not be our employees and, except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical and nonclinical programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other drug development activities, which could affect their performance on our behalf. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed. Switching or adding third parties to conduct our clinical trials involves substantial cost and requires extensive management time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. We may rely on third parties to manufacture our clinical product supplies, and we may have to rely on third parties to produce and process our product candidates, if approved. If we are unable to develop or obtain regulatory approval of our own commercial manufacturing facility for any commercial product supplies or engage any future third-party manufacturer, we are exposed to the following risks: We may be unable to identify manufacturers on acceptable terms or at all because the number of potential manufacturers is limited and the FDA may have questions regarding any replacement contractor. This may require new testing and regulatory interactions. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of FDA questions, if any. Our third-party manufacturers might be unable to timely formulate and manufacture our product or produce the quantity and quality required to meet our clinical and commercial needs, if any. Contract manufacturers may not be able to execute our manufacturing procedures appropriately. Our future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products. Manufacturers are subject to ongoing periodic unannounced inspection by the FDA, the Drug Enforcement Administration and corresponding state agencies to ensure strict compliance with cgmp and other government regulations and corresponding foreign standards. We do not have control over third-party manufacturers compliance with these regulations and standards. We may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our products. Our third-party manufacturers could breach or terminate their agreement with us. Our contract manufacturers would also be subject to the same risks we face in developing our own manufacturing capabilities, as described above. Each of these risks could delay our clinical trials, the approval, if any of our product candidates by the FDA or the commercialization of our product candidates or result in higher costs or deprive us of potential product revenue. In addition, we will rely on third parties to perform release tests on our product candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could be put at risk of serious harm. We also plan to rely on a contract manufacturer to assist with part of the manufacturing process for our clinical trials in Europe and any non-performance by such manufacturer will adversely affect our clinical trials in Europe. Cell-based therapies rely on the availability of specialty raw materials, which may not be available to us on acceptable terms or at all. Our product candidates require many specialty raw materials, including viral vectors that deliver the CAR or TCR sequence, some of which are manufactured by small companies with limited resources and experience to support a commercial product, and the suppliers may not be able to deliver raw materials to our specifications. In addition, those suppliers normally support blood-based hospital businesses and generally do not have the capacity to support commercial products manufactured under cgmp by biopharmaceutical firms. The suppliers may be ill-equipped to support our needs, especially in non-routine circumstances like an FDA inspection or medical crisis, such as widespread contamination. We also do not have contracts with many of these suppliers, and may not be able to contract with them on acceptable terms or at all. Accordingly, we may experience delays in receiving key raw materials to support clinical or commercial manufacturing. 53

55 In addition, some raw materials are currently available from a single supplier, or a small number of suppliers. We cannot be sure that these suppliers will remain in business, or that they will not be purchased by one of our competitors or another company that is not interested in continuing to produce these materials for our intended purpose. If we or our third-party suppliers use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages. Our research and development activities involve the controlled use of potentially hazardous substances, including chemical and biological materials. We and our suppliers are subject to federal, state and local laws and regulations in the United States governing the use, manufacture, storage, handling and disposal of medical and hazardous materials. Although we believe that we and our suppliers procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, we and our suppliers cannot completely eliminate the risk of contamination or injury resulting from medical or hazardous materials. As a result of any such contamination or injury, we may incur liability or local, city, state or federal authorities may curtail the use of these materials and interrupt our business operations. In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources. We do not have any insurance for liabilities arising from medical or hazardous materials. Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations. Risks Related to Government Regulation The FDA regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our product candidates.* A BLA must include extensive preclinical and clinical data and supporting information to establish the product candidate s safety and effectiveness for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing and controls for the product, including with respect to chain of identity and chain of custody of the product. In March 2017, we completed our submission of the BLA for the approval of KTE-C19 as a treatment for patients with relapsed or refractory aggressive B-cell NHL, who are ineligible for ASCT. However, our BLA may be incomplete or the FDA may require additional information. We expect the novel nature of our product candidates to create further challenges in obtaining regulatory approval. For example, the FDA has limited experience with commercial development of T cell therapies for cancer. We also intend to obtain regulatory approval of future TCR-based product candidates regardless of cancer type or origin, which the FDA may have difficulty accepting if our clinical trials only involved cancers of certain origins. Accordingly, the regulatory approval pathway for our product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained. We may also experience delays in completing planned clinical trials for a variety of reasons, including delays related to: the availability of financial resources to commence and complete the planned trials; reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; obtaining approval at each clinical trial site by an independent institutional review board, or IRB; recruiting suitable patients to participate in a trial; having patients complete a trial, including having patients enrolled in clinical trials dropping out of the trial before the product candidate is manufactured and returned to the site, or return for post-treatment follow-up; clinical trial sites deviating from trial protocol or dropping out of a trial; adding new clinical trial sites; or manufacturing sufficient quantities of qualified materials under cgmps and applying them on a patient by patient basis for use in clinical trials. We could also encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by us, the IRBs for the institutions in which such trials are being conducted, the Data Monitoring Committee for such trial, or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. The FDA s review of our data of our ongoing clinical trials of KTE-C19 may, depending on the data, also result in the delay, 54

56 suspension or termination of one or more clinical trials of KTE-C19, which would also delay or prevent the initiation of our other planned clinical trials. If we experience termination of, or delays in the completion of, any clinical trial of our product candidates, the commercial prospects for our product candidates will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenue. The NCI is also experiencing difficulties in completing ongoing clinical trials and conducting future clinical trials of product candidates due to the NIH facility evaluation. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of our product candidates. The FDA may disagree with our regulatory plan and we may fail to obtain regulatory approval of our product candidates.* While we believe the primary analysis supports our BLA submission for approval of KTE-C19, the FDA may disagree or the FDA could require longer-term follow-up results, additional data from our clinical trial or additional information relating to GMP or GCP compliance and chain of identity and chain of custody that could delay or prevent FDA s filing or approval of our first BLA submission. FDA refusal to file our BLA would delay resubmission and harm our business. Even if filed by the FDA, the FDA may issue a complete response letter on the basis that the benefits of KTE-C19 do not outweigh its risks, or if there are data integrity or GMP or GCP compliance concerns. The FDA may also convene a public advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved. If an advisory committee were to recommend against the approval of our BLA, we may not be able to succeed in securing approval for KTE-C19. The FDA is not bound by the recommendation of an advisory committee. In addition, the general approach for FDA approval of a new biologic or drug is dispositive data from two well-controlled, Phase 3 clinical studies of the relevant biologic or drug in the relevant patient population. Phase 3 clinical studies typically involve hundreds of patients, have significant costs and take years to complete. We believe our approval strategy is warranted given the limited alternatives for patients with aggressive NHL, but the FDA may ultimately require a Phase 3 clinical trial prior to approval, particularly since our product candidates represent a novel and personalized treatment. In addition, the standard of care may change with the approval of new products in the same indications that we are studying. This may result in the FDA or other regulatory agencies requesting additional studies to show that our product candidate is superior to the new products. Our clinical trial results may also not support approval. In addition, our product candidates could fail to receive regulatory approval for many reasons, including the following: the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product candidates are safe and effective for any of their proposed indications; the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval, including due to the heterogeneity of patient populations; we may be unable to demonstrate that our product candidates clinical and other benefits outweigh their safety risks; the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere; the FDA or comparable foreign regulatory authorities will inspect our commercial manufacturing facility and may not approve our facility; and the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. The FDA may also approve an indication that is narrower than the indication we are seeking, such as limiting to the indication studied in ZUMA-1, or grant accelerated approval if the FDA believes our results do not support regular approval, which may require us to conduct a confirmatory study to verify the predicted clinical benefit and additional safety studies. The results from the confirmatory study may not support the clinical benefit, which would result in the approval being withdrawn. In addition, accelerated approval would require the pre-approval of promotional materials, which could adversely impact how we market and sell KTE-C19. 55

57 Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions. Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval. We may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. Even if we receive regulatory approval of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.* Any regulatory approvals that we receive for our product candidates will require surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require a risk evaluation and mitigation strategy in order to approve our product candidates, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cgmps and cgcps for any clinical trials that we conduct post-approval. In addition, the FDA could require us to conduct another study to obtain additional safety or biomarker information. Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party suppliers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product from the market, or voluntary or mandatory product recalls; fines, warning letters or holds on clinical trials; refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals; product seizure or detention, or refusal to permit the import or export of our product candidates; and injunctions or the imposition of civil or criminal penalties. The FDA s and other regulatory authorities policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability. Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates, if approved, profitably. Successful sales of our product candidates, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors. In addition, because our product candidates represent new approaches to the treatment of cancer, we cannot accurately estimate the potential revenue from our product candidates. 56

58 Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Obtaining coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement. Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor s determination that use of a product is: a covered benefit under its health plan; safe, effective and medically necessary; appropriate for the specific patient; cost-effective; and neither experimental nor investigational. Obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products. Even if we obtain coverage for a given product, if the resulting reimbursement rates are deemed to be insufficient, hospitals may not approve our product for use in their facility or may require co-payments that patients find unacceptably high. Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates. In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained. We intend to seek approval to market our product candidates in both the United States and in selected foreign jurisdictions. If we obtain approval in one or more foreign jurisdictions for our product candidates, we will be subject to rules and regulations in those jurisdictions. In some foreign countries, particularly those in Europe, the pricing of biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate. In addition, market acceptance and sales of our product candidates will depend significantly on the availability of coverage and adequate reimbursement from third-party payors for our product candidates and may be affected by existing and future health care reform measures. The advancement of health reform may negatively impact our ability to sell our product candidates, if approved, profitably. Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our product candidates, if approved, profitably. In particular, in 2010 the Affordable Care Act was enacted. The Affordable Care Act and its implementing regulations, among other things, revised the methodology by which rebates owed by manufacturers to the state and federal government for covered outpatient drugs and certain biologics, including our product candidates, under the Medicaid drug rebate program are calculated, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid drug rebate program, extended the Medicaid drug rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government s comparative effectiveness research. Additionally, the Affordable Care Act expanded eligibility criteria for Medicaid programs, imposed a new Medicare Part D coverage gap discount program, expanded the entities eligible for discounts under the Public Health Service pharmaceutical pricing program, and implemented a new Patient-Centered Outcomes Research Institute. We are still unsure the full impact that the Affordable Care Act will have on our business. Further, since its enactment, there have been judicial and Congressional challenges to numerous provisions of the Affordable Care Act. In January, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of the Affordable Care Act. The Budget Resolution is not a law, but it is widely viewed as the first step toward the passage of legislation that would repeal certain aspects of the Affordable Care Act. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the 57

59 implementation of any provision of the Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress also could consider subsequent legislation to replace elements of the Affordable Care Act that are repealed. There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. For example, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient assistance programs, and reform government program reimbursement methodologies for drugs. Further, in April 2016, CMS final rule regarding the Medicaid drug rebate program took effect, among other things, revising the manner in which the average manufacturer price is to be calculated by manufacturers participating in the program and implementing certain amendments to the Medicaid rebate statute created under the Affordable Care Act. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect: the demand for our product candidates, if we obtain regulatory approval; our ability to set a price that we believe is fair for our products; our ability to generate revenue and achieve or maintain profitability; the level of taxes that we are required to pay; and the availability of capital. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability. Risks Related to Our Intellectual Property We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business. We are dependent on patents, know-how and proprietary technology, both our own and licensed from others. We have several license agreements, including with Cabaret Biotech Ltd., or Cabaret, and Dr. Zelig Eshhar, the NIH, Amgen Inc., Alpine Immune Sciences, Inc., The Regents of the University of California and Cell Design Labs, Inc. These licenses may be terminated upon certain conditions. Any termination of these licenses could result in the loss of significant rights and could harm our ability to commercialize our product candidates. In addition, Cabaret and other of our licensors in-license some of the intellectual property rights they are licensing to us. To the extent these licensors fail to meet their obligations under their license agreements, which we are not in control of, we may lose the benefits of our license agreements with these licensors. Disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: the scope of rights granted under the license agreement and other interpretation-related issues; whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; our right to sublicense patent and other rights to third parties under collaborative development relationships; our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; and the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. In addition, our subsidiary, Kite Pharma EU B.V., has licenses to certain intellectual property rights relating to its TCR-GENErator platform, and we are subject to the same risks of termination and disputes with respect to our subsidiary s licenses. We are generally also subject to all of the same risks with respect to protection of intellectual property that we license, as we are for intellectual property that we own, which are described below. If we or our licensors fail to adequately protect this intellectual property, our ability to commercialize products could suffer. 58

60 If our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be able to compete effectively in our market.* We rely upon a combination of patents, trade secret protection and license agreements to protect the intellectual property related to our technologies. Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. We primarily rely on our license agreement with Cabaret with respect to CAR-based product candidates generally and KTE-C19 specifically, and rely and expect to rely on license agreements with the NIH for other product candidates. Certain intellectual property which is covered by these agreements has been developed with funding from the U.S. government. As such, our rights in this intellectual property are subject to certain research and other rights of the government. Additional patent applications have been filed, and we anticipate additional patent applications will be filed, both in the United States and in other countries, as appropriate. However, we cannot predict: if and when patents will issue; the degree and range of protection any issued patents will afford us against competitors including whether third parties will find ways to invalidate or otherwise circumvent our patents; whether or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; or whether we will need to initiate litigation or administrative proceedings which may be costly whether we win or lose. Composition of matter patents for biological and pharmaceutical products such as CAR- or TCR-based product candidates are generally considered to be the strongest form of intellectual property protection for those types of products, as such patents provide protection without regard to any method of use. We cannot be certain that the claims in our pending patent applications covering composition of matter of our product candidates will be considered patentable by the United States Patent and Trademark Office, or the USPTO, or by patent offices in foreign countries, or that the claims in any of our issued patents will be considered patentable by courts in the United States or foreign countries. Method of use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates or uses thereof in the United States or in other foreign countries. Even if the patents do successfully issue, third parties may challenge the patentability, validity, enforceability or scope thereof, for example through inter partes review, or IPR, post-grant review or ex parte reexamination before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions, which may result in such patents being cancelled, narrowed, invalidated or held unenforceable. For example, on November 16, 2015, March 18, 2016 and August 5, 2016, one or more anonymous parties filed for ex parte reexaminations of certain patents that we licensed pursuant to our agreement with Cabaret. On December 12, 2016, we achieved a favorable outcome in one of these reexaminations: the USPTO maintained the patent with its expiration date unchanged. However, on March 31, 2017, in another reexamination of one of our CAR-related patents, expiring in 2027, the USPTO issued a non-final Office Action wherein the USPTO examiners presented their views and arguments (called rejections ) on the patentability of the patent claims. If, as a result, one or more of the claims in these patents are ultimately determined to be unpatentable, invalid or unenforceable, our ability to block certain third party CAR products with these patents could be seriously impaired. Even if our patents and applications are unchallenged, they may not adequately protect our intellectual property or prevent others from designing around our claims. If the breadth or strength of protection provided by the patents and patent applications we hold with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our product candidates. Further, if we encounter delays in our clinical trials, the period of time during which we could market our product candidates under patent protection would be reduced. United States patent applications containing or that at any time contained a claim not entitled to a priority date before March 16, 2013 are subject to the first to file system implemented by the America Invents Act (2011). This first to file system will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our product candidates. Furthermore, 59

61 for United States applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third-party or instituted by the USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. In addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our product discovery and development processes that involve proprietary know-how, information, or technology that is not covered by patents. Although we require all of our employees to assign their inventions to us, and require all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information, or technology to enter into confidentiality agreements, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent unauthorized material disclosure of our intellectual property to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results and financial condition. Third-party claims of intellectual property infringement may prevent or delay our product discovery and development efforts.* Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates. As described in more detail below, we are engaged in litigation in which a third party claims that our lead product candidate, KTE-C19, infringes or will infringe its patent rights. The patent-in-suit in the litigation in which we are involved is owned by Memorial Sloan Kettering Cancer and Sloan Kettering Institute for Cancer Research, or MSK, and licensed to Juno Therapeutics, Inc., or Juno, and relates to certain CAR compositions of matter. Juno is a publicly held biotherapeutics company developing CAR and TCR technologies. On August 13, 2015, we filed a petition with the USPTO to institute an IPR proceeding of the MSK patent. The purpose of the IPR petition was to seek a determination before the Patent Trial and Appeal Board, or PTAB, that the claims recited in the patent licensed to Juno were invalid. A decision was issued in the IPR on December 16, 2016 wherein the PTAB declined to hold the claims invalid. On February 16, 2017, we filed a Notice of Appeal to the Court of Appeals for the Federal Circuit. Separately, on December 19, 2016, Juno and MSK filed a patent infringement lawsuit against us in the U.S. District Court for the District of Delaware with respect to the MSK patent. On February 23, 2017, we filed a motion to dismiss this lawsuit based upon lack of subject matter jurisdiction. If we are unsuccessful in our motion to dismiss, we expect the case to proceed. If the motion is successful, MSK may nonetheless bring another lawsuit in the future. Based on the controlling statute, in our defense against the infringement claims we would be precluded, or estopped from asserting that the patent at issue is invalid on any ground that we raised or reasonably could have raised during the IPR proceeding. The precise scope of this statutory estoppel is evolving in the courts, and we are not estopped from raising additional invalidity challenges to the patent, as well as defenses in the lawsuit, based on grounds other than those that we raised or reasonably could have raised during the IPR. To have succeeded in the IPR proceeding, we would have needed to establish invalidity of the MSK patent by a preponderance of the evidence, meaning that, based on the evidence, it is more likely than not that the claims in the patent are invalid. In contrast, in the separate infringement lawsuit filed against us, we would need to prove invalidity by clear and convincing evidence, a heightened standard of proof. In the U.S., issued patents enjoy a presumption of validity in court, but not at the USPTO. If the MSK patent were upheld in the IPR appeal and were held by a court of competent jurisdiction to be not invalid, and that it covers KTE-C19, and if a court were to grant an injunction, Juno and MSK may be able to block our ability to sell the product unless we obtained a license or until such patent expires (which we believe will be in 2024) or is finally determined to be not infringed, unpatentable, invalid or unenforceable. While we believe that we have a meritorious basis for asserting that the MSK patent is invalid, patent litigation is inherently uncertain, and therefore we cannot be certain that we will prevail in these proceedings. Additionally, there may be third-party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued 60

62 patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held not infringed, unpatentable, invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held not infringed, unpatentable, invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business. Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. These risks apply to the MSK patent and the related legal proceedings as well as to any other relevant third-party patent. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly. We may not be successful in obtaining or maintaining necessary rights to product components and processes for our development pipeline through acquisitions and inlicenses. Presently we have rights to the intellectual property, through licenses from third parties and under patent applications that we own or will own, to develop KTE-C19 and certain other product candidates. Because our programs may involve additional product candidates that may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. For instance, while we have certain intellectual property directed to a CARbased product candidate that targets the EGFRvIII antigen, we may require an additional license relating to the EGFRvIII scfv target binding site in order to commercialize a CAR-based product candidate that targets the EGFRvIII antigen. In addition, while we have patent rights directed to certain CAR constructs, we do not have, and do not expect to obtain, any intellectual property to broad TCR constructs. Rather, any intellectual property directed to TCR-based product candidates that we may obtain would likely be product and/or construct specific. Our product candidates may also require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or inlicense any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology. The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies, which may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. For example, for licenses to additional product candidates, we would have to negotiate a license with the NIH or other third parties for the rights to certain patents and patent applications relating to such product candidates. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to acquire. 61

63 We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful. Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of our patents is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. Interference proceedings provoked by third parties or brought by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Litigation or interference proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business. Issued patents covering our product candidates could be found unpatentable, invalid or unenforceable if challenged in court or the USPTO. If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate, as applicable, is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include IPR, ex parte re-examination and post grant review in the United States, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). For example, on November 16, 2015, March 18, 2016 and August 5, 2016, one or more anonymous parties filed for ex parte reexaminations of certain patents that we licensed pursuant to our agreement with Cabaret. On December 12, 2016, we achieved a favorable outcome in one of these reexaminations: the USPTO maintained the patent with its expiration date unchanged. However, on March 31, 2017, in another reexamination of one of our CAR-related patents, expiring in 2027, the USPTO issued a non-final Office Action wherein the USPTO examiners presented their views and arguments (called rejections ) on the patentability of the patent claims. Such proceedings could result in ultimate revocation, truncation of term, or amendment to our patents in 62

64 such a way that they no longer cover our product, or competitor product, candidates. The outcome following legal assertions of unpatentability, invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we, our patent counsel and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of unpatentability, invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection could have a material adverse impact on our business. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the recent case, Assoc.forMolecular Pathologyv.MyriadGenetics,Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not patentable. While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents. We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world. We have limited intellectual property rights outside the United States, and, in particular, our patents directed to CAR constructs licensed from Cabaret do not extend outside of the United States. Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. We have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of these third parties or our employees former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees. 63

65 Risks Related to Our Common Stock The price of our stock has been and may continue to be highly volatile, and you could lose all or part of your investment. Prior to our initial public offering in 2014, there was no public market for our common stock. We cannot assure you that an active, liquid trading market for our shares will develop or persist. You may not be able to sell your shares quickly or at a recently reported market price if trading in our common stock is not active. The trading price of our common stock following our initial public offering has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. In addition to the factors discussed in this Risk Factors section, these factors include: any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority s review of such filings, including without limitation the FDA s issuance of a refusal to file letter or a request for additional information; our failure to commercialize our product candidates; the commencement, enrollment or results of our ongoing and planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates; adverse results or delays in clinical trials; our or NCI s decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial; the resolution of the NIH facility evaluation and the ability and timing of the NCI to advance clinical trials under the 2012 CRADA and 2016 CRADAs; adverse regulatory decisions, including failure to receive regulatory approval of our product candidates; changes in laws or regulations applicable to our products, including but not limited to clinical trial requirements for approvals; adverse developments concerning our manufacturers or suppliers; our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices; our inability to establish collaborations if needed; additions or departures of key scientific or management personnel; unanticipated serious safety concerns related to immuno-oncology or related to the use of our product candidates; introduction of new products or services offered by us or our competitors; announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; our ability to effectively manage our growth; the size and growth of our initial cancer target markets; our ability to successfully treat additional types of cancers or at different stages, including the ability of Kite Pharma EU B.V. to discover new TCR-based product candidates; actual or anticipated variations in quarterly operating results; our cash position; our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; publication of research reports about us or our industry, or immunotherapy in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts; changes in the market valuations of similar companies; overall performance of the equity markets; sales of our common stock by us or our stockholders in the future; trading volume of our common stock; changes in accounting practices; ineffectiveness of our internal controls; disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; significant lawsuits, including patent or stockholder litigation; general political and economic conditions; and other events or factors, many of which are beyond our control. In addition, the stock market in general, and The NASDAQ Global Select Market and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company s securities. This type of litigation, 64

66 if instituted, could result in substantial costs and a diversion of management s attention and resources, which would harm our business, operating results or financial condition. We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock. Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.* As of May 1, 2017, our executive officers, directors, and 10% stockholders beneficially owned approximately 14% of our voting stock, a significant portion of which is beneficially owned by Arie Belldegrun, our President, Chief Executive Officer and Chairman. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. Failure to establish and maintain adequate finance infrastructure and accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies. As a public company, we operate in an increasingly demanding regulatory environment, including with respect to more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, include establishing and maintaining corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. Our compliance with Section 404 of the Sarbanes-Oxley Act requires that we incur substantial accounting expense and expend significant management efforts. We complied with Section 404 at December 31, 2015 and 2016 and while our testing did not reveal any material weaknesses in our internal controls, subsequent testing by our independent registered public accounting firm may reveal material weaknesses in our internal controls that we would be required to remediate in a timely manner so as to be able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act each year. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner each year, we could be subject to sanctions or investigations by the SEC, NASDAQ or other regulatory authorities which would require additional financial and management resources and could adversely affect the market price of our common stock. Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information. We have incurred and will incur significant increased costs as a result of operating as a public company, and our management has to devote substantial time to new compliance initiatives. As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act, which requires, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The NASDAQ Global Select Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as say on pay and proxy access. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. We expect the rules and regulations applicable to public companies to continue to increase our legal and financial compliance costs and to make some activities more timeconsuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our net loss, and may require 65

67 us to reduce costs in other areas of our business or increase the prices of our products or services. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall. Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. Sales of our common stock by current stockholders may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, and make it more difficult for you to sell shares of our common stock. Certain holders of our securities are entitled to rights with respect to the registration of their shares under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock. We have registered on Form S-8 all shares of common stock that are issuable under our 2014 Equity Incentive Plan, as amended, or the EIP. As a consequence, these shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. Actual or potential sales of our common stock by our employees, including our directors and executive officers, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negatively by other investors. In accordance with the guidelines specified under Rule 10b5-1 of the Exchange Act, and our policies regarding stock transactions, a number of our employees, including certain executive officers, have adopted and may continue to adopt stock trading plans pursuant to which they arrange to sell shares of our common stock from time to time in the future. Generally, sales under such plans by our executive officers require public filings. Actual or potential sales of our common stock by such persons could cause the price of our common stock to fall or prevent it from increasing for numerous reasons. For example, a substantial number of shares of our common stock becoming available (or being perceived to become available) for sale in the public market could cause the market price of our common stock to fall or prevent it from increasing. Also, actual or potential sales by such persons could be viewed negatively by other investors. Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to the EIP, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock. Pursuant to the EIP, our management is authorized to grant stock options and other equity awards to our employees, directors and consultants. The number of shares of our common stock reserved for issuance under our EIP will automatically increase on January 1 of each year continuing through and including January 1, 2024, by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or such lesser number of shares determined by our board of directors. In addition, the number of shares of our common stock reserved for issuance under our 2014 Employee Stock Purchase Plan, or ESPP, will automatically increase on January 1 of each year continuing through and including January 1, 2024, by the lesser of (1) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, (2) 720,000 shares, or (3) a number determined by our board of directors that is less than (1) and (2). Unless our 66

68 board of directors elects not to increase the number of shares underlying our EIP and ESPP each year, our stockholders may experience additional dilution, which could cause our stock price to fall. Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management. Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include: a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer, or by a majority of the total number of authorized directors; advance notice requirements for stockholder proposals and nominations for election to our board of directors; a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline. If securities or industry analysts issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if the clinical trials and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more analysts do not initiate coverage of us, cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 67

69 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION None. 68

70 ITEM 6. EXHIBITS The following exhibits are filed as part of this report: Number Description 3.1(1) Amended and Restated Certificate of Incorporation of the Registrant. 3.2(1) Amended and Restated Bylaws of the Registrant. 4.1(2) Form of Common Stock Certificate of the Registrant. 4.2(2) Amended and Restated Investors Rights Agreement by and among the Registrant and certain of its stockholders, dated April 25, * Collaboration and License Agreement, between Daiichi Sankyo Company, Limited and Kite Pharma EU B.V., a wholly owned indirect subsidiary of the Registrant, dated January 5, * Sino-foreign Co-operative Joint Venture Contract, between Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. and KP EU C.V., a wholly owned indirect subsidiary of the Registrant, dated January 10, Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant Section 906 of the Sarbanes-Oxley Act of INS XBRL Instance Document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. (1) Incorporated by reference to Kite Pharma, Inc. s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No ). (2) Incorporated by reference to Kite Pharma, Inc. s Registration Statement on Form S-1 (File No ), as amended. * Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment. 69

71 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KITE PHARMA, INC. May 8, 2017 By: /s/ Arie Belldegrun, M.D. Arie Belldegrun, M.D. President and Chief Executive Officer May 8, 2017 By: /s/ Paul Jenkinson Paul Jenkinson Chief Financial Officer 70

72 Exhibit 10.1 ***Text Omitted and Filed Separately Execution Copy with the Securities and Exchange Commission. Confidential Treatment Requested Under 17 C.F.R. Section 20080(b)(4) and Rule 406 of the Securities Act of 1933, as amended. EXECUTION VERSION CONFIDENTIAL COLLABORATION AND LICENSE AGREEMENT by and between Kite Pharma EU B.V. And Daiichi Sankyo Company, Limited ARTICLE I DEFINITIONS 1 ARTICLE II LICENSES, OPTION AND EXCLUSIVITY License to DS DS Option License to Kite No Implied License DS Exclusivity Kite Exclusivity Trademark Licenses Use of Know-How outside the Collaboration Use of Patents Outside Collaboration Right of First Negotiation 24 ARTICLE III GOVERNANCE Alliance Managers JSC Formation and Purpose 26

73 3.3 JOC Formation and Purpose Membership and Procedures Decision-Making Day-to-Day Responsibilities Limitation of Authority Expenses Discontinuation of the JSC 29 ARTICLE IV DEVELOPMENT Overview Development Plan Development Diligence Development Records Development Reports Subcontractors Kite Assistance Cross-Territory Development Coordination; Data Exchange References to Kite 32 ARTICLE V REGULATORY MATTERS Regulatory Responsibilities Regulatory Filings Regulatory Meetings Rights of Reference Audit; Inspection Regulatory Matters Outside the Territory Safety; Adverse Event Reporting Remedial Action 36 ARTICLE VI COMMERCIALIZATION Overview Commercialization Plan Commercial Diligence Pricing Marketing and Promotional Materials Labeling Marking Selection of Product Trade Name Reports Cross Territory Coordination Marketing and Sales in the Kite Territory 38 ARTICLE VII MANUFACTURE AND SUPPLY Product Supply Manufacturing Technology Transfer 39 ARTICLE VIII FINANCIAL TERMS Upfront Payment Development and Commercialization Milestones 40

74 8.3 Sales Milestones Running Royalties Payment under In-License Agreements 43 ARTICLE IX RECORDS AND REPORTS Royalty Reports; Payment Currency Interest on Late Payments Taxes Records; Audits 46 ARTICLE X INTELLECTUAL PROPERTY Ownership of Inventions Disclosure of Inventions Prosecution of Patents Patent Term Extensions in the Territory Infringement of Patents by Third Parties Infringement of Third Party Rights in the Territory Patent Oppositions and Other Proceedings Patent Licensed To or From Third Parties 51 ARTICLE XI CONFIDENTIALITY Nondisclosure Authorized Disclosure Publications Publicity 54 ARTICLE XII REPRESENTATIONS, WARRANTIES, & COVENANTS Mutual Representations and Warranties DS s Representations and Warranties Kite s Representations and Warranties DS Covenants Kite Covenants Disclaimer 58 ARTICLE XIII INDEMNIFICATION AND INSURANCE Indemnification by Kite Indemnification by DS Indemnification Procedures Mitigation of Loss Limitation of Liability Insurance 60 ARTICLE XIV TERM AND TERMINATION Term Early Termination Effect of Expiration or Termination Rights in Bankruptcy Survival 64 ARTICLE XV DISPUTE RESOLUTION 64

75 15.1 Disputes Arising Between the Parties Binding Arbitration Patent and Trademark Dispute Resolution Injunctive Relief 65 ARTICLE XVI OTHER PROVISIONS Governing Law Performance Through Affiliates Force Majeure Assignment Severability Notices Entire Agreement; Amendments Relationship of the Parties Waiver Third Party Beneficiaries Further Assurances Counterparts Interpretation 68 COLLABORATION AND LICENSE AGREEMENT This C OLLABORATION AND L ICENSE (this Agreement ) effective as of January 5, 2017 (the Effective Date ), is by and between K ITE P HARMA EU B.V., a corporation organized and existing under the laws of The Netherlands having a place of business at Science Park 408, 1098 XH Amsterdam ( Kite ) and D AIICHI S ANKYO C OMPANY, L IMITED, a corporation organized and existing under the laws of Japan, having a place of business at Nihonbashi-honcho, Chuo-ku, Tokyo ( DS ). Kite is a wholly-owned indirect subsidiary of Kite Pharma, Inc. ( ParentCo ). Kite and DS may be referred to herein each as a Party and collectively as the Parties. RECITALS W HEREAS, Kite, a biopharmaceutical company focused on the development of novel cancer immunotherapy products, is developing proprietary chimeric antigen receptor (CAR) products and T cell receptor (TCR) products, including KTE-C19; W HEREAS, DS is a Japanese company with experience in developing and commercializing pharmaceutical products in Japan; W HEREAS, DS wishes to obtain from Kite the exclusive right to develop and commercialize KTE-C19 and other selected Kite CAR and TCR products in Japan, and Kite is willing to grant such rights to DS, all on the terms and conditions set forth herein; and W HEREAS, ParentCo has entered into a Guarantee of even date herewith pursuant to which it has provided DS certain guarantees, representations, warranties and assurances in connection with the transactions hereunder (the Guarantee ). N OW T HEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the Parties hereby agree as follows: Article I DEFINITIONS 1.1 Adverse Event means any adverse medical occurrence in a patient or clinical investigation subject to whom a Licensed Product is administered and which could, but does not necessarily, have a causal relationship with the Licensed Product, including any unfavorable and unintended sign (including an abnormal laboratory finding, for example), symptom, or disease temporally associated with the administration of the Licensed Product, whether or not considered related to Licensed Product administration. 1.2 Affiliate, with respect to a Party, means any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with that Party. For purposes of this definition, control and, with correlative meanings, the terms controlled by and under common control with means (a) the possession, directly or indirectly, of the power to direct the management or

76 policies of a legal entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) the ownership, directly or indirectly, of 50% or more of the voting securities or other ownership interest of a legal entity; provided, that if local law restricts foreign ownership, control will be established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests. 1.3 Anti-Corruption Laws means the UK Bribery Act 2010, as amended, the United States Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. 78dd-1 et seq. and any other applicable anti-corruption laws and laws for the prevention of fraud, racketeering, money laundering or terrorism. 1.4 Applicable Laws means any federal, state, local, national, and supra-national laws, statutes, rules and/or regulations, including any rules, regulations, guidance, guidelines, or requirements of Regulatory Authorities, national securities exchanges, or securities listing organizations, that may be in effect from time to time during the Term and apply to a particular activity hereunder and including laws, regulations, and guidelines governing the import, export, Development, manufacture, transport, handling, storage, distribution, or Commercialization of any Licensed Product in or for the Territory. 1.5 Approved CMO means a contract manufacturing organization approved in writing by Kite (which approval shall not be unreasonably withheld, conditioned or delayed) to receive Kite Know-How in order to perform manufacturing services for DS or its Affiliates. 1.6 Business Day means a day that is not a Saturday, Sunday, or a day on which banking institutions in Tokyo, Japan, Los Angeles, California, or Amsterdam, The Netherlands, are required by law to remain closed. 1.7 Calendar Quarter means each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30, or December 31; provided, however that (a) the first Calendar Quarter of the Term shall extend from the Effective Date to the last day of the Calendar Quarter in which the Effective Date falls; and (b) the last Calendar Quarter of the Term shall end upon the expiration or termination of this Agreement. 1.8 Calendar Year means each successive period of twelve (12) months commencing on January 1 and ending on December 31; provided however, that (a) the first Calendar Year of the Term shall extend from the Effective Date to the last day of the Calendar Year in which the Effective Date falls; and (b) the last Calendar Year of the Term shall end upon the expiration or termination of this Agreement. 1.9 CAR means a chimeric antigen receptor CAR-T Product means a pharmaceutical or biologic product containing an engineered autologous T cell expressing a CAR directed against a particular Target Collaboration Data has the meaning ascribed in Section Collaboration Know-How means Know-How conceived, discovered, developed or otherwise made by (a) DS, its Affiliates and their respective employees, agents or contractors, and/or (b) Kite, its Affiliates and their respective employees, agents or contractors, in each case from and after the Effective Date and during the Term, in the conduct of research, Development, manufacturing or Commercialization activities for the Licensed Products, or otherwise pursuant to this Agreement, but excluding the Collaboration Data Collaboration Patent means any Patent which claims an Invention Collaboration Technology means all Collaboration Know-How and all Collaboration Patents Commercialization means any and all activities undertaken before and after obtaining Regulatory Approval relating specifically to the pre-launch, launch, promotion, marketing, sale, and distribution (including importing, exporting, transporting, customs clearance, warehousing, invoicing, handling, and delivering the Licensed Product to customers) of the Licensed Products, including: (a) strategic marketing, sales force detailing, advertising, medical education and liaison, and market and product support; (b) any post-approval clinical trials that are not conducted for obtaining Regulatory Approval(s) (but, for clarity, excluding any post-approval clinical trials that must be conducted to maintain Regulatory Approval), and (c) all customer support, invoicing and sales activities. Commercialize means to engage in Commercialization activities Commercially Reasonable Efforts means, with respect to a Party in the performance of its obligations hereunder in relation to the Licensed Products, the application by or on behalf of such Party of a level of efforts that a [ *** ] pharmaceutical or biotechnology company, as the case may be, would apply to such activities in relation to a similar pharmaceutical or biologic product, as applicable, owned by it or to which it has exclusive rights, which product is at a similar stage in its development or product life and is of similar market potential and strategic value (in each case as compared to the Licensed Product) taking into account efficacy, safety, expected and actual Regulatory Authority approved labeling, the competitiveness of alternative products in the marketplace and market conditions, the patent, regulatory (i.e. regulatory exclusivity) and other proprietary position of the Licensed Product, the likelihood of regulatory approval of the Licensed Product given the

77 regulatory structure involved, the expected and actual profitability of the Licensed Product (excluding [ *** ]), and other relevant factors, based on conditions then prevailing Competing Product means (a) any CAR-T Product or TCR-T Product directed to the same Target as a Licensed Product, including CD19 (the Target of KTE-C19); and (b) to the extent not covered by clause (a), any CAR-T Product or TCR-T Product directed to the same Target as any IND Product that is or was part of a Product Evaluation by DS pursuant to Section and for which DS did not exercise the Option (including the IND Product that was the subject of such unexercised Option), provided in the case of (b), such CAR-T Product or TCR-T Product shall no longer be deemed a Competing Product [ *** ] ([ *** ]) years after [ *** ] (the Tail Period ) (however, subclause (a) above shall continue to apply); but excluding any Licensed Product for use in the Field in the Territory in each case of (a) and (b). Where DS has elected not to exercise the Option for [ *** ] or more IND Products directed to the same Target, the applicable date from which the Tail Period is measured shall be the date that [ *** ] Confidential Information means all non-public information disclosed by a Party to the other Party under this Agreement, including any such information related to any scientific, clinical, engineering, manufacturing, marketing, financial, or personnel matters relating to a Party, or related to a Party s present or future products, sales, suppliers, customers, employees, investors, business plans, Know-How, regulatory filings, data, compounds, research projects, work in progress, future developments or business, in all such cases whether disclosed in oral, written, graphic or electronic form, and whether or not specifically marked as confidential or proprietary, where under the circumstances in which such disclosure was made or given the nature of information disclosed, a reasonable person would consider such information confidential; provided, however, that in any event, Confidential Information excludes any information that (a) is known by the receiving Party at the time of disclosure, and not through a prior disclosure by or on behalf of the disclosing Party, as documented by the receiving Party s written records in existence prior to the receipt of such information; (b) is or becomes in the public domain, other than through the receiving Party s breach of the confidentiality obligations set forth in this Agreement; (c) is subsequently rightfully disclosed to the receiving Party by a Third Party who is not directly or indirectly under an obligation of confidentiality to the disclosing Party; or (d) is developed by or for the receiving Party independently of, and without reference to or use of, the information received from the disclosing Party. Confidential Information shall include: (i) the terms and conditions of this Agreement; and (ii) information disclosed by either Party pursuant to the Confidentiality Agreement Confidentiality Agreement means that certain Mutual Confidentiality Agreement between Kite and DS dated as of April 25, 1.20 Control means with respect to any Know-How, Patent, or other intellectual property right, possession of the right, whether directly or indirectly, and whether by ownership, license, or otherwise, to grant a license, sublicense, or other right to or under, such Know-How, Patent, or other intellectual property right as required herein without violating the terms of any agreement or other arrangements with any Third Party CTN means the Clinical Trial Notification filed with Japan s Pharmaceuticals and Medical Devices Agency for the purpose of conducting clinical trials of a pharmaceutically active agent in humans in Japan Development means all development activities for the Licensed Products that are directed to obtaining Regulatory Approval(s) of the Licensed Products, including all non- clinical, preclinical, and clinical testing and studies of the Licensed Products; toxicology, pharmacokinetic, and pharmacological studies; CMC activities; statistical analyses; assay development; protocol design and development; the preparation, filing, and prosecution of any MAA for the Licensed Products; development activities directed to label expansion and/or obtaining Regulatory Approval for one or more additional indications following initial Regulatory Approval; development activities conducted after the launch, excluding any post- approval clinical trials that are not conducted for obtaining Regulatory Approval(s) (but, for 1.23 clarity, including any post-approval clinical trials that must be conducted to maintain Regulatory Approval); and all regulatory affairs related to any of the foregoing including negotiations with Regulatory Authority and the product labeling or label change. Develop and Developing have correlative meanings Disclosed Know-How has the meaning set forth in Section Dollar means United States dollars, and $ shall be interpreted accordingly DS Housemark means any trademark or trade name, and registrations and applications therefor, owned or Controlled by DS and covering DS s (or its Affiliate s) corporate name or company logo DS Know-How means any Know-How that (a) is Controlled by DS or its Affiliates as of the Effective Date or during the Term, and (b) is necessary or actually useful for the Development, manufacture or Commercialization of the Licensed Products in the Field, but excluding all Collaboration Know-How and DS Patents DS Patent means any Patent that (a) is Controlled by DS or its Affiliates as of the Effective Date or during the Term, and (b) is necessary or reasonably useful for the Development, manufacture or Commercialization of the Licensed Products in the Field, but excluding

78 all Collaboration Patents DS Target means a Target against which DS or its Affiliates is researching one or more CAR-T Products or TCR-T Products following the commencement of (i) for CAR-T Products, [ *** ]; and (ii) for TCR-T Products, [ *** ] DS Technology means all DS Know-How and all DS Patents Exchange Act means the U.S. Securities Exchange Act of 1934, as amended, and the rules, regulations, and schedules promulgated thereunder Executive Officers means the Chief Executive Officer in the case of Kite and the Chief Executive Officer in the case of DS, provided that either Chief Executive Officer may designate any employee with a title of executive vice president or above as an Executive Officer FDA means the United States Food and Drug Administration or any successor agency thereto Field means all human therapeutic and prophylactic uses First Commercial Sale means, with respect to any Licensed Product, the first sale, transfer or disposition for value of such Licensed Product by DS, its Affiliates or Sublicensees to an end user or prescriber for use, consumption, or resale anywhere in the Territory. [ *** ] [ *** ] shall not constitute a First Commercial Sale FTE means the efforts of one or more employees or independent contractors equivalent to the efforts of a full time employee based upon a total of [ *** ] for a [ *** ] period FTE Rate means an initial rate of [ *** ] Dollars ($[ *** ]) per FTE per year. Commencing January 1, 2018, the FTE Rate shall be changed [ *** ] basis to reflect any [ *** ] (as the case may be) in the applicable [ *** ] (based on the change in the [ *** ] as of the Effective Date to [ *** ] as of the date of the calculation of such revised FTE Rate) Generic Product means, with respect to a Licensed Product, any product sold by a Third Party (including a generic product, biogeneric, follow-on biologic, follow-on biological product, follow-on protein product, follow-on CAR-T Product, follow-on TCR- T Product, similar biological medicinal product, or biosimilar product ) approved by way of an abbreviated regulatory mechanism by the Regulatory Authority in the Territory that, in each case, (a) has not been licensed by DS or its Affiliates to such Third Party in the Territory, and (b) in the Territory, meets the equivalency determination by the applicable Regulatory Authority (including a determination that the product is comparable, interchangeable, bioequivalent, biosimilar or other term of similar meaning, with respect to the Licensed Product), in each case, as is necessary to permit substitution of one product for another product under Applicable Law Good Clinical Practices or GCP means the then-current standards, regulations, practices and procedures promulgated or endorsed by the FDA for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of clinical trials as set forth in the guidelines adopted by the ICH, titled Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance (or any successor document), and the equivalent promulgated or endorsed by any other Regulatory Authority, in each case as they may be updated from time to time Good Laboratory Practices or GLP means the then-current standards, regulations, practices, and procedures for laboratory activities of biologics promulgated or endorsed by the FDA as set forth in 21 C.F.R. 58 (or any successor statute or regulation) or the Good Laboratory Practice principles of the Organization for Economic Co-Operation and Development (OECD)), and the equivalent promulgated or endorsed by any other Regulatory Authority, in each case as they may be updated from time to time Good Manufacturing Practices or GMP means the then-current good manufacturing practices required by the FDA and other Applicable Laws in the United States relating to the manufacture and testing of biopharmaceutical materials, and comparable Applicable Laws and requirements of Regulatory Authorities in the Territory relating to the manufacture and testing of biopharmaceutical materials, in each case as they may be updated from time to time, including applicable rules and guidelines promulgated under the ICH ICH means the International Conference on Harmonization IFRS or International Financial Reporting Standards means an integrated system of International Accounting Standards and International Financial Reporting Standards, consistently applied Initiation means, with respect to a clinical trial, the enrollment of the first subject in such clinical trial In-License Agreements means any Third Party agreements under which Kite or its Affiliates obtained rights to any Kite

79 Technology. The In-License Agreements existing as of the Effective Date are set forth in Schedule Additional In-License Agreements may be added in accordance with Section IND means an Investigational New Drug Application filed with the FDA pursuant to 21 CFR or any successor regulation thereto IND Product means any Product (a) that is listed on Schedule 1.46; or (b) for which Kite, its Affiliates, agents or marketing or development partners have submitted an IND to the FDA during the Option Exercising Period Invention means any process, method, composition of matter, article of manufacture, invention, discovery or finding, patentable or otherwise, that is discovered, conceived of and/or reduced to practice as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or contractors, including all rights, title and interest in and to the intellectual property rights therein Japanese Yen or JPY means the official currency of Japan and shall be interpreted accordingly Kite Housemark means any trademark or trade name, including registrations and applications therefor, owned or Controlled by Kite covering Kite s corporate name and/or company logo Kite Know-How means any Know-How that (a) is Controlled by Kite or its Affiliates as of the Effective Date or during the Term (but subject to Sec tion ), and (b) is necessary or actually useful for the Development, manufacture or Commercialization of the Licensed Products in the Field in the Territory, but excluding all Collaboration Technology and Kite Patents Kite Patents means any Patent that (a) is Controlled by Kite or its Affiliates as of the Effective Date or during the Term (but subject to Sec tion ), and (b) claims the Licensed Products or would otherwise be infringed, but for the license granted herein, by the Development, manufacture or Commercialization of the Licensed Products in the Field in the Territory, but excluding all Collaboration Patents. Kite Patents existing as of the Effective Date are listed on Schedule Kite Target means [ *** ] [ *** ] 1.54 Kite Technology means all Kite Know-How and all Kite Patents Kite Territory means worldwide outside the Territory Know-How means any non-public knowledge, know-how, technology, information, data, trade secrets, formulas, formulations, processes, techniques, inventions, methods, discoveries, specifications, formulations, compositions, materials, ideas, developments, test procedures and results Knowledge of a Party means the actual or constructive knowledge of the senior executives of such Party, including the chief executive officer, and any executive vice president, the general counsel, or the chief medical officer of a Party, or any personnel holding positions equivalent to such job titles (but only to the extent such positions exist at such Party) KTE-C19 means Kite s proprietary anti-cd19 CAR-T Product known as KTE- C19 and as described in Schedule Licensed Products means (a) KTE-C19 and (b) any Opt-in Product(s) (each, a Licensed Product ) MAA or Marketing Authorization Application means an application to the appropriate Regulatory Authority for approval to market a Licensed Product (but excluding Pricing Approval) in any particular jurisdiction and all amendments and supplements thereto Manufacturing Cost means, with respect to the Licensed Products supplied by Kite to DS under this Agreement: If such Licensed Product is manufactured by a Third Party under contract with Kite or its Affiliates, and supplied to DS by Third Party contract manufacturer(s) either directly to DS, or indirectly to Kite or its Affiliates for further supply to DS, the Manufacturing Cost means [ *** ]. As used in this paragraph, Additional Costs means (a) [ *** ] [ *** ]. herein: If such Licensed Product is manufactured by Kite or its Affiliates, the Manufacturing Cost means [ *** ]. As used Direct Expenses are those material and labor and services expenses captured in time sheets, invoices, and

80 the like that are [ *** ] Indirect Expenses means a reasonable allocation of expenses associated with [ *** ] but, in each case, excluding any Direct Expenses. Indirect Expenses shall be calculated in accordance with Kite s standard accounting methodology Medical Affairs Activities means: (a) the coordination of medical information requests and field based medical liaisons in the Territory with respect to Licensed Products commercially launched in the Territory; and (b) those clinical studies conducted in the Territory after Regulatory Approval of a Licensed Product has been obtained which are neither intended nor designed to support a Regulatory Filing, including medical affairs studies, post marketing studies, and investigator and physician-initiated studies, in all such cases initiated by or under the control or direction of DS Necessary IP means one or more Patents that are (a) owned or controlled by a Third Party and to which Kite acquires a license following the Effective Date or (b) acquired by Kite following the Effective Date, [ *** ] Net Sales means with respect to any Licensed Product, the gross amounts invoiced by DS or its Affiliates or Sublicensees to any Third Party for sales of the Licensed Products, less the following deductions, to the extent such deductions are actually paid, incurred, or otherwise taken, and are reasonable and customary: [ *** ]; [ *** ]; [ *** ]; and [ *** ]. Components of Net Sales shall be determined in the ordinary course of business in accordance with IFRS, consistently applied. For purposes of determining when a sale of any Licensed Product occurs for purposes of calculating Net Sales, [ *** ]. For purposes of determining Net Sales, a sale shall not include [ *** ]. In the event that DS sells a Licensed Product (a) [ *** ]. In the event that DS [ *** ] NIH Product means a product developed by the National Cancer Institute ( NCI ) pursuant to a cooperative research and development agreement between Kite and NCI that is subject to a license agreement between Kite and the National Institutes of Health and for which NCI has completed a technology transfer to Kite relating to the manufacture of such product Opt-in Product means any IND Product(s) for which DS has timely exercised its Option to include such product as a Licensed Product under this Agreement Option has the meaning set forth in Section Option Exercising Period means the [ *** ] period after the Effective Date and any extension thereof in accordance with Section Opt-out Product means any IND Product(s) (a) for which DS has affirmatively elected during the applicable Evaluation Period to not exercise its Option; or (b) for which DS has not exercised its Option during the applicable Evaluation Period to include such product as a Licensed Product under this Agreement Patents means all patents and patent applications (which for the purpose of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention), including all divisionals, continuations, substitutions, continuations-inpart, re- examinations, reissues, additions, renewals, revalidations, extensions, and supplemental protection and the like of any such patents and patent applications, and any and all foreign equivalents of the foregoing Person means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, limited liability partnership, unincorporated organization, government (or any agency or political subdivision thereof) or other legal entity or organization Pricing Approval means the approval, agreement, determination or governmental decision of a Regulatory Authority establishing the price for a Licensed Product that can be charged and/or reimbursed in regulatory jurisdictions where the applicable Regulatory Authority approves or determines the price and/or reimbursement of pharmaceutical and biologic products Products means any CAR-T Product or TCR-T Product Controlled by Kite (i) as of the Effective Date and set forth on Schedule 1.72 ([ *** ]) or (ii) during the Option Exercising Period ([ *** ]).

81 1.74 Product Trademarks means the trade names, trademarks, service marks, design and logos for the Licensed Products selected pursuant to Section 6.7 for use in connection with the Commercialization of Licensed Products. Product Trademarks excludes any trade names, trademarks, service marks, design or logos that include any corporate name or logo of the Parties or their Affiliates Quality Agreement has the meaning set forth in Section Regulatory Approval means any approval, product and establishment license, registration, or authorization, including pricing approvals and reimbursement approvals, of any Regulatory Authority required for the manufacture, use, storage, import, transport, or Commercialization of a Licensed Product in accordance with Applicable Laws Regulatory Authority means any applicable government regulatory authority involved in granting approvals for the manufacture, Development, Commercialization, reimbursement, and/or pricing of a Licensed Product in the Territory. Regulatory Authority in the Territory includes Japan s Ministry of Health, Labor and Welfare, the Japanese Pharmaceuticals and Medical Devices Agency, or any successor agency of the foregoing having regulatory jurisdiction over the manufacture, Development, Commercialization, reimbursement, and/or pricing of drugs or biologics in the Territory Regulatory Filings means all documentation, correspondence, submissions, applications and notifications submitted to or received from a Regulatory Authority that are necessary or reasonably useful in order to Develop, manufacture and Commercialize a Licensed Product in the Field. Regulatory Filings include, with respect to each Licensed Product, all INDs, CTAs, CTNs, MAAs, Regulatory Approvals, and amendments and supplements of any of the foregoing, as well as the contents of any minutes from formal meetings (whether in person or by audio conference or videoconference) with a Regulatory Authority ROFN Product has the meaning set forth in Section Safety Agreement has the meaning set forth in Section Sublicensee means a Third Party or an Affiliate of DS, in each case which is granted a sublicense by DS to any of the Kite Technology pursuant to Secti on Target means an antigen expressed on or in a tumor cell Tax or Taxes means (a) any taxes, assessments, fees, including income, profits, gross receipts, net proceeds, sales, alternative or add on minimum, ad valorem, turnover, property, personal property (tangible and intangible), environmental, stamp, leasing, lease, user, duty, franchise, capital stock, transfer, registration, license, withholding, social security (or similar), unemployment, disability, payroll, employment, social contributions, fuel, excess profits, occupational, premium, windfall profit, severance, estimated, or other charge of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and (b) any liability for the payment of any amounts of the type described in clause (a) as a result of the operation of law or any express obligation to indemnify any other person TCR means a T cell receptor TCR-T Product means a pharmaceutical or biologic product containing an engineered autologous T cell expressing a TCR directed against a particular Target Territory means Japan Third Party means a Person other than DS, Kite, or their respective Affiliates Third Party Agent has the meaning set forth in Section Transaction Agreements means, individually and collectively, this Agreement and the various other agreements expressly referenced herein to be entered into between the Parties including the Safety Agreement and the Quality Agreement, once executed and the ROFN Agreement, if and when executed Valid Claim means a claim of any issued and unexpired patent (as may be extended through supplementary protection certificate or patent term extension or the like) or pending patent application included within Kite Patents, Kite Sole Patents or Joint Patents, which claim has not been revoked, held invalid, unpatentable, or unenforceable by a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal was taken within the allowable time period) and which claim has not been disclaimed, denied or admitted to be invalid, unpatentable, or unenforceable through reissue, re-examination or disclaimer or otherwise. In the case of patent applications, in order to be considered within the scope of a Valid Claim, a patent application cannot have a priority date that is [ *** ] or more years earlier than any date on which the patent application was pending, provided that upon the issuance of a patent from such patent application, the claims therein shall again be deemed to be Valid Claims (subject to the preceding sentence) Additional Definitions. The following table identifies the location of definitions set forth in various Sections of the Agreement:

82 Defined Term Section Action Alliance Manager 3.1 Claims 13.1 Clinical Data Code 14.4 Commercialization Plan 6.2 Development Plan 4.2 DS Group 13.2 DS Indemnitees 13.1 DS Wind Down Period Evaluation Period Extension Fee Grantee Grantor Guarantee Recitals Indemnified Party 13.3 Indemnifying Party 13.3 Japan Milestone Payment Defined Term Section Joint Inventions 10.1 JOC 3.3 Joint Patents 10.1 JSC 3.2 Key Regulatory Filings Kite Indemnitees 13.2 Kite Manufacturing Know-How Kite Partner Kite Partner Agreement Kite Wind Down Period Kite-Prosecuted Patents Negotiation Period New Affiliate IP NIH Agreement Schedule 1.44 Opt-in Fee Option Option Term ParentCo 1 st Paragraph Pre-IND Data Product Evaluation Product Infringement 10.5 Product Trademarks 6.7 Remedial Action ROFN Agreement ROFN Protection Period Royalty Term Sole Inventions 10.1 Sole Patents 10.1 Successful Completion 7.2.4

83 Technology Transfer 7.2 Term 14.1 Third Party Agent Third Party Offer Trademark License SEC Second Negotiation Period VAT License to DS. ARTICLE II LICENSES, OPTION AND EXCLUSIVITY License Grant. Subject to the terms and conditions of this Agreement, Kite hereby grants to DS an exclusive (even as to Kite and its Affiliates), royalty-bearing and sublicenseable (solely as set forth in Section ) license under the Kite Technology and Kite s interest in the Collaboration Technology to Develop, use, manufacture, have manufactured (solely through an Approved CMO), sell, offer for sale, have sold, import, export, and otherwise Commercialize the Licensed Products in the Field in the Territory. The scope of the license granted in this Section will include the rights to manufacture and have manufactured (solely through an Approved CMO) in the Kite Territory (excluding sell, offer for sale, have sold, Commercialize activities) only for the purpose of Commercializing the Licensed Products in the Territory Sublicense Rights. Subject to the terms and conditions of this Agreement, DS shall have the right to sublicense the rights granted to it under Sec tion without Kite s consent: (a) to its Affiliates, provided that such sublicense shall automatically terminate if such Sublicensee ceases to be an Affiliate of DS (without the right to further sublicense except as set forth in subclause (b) or (c)); (b) to its Third Party subcontractors (without the right to further sublicense) for the sole purpose of performing part of DS s obligations with respect to the Development of the Licensed Products; and (c) to an Approved CMO (without the right to further sublicense) for the sole purpose of manufacturing and supply the Licensed Products to DS. DS shall not grant any other sublicense without Kite s express prior written consent. Each sublicense granted by DS shall be consistent with the terms and conditions of this Agreement, and DS shall ensure that each Sublicensee agrees in writing to comply with the terms and conditions of this Agreement that are applicable to such Sublicensee s activities under such sublicense. DS shall remain fully responsible for all of its Sublicensees activities, including any and all failures by its Sublicensees to comply with the applicable terms and conditions of this Agreement. Within [ *** ] after the grant of a sublicense with a Third Party for which DS needs to obtain Kite s prior written consent under this Section, DS shall notify Kite and shall provide Kite with a true and complete copy of the sublicense agreement (redacted as to economic terms and other commercially sensitive numbers and provisions unrelated to this Agreement) Retained Rights. Kite hereby expressly retains: (a) the right under the Kite Technology to exercise its rights and perform its obligations under this Agreement, whether directly or through one or more licensees (other than DS) or subcontractors; (b) subject to Sec tion 2.6, all rights to practice and license the Kite Technology outside of the scope of the licenses granted in Section 2.1.1, including the exclusive right to Develop, use, manufacture, have manufactured, import, export, and otherwise Commercialize the Licensed Products in the Kite Territory. DS acknowledges that an In-License Agreement may also provide for retained rights by the licensor of the Kite Technology under such In-License Agreement and that DS s license hereunder is subject to such retained rights In-License Agreements. DS acknowledges that certain of the Kite Technology has been licensed to Kite under the In- License Agreements, and that DS s license under such Kite Technology is therefore a sublicense under and subject in all cases to the terms of the In-License Agreements, and DS agrees to comply with all applicable provisions of the In-License Agreements. For clarity, Kite is required to obtain consent prior to sublicensing any NIH Product to DS. Kite hereby warrants that it has obtained such consent for KTE-C19 as of the Effective Date, and will use reasonable efforts to obtain such consent for all other NIH Products. DS further acknowledges that the licensed field of use under an In-License Agreement may be narrower than the Field and agrees that, in such case, DS s sublicense under the applicable Kite Technology shall be limited to the scope of the licensed field of use under such In-License Agreement New Kite Technology If, during the Term, Kite obtains Control of any Necessary IP (except as set forth in Section ), then Kite will share the terms and conditions of the agreement through which Kite obtained such Necessary IP with DS promptly after the execution of such agreement. (a) If DS determines, [ *** ], then DS shall notify Kite in writing thereof. Upon Kite s receipt of such notice, (i) such Necessary IP shall be included in the Kite Technology, (ii) the agreement through which Kite obtained such Necessary IP shall be deemed to be an In-License Agreement, and (iii) Section shall apply with regard to such Necessary IP relating to KTE-C19 and Section shall apply with regard to such Necessary IP relating to all other Licensed Products (but not KTE-C19).

84 (b) If DS determines [ *** ], then DS shall notify Kite in writing thereof and (i) such Necessary IP shall not be included in the Kite Technology, (ii) the agreement through which Kite obtained such Necessary IP shall not be deemed to be an In-License Agreement, and (iii) Section and Section shall not apply with regard to such Necessary IP relating to Licensed Products. If DS determines, [ *** ], for the Development, manufacture, or Commercialization of the Products in the Field in the Territory, then the Parties will follow the licensing process according to Section (c) If DS determines [ *** ], then DS shall have the option to terminate such Licensed Product(s) to which such Necessary IP relates pursuant to Section If during the Term, Kite obtains Control of any intellectual property rights that are owned or controlled by a Third Party that are not Necessary IP [ *** ], then Kite may bring such new intellectual property rights to the attention of DS in writing, including a description of such intellectual property rights, and the Parties in good faith will discuss whether such new intellectual property rights should be made available for use by DS pursuant to this Agreement for the Development, manufacture or Commercialization of Licensed Products in the Field in the Territory. [ *** ]. The Parties will discuss the rationale of including the new intellectual property rights and [ *** ]. (a) If the Parties agree in writing [ *** ] for such new intellectual property rights, then (i) such new intellectual property rights shall thereafter be included in the Kite Technology, and (ii) the agreement through which Kite obtained such new intellectual property rights shall thereafter be deemed an In-License Agreement. (b) If DS [ *** ], then (i) such intellectual property rights shall not be included in the Kite Technology, and (ii) the agreement through which Kite obtained such new intellectual property rights shall not be considered an In-License Agreement If during the Term, a Third Party becomes an Affiliate of Kite as a result of a merger with, acquisition, consolidation or similar transaction of Kite, any intellectual property rights owned or controlled by such new Affiliate as of the closing of such transaction or developed by such new Affiliate thereafter independent of Kite s activities under this Agreement and without using any Kite Technology ( New Affiliate IP ) shall be excluded from the Kite Technology and shall not be licensed to DS under this Agreement except as expressly set forth below. (a) If such Third Party was a party to an In-License Agreement at the timing of such merger or acquisition, then the sublicenses to such New Affiliate IP granted to DS, its Affiliates or Sublicensees under this Agreement based on such In-License Agreements will continue to be in force even after such merger or acquisition. (b) If such New Affiliate IP includes any Necessary IP that is not subject to subsection (a) above, then [ *** ]. If the Parties cannot agree in writing upon such terms within [ *** ] of engaging in such discussions, then DS shall have the option to terminate this Agreement with respect to any Licensed Product(s) to which such Necessary IP relates pursuant to Section If during the Term, [ *** ] [ *** ], the Parties shall discuss the necessity of licensing in such rights in good faith, employing qualified individuals to participate in such discussions Patent License Registration. Kite agrees to register itself, or to cooperate with DS to register, the exclusive license of the Kite Patents granted under Section to DS in the Territory as a Senyou Jisshiken in accordance with Article 77 of the Japanese Patent Law of 1959, or a Kari-Senyo Jisshiken in accordance with Article 34-2 thereof, in Japan, at DS s request and expense. 2.2 DS Option Option Grant. Subject to the terms and conditions of this Agreement, from the Effective Date until later of (a) [ *** ] or (b) [ *** ], Kite hereby grants to DS the exclusive option to include any Product as a Licensed Product under this Agreement (the Option ), which option may be exercised as set forth in Section below. During the Option Term, Kite shall not commercialize any Product in the Territory or grant any Third Party the right to develop and commercialize any Product in the Territory unless and until DS s Option for such Product expires under Section Evaluation. After the Effective Date and during the Option Exercising Period, upon DS s request, Kite shall promptly provide DS with Pre-IND Data and Clinical Data for the IND Product(s) so requested. If any Product becomes an IND Product during the Option Exercising Period, Kite shall promptly inform DS of such achievement and of the Target of such IND Product. Upon DS s request, Kite shall provide DS with Pre-IND Data and Clinical Data and intellectual property rights information for such IND Product (including any thenexisting agreement(s) that, if DS were to exercise its Option for such IND Product, would be deemed an In-License Agreement(s)). Following the delivery of Pre-IND Data and Clinical Data and intellectual property rights information for the IND Product(s) so requested, upon DS s reasonable request during the Evaluation Period for such IND Product(s), Kite shall keep DS updated on the Development of such IND Product(s) and shall provide DS with additional Pre-IND Data and Clinical Data and intellectual property rights information (including new agreement(s) that have been executed in the interim that, if DS were to exercise its Option for such IND Product, would be deemed an In- License Agreement(s)) for such IND Product(s) as such information become available. In addition, upon DS s reasonable request during the Evaluation Period for such IND Product(s) so requested, Kite shall provide any additional information, including Confidential Information, for

85 such IND Product. DS shall use the Pre-IND Data and Clinical Data and intellectual property rights information provided by Kite solely to evaluate whether to exercise its Option for such IND Product. DS s evaluation of Pre-IND Data and Clinical Data and intellectual property rights information of a requested IND Product shall be referred to as a Product Evaluation under this Agreement. As used herein, Pre-IND Data means [ *** ], and Clinical Data means the [ *** ] [ *** ]. Notwithstanding the foregoing, for NIH Products, Pre-IND Data and Clinical Data shall only include such data as is in Kite s possession or control and Kite shall not be obligated to obtain additional data from NCI Option Exercise and Expiration. DS may exercise the Option, on an IND Product-by-IND Product basis, by providing written notice of exercise to Kite before [ *** ] after the date of filing of the IND (or [ *** ] from the Effective Date, if longer) for such IND Product by Kite (the Evaluation Period ). Notwithstanding the foregoing, if the dosing of the first patient in a clinical trial for a particular IND Product occurs later than [ *** ] following the date of filing of a Kite IND for such IND Product, then the Evaluation Period for such IND Product shall be extended for [ *** ]. If Kite does not receive the exercise notice for an IND Product before the expiration of the applicable Evaluation Period or if DS affirmatively elects prior to the expiration of the applicable Evaluation Period to not exercise its Option for an IND Product and delivers notice of such election, then the Option for such IND Product shall automatically expire and, notwithstanding Section 2.6, Kite shall have the right to continue the Development and Commercialization of such IND Product in the Territory, either on its own or with a Third Party, with no further obligations to DS Opt-in Payment. On a IND Product-by-IND Product basis, within [ *** ] after DS s exercise of the Option for an IND Product in accordance with Section 2.2.3, DS shall pay to Kite a non-refundable, non-creditable option exercise fee (the Opt-in Fee ) of [ *** ] Dollars ($[ *** ]). Notwithstanding the foregoing, if such IND Product is directed to the same Target as another IND Product for which DS has already paid the Opt-in Fee, then the Opt-in Fee for such IND Product shall be reduced to [ *** ] Dollars ($[ *** ]). For clarity, no Opt-in Fee shall be owed for KTE-C Extension of Option Exercising Period. DS shall have the right to extend the Option Exercising Period by successive additional [ *** ] periods if (a) DS provides Kite with a written extension notice no later than [ *** ] before the expiration of the then current Option Exercising Period and Kite does not, at least [ *** ] before the expiration of the then-current Option Exercising Period, provide DS with written notice that Kite does not wish to extend the Option Exercising Period, and (b) DS pays Kite an extension fee of [ *** ] Dollars ($[ *** ]) for each year it extends the Option Exercising Period (the Extension Fee ), which amount shall be paid no later than [ *** ] before the expiration of the then-current Option Exercising Period Effect of Expiration of the Option Exercising Period. For clarity, expiration of the Option Exercising Period shall not affect any Evaluation Period and if the Option Exercising Period expires while an Evaluation Period is in effect, DS shall have the right to continue the evaluation and to exercise the applicable Option until the expiration of such Evaluation Period. 2.3 License to Kite. Subject to the terms and conditions of this Agreement, DS hereby grants to Kite a non-exclusive, royalty free license under DS Technology and DS s interest in the Collaboration Technology solely to Develop, make, have made, use, sell, offer for sale, have sold, import, export, and otherwise Commercialize Licensed Products in the Kite Territory and to perform Kite s obligations under this Agreement. The foregoing license may be sublicensed through multiple tiers, provided that Kite requires each such sublicensee to comply with all applicable terms and conditions of this Agreement. Kite shall remain fully responsible for any and all failures by its sublicensees to comply with the applicable terms and conditions of this Agreement. 2.4 No Implied License. Neither Party grants to the other Party any rights or licenses in or to any intellectual property, whether by implication, estoppel, or otherwise, other than the license rights that are expressly granted under this Agreement. For clarity, the license granted to DS under any particular Kite Technology shall be exclusive as to any Third Party only to the extent Kite Controls the exclusive rights to such Kite Technology. DS shall not, and shall not permit any of its Affiliates or Sublicensees to, practice any Kite Technology or any Collaboration Technology solely owned by Kite outside the scope of the licenses granted to it under this Agreement. Kite shall not, and shall not permit any of its Affiliates or sublicensees of the DS Technology or Collaboration Technology solely owned by DS to, practice any DS Technology or any Collaboration Technology solely owned by DS outside the scope of the licenses granted to it under this Agreement. 2.5 DS Exclusivity Subject to Sec tion 2.5.2, during the Term, DS shall not, and shall cause its Affiliates not to, either itself or together or through the grant of rights to any Third Party, [ *** ] any Competing Product for use [ *** ] Notwithstanding the above, if DS or its Affiliate obtains rights to develop or commercialize any Competing Product as a result of (a) a merger with, or acquisition of or by, any Third Party, or (b) the acquisition of assets that include the business of developing or commercializing a Competing Product, DS shall have [ *** ] from the closing of such merger or acquisition to wind down and/or divest, or cause its relevant Affiliate to wind down and/or divest, such Competing Product (or such longer period as DS (or its Affiliate) is actively engaged in bona fide efforts to divest such Competing Product) (the DS Wind Down Period ), whether by asset sale, license or otherwise, and DS s development or commercialization of the Competing Product during the DS Wind Down Period shall not be deemed a breach of DS s exclusivity obligations set forth above. The Parties agree that (i) DS s (or its Affiliate s) development or commercialization of the Competing Product shall be conducted independently of DS s (or its Affiliate s) activities under this Agreement and without the use of any Kite

86 Technology, Kite Confidential Information or Collaboration Technology; (ii) [ *** ]; (iii) for a reasonable period of time ([ *** ]) and solely as reasonably necessary to transfer the Competing Product to the acquirer or licensee of such Competing Product, DS (or its Affiliate) shall be permitted to manufacture such Competing Product for such acquirer or licensee, and to provide technology transfer and transition services for such Competing Product to such acquirer or licensee [ *** ]; (iv) DS (or its Affiliate) shall have the right to take back rights to the Competing Product from the acquirer or licensee in the event that DS (or its Affiliate) terminates the acquisition or license agreement for such Competing Product due to a breach or other termination event triggered by such acquirer or licensee, in which event DS shall be required again to divest such Competing Product in accordance with this Section. For clarity, if DS (or its Affiliate) winds down but is unable to divest such Competing Product during the DS Wind Down Period, DS and its Affiliates shall [ *** ]. 2.6 Kite Exclusivity During the Term, Kite shall not, and shall cause its Affiliates not to, either itself or together or through the grant of rights to any Third Party, Commercialize or have Commercialized any Licensed Product for use in the Field in the Territory Subject to Section 2.6.3, during the Term, Kite shall not, and shall cause its Affiliates not to, either itself or together or through the grant of rights to any Third Party, Commercialize or have Commercialized any ROFN Product for use in the Field in the Territory unless Kite has first met the requirements of Section 2.10 with respect to such ROFN Product Notwithstanding the above, if Kite or its Affiliate obtains rights to commercialize any ROFN Product as a result of (a) a merger with, or acquisition of or by, any Third Party, or (b) the acquisition of assets that include the business of commercializing a ROFN Product, and, pursuant to Section , elects not to offer such ROFN Product to DS pursuant to Section 2.10, then Kite shall have [ *** ] from the closing of such merger or acquisition to wind down and/or divest, or cause its relevant Affiliate to wind down and/or divest, such ROFN Product (or such longer period as Kite (or its Affiliate) is actively engaged in bona fide efforts to divest such ROFN Product) (the Kite Wind Down Period ), whether by asset sale, license or otherwise, and Kite s commercialization of the ROFN Product during the Kite Wind Down Period shall not be deemed a breach of Kite's exclusivity obligations set forth above. The Parties agree that (i) Kite s (or its Affiliate s) commercialization of the ROFN Product shall be conducted independently of Kite s (or its Affiliate s) activities under this Agreement and without the use of any Kite Technology, Kite Confidential Information or Collaboration Technology; (ii) [ *** ]; (iii) for a reasonable period of time (not to exceed [ *** ]) and solely as reasonably necessary to transfer the ROFN Product to the acquirer or licensee of such ROFN Product, Kite (or its Affiliate) shall be permitted to manufacture such ROFN Product for such acquirer or licensee, and to provide technology transfer and transition services for such ROFN Product to such acquirer or licensee [ *** ]; (iv) Kite (or its Affiliate) shall have the right to take back rights to the ROFN Product from the acquirer or licensee in the event that Kite (or its Affiliate) terminates the acquisition or license agreement for such ROFN Product due to a breach or other termination event triggered by such acquirer or licensee, in which event Kite shall be required again to divest such ROFN Product in accordance with this Section. For clarity, if Kite (or its Affiliate) winds down but is unable to divest such ROFN Product during the Kite Wind Down Period, Kite and its Affiliates shall [ *** ]. 2.7 Trademark Licenses Kite hereby grants to DS an exclusive (even as to Kite and its Affiliates) license to use the Product Trademarks and Kite Housemarks solely in connection with DS s exercise of the license granted to it pursuant to Section 2.1 above, including the limited right to sublicense to Sublicensees as provided for in such license (the Trademark License ). DS will use (a) the Product Trademarks solely in the manner specified in this Agreement in connection with Licensed Products and not for any other goods or services, and (b) the Kite Housemarks on the Licensed Products only in the form and manner as reasonably prescribed in writing to DS in advance from time to time by Kite (provided, however, that DS shall have a reasonable period of time to modify any of its promotional, marketing, regulatory, or other practices, including in light of Applicable Laws, or cease use of the Product Trademarks and Kite Housemarks, as may be reasonably necessary to comply with any such form and manner prescriptions or any changes thereto). Without limiting the foregoing, any use by DS of a Product Trademark for a Licensed Product should be accompanied, if reasonably possible (e.g. space perspective), by a trademark notice that states that such Licensed Product Trademark is a trademark (or a registered trademark, if applicable) of Kite. Any use by DS of the Product Trademarks and Kite Housemarks, and Kite s maintenance of the Product Trademarks and Kite Housemarks, shall be in compliance with all Applicable Laws, including those relating to the licensing of trademarks, in the Territory. DS and Kite agree to promptly correct any failure to comply with this Section For the avoidance of doubt, DS shall have no responsibility or obligation for (and Kite shall be solely responsible for) the filing, maintenance, registration, prosecution, and enforcement of the Product Trademarks and Kite Housemark, which shall be at Kite s sole cost and expense DS acknowledges Kite s ownership of all right, title, and interest in and to the Product Trademarks and Kite Housemark, and agrees that it will do nothing inconsistent with such ownership, that all use of the Product Trademarks and Kite Housemark by DS will inure to the benefit of and be on behalf of Kite, and that any goodwill associated with the use of any Product Trademark and Kite Housemark by DS will inure to the benefit of Kite. DS agrees that nothing in this Agreement will give DS any right, title, or interest in the Product Trademarks and Kite Housemarks other than the right to use the Product Trademarks and Kite Housemarks in accordance with this Agreement. Anything in this Agreement to the contrary notwithstanding, if by virtue of DS s use of the Product Trademarks and Kite Housemarks, DS acquires any equity, title, or other rights in or to the Product Trademarks and Kite Housemarks, DS hereby agrees all such equity, title, or other rights in or to the Product Trademark and Kite Housemark belong to Kite upon creation of the value, and DS agrees to and

87 hereby does assign and transfer any such Product Trademark or Kite Housemark rights to Kite. DS agrees not to use (a) any trademark or trade name that is confusingly similar to any Product Trademark or Kite Housemark or (b) file any application to register any trademark or trade name that is identical or confusingly similar to any Product Trademark or Kite Housemark Kite agrees to register itself, or to cooperate with DS to register, the exclusive license of the Product Trademark granted under Section to DS in the Territory as a Senyou Shiyouken in accordance with Article 30 of the Japanese Trademark Law of 1959, in Japan, at DS s request and expense. 2.8 Use of Know-How outside the Collaboration License Grant. The Parties recognize that each Party will share Know-How and other intellectual property with the other Party during the course of the collaboration under this Agreement that may have usefulness and applicability outside the scope of such collaboration. As such, subject to Sections 2.5 and 2.6 and the exclusive licenses granted hereunder, each Party (the Grantor ) hereby grants the other Party (the Grantee ) a non-exclusive, royalty-free license, with the right to sublicense (without the right to further sublicense) solely to (a) its Affiliates, and (b) Third Party contractors to perform services for the sole benefit of the Grantee and its Affiliates, under the Grantor s or its Affiliates Know-How (excluding (a) all Know-How in-licensed by the Grantor or its Affiliates, and (b) all Patents owned or Controlled by the Grantor or its Affiliates) that has been disclosed by the Grantor or its Affiliates to the Grantee (the Disclosed Know-How ) to research, develop, use, manufacture, offer for sale, sell, have sold, import, market, distribute and otherwise commercialize any product or service in the Territory or outside the Territory during the Term and thereafter; provided that the foregoing license granted by Kite to DS expressly excludes (i) [ *** ] (other than a Licensed Product in the Field in the Territory in accordance with this Agreement), and (ii) the right to grant a sublicense to manufacture any product to any entity other than an Approved CMO. Each sublicense granted by the Grantee of its rights under this Section shall be consistent with the terms and conditions of this Agreement, and the Grantee shall ensure that each such sublicensee agrees in writing to comply with the terms and conditions of this Agreement that are applicable to such sublicensee s activities under such sublicense. The Grantee shall remain fully responsible for all of its sublicensees activities, including any and all failures by its sublicensees to comply with the applicable terms and conditions of this Agreement Know-How Procedures for DS. Within [ *** ] of the Effective Date or such longer period as the Parties may agree in writing, the Parties shall discuss in good faith and enter into a third party reviewer agreement with a mutually agreed Third Party to perform the activities described in this Section (the Third Party Agent ). The Parties may replace the Third Party Agent by written agreement. If DS wants to use Kite s Disclosed Know-How in the Territory or outside of the Territory to develop, manufacture or commercialize any CAR-T Product or TCR-T Product (other than a Licensed Product in the Field in the Territory), DS shall notify the Third Party Agent in writing of the DS Target against which such CAR-T Product or TCR-T Product is intended to be developed, manufactured or commercialized by DS (which notice shall include an officer s certificate certifying that such Target meets the definition of DS Target herein) and shall simultaneously notify Kite in writing that it has so notified the Third Party Agent. Within [ *** ] of its receipt of DS s notice, Kite shall provide the Third Party Agent with its list of Kite Targets. Within [ *** ], the Third Party Agent shall either inform the Parties in writing whether or not such DS Target is also a Kite Target, without disclosing the identity of such DS Target or any Kite Target, or request such additional information from the Parties as the Third Party Agent requires to make such determination. In any event, the Third Party Agent shall inform both Parties in writing within [ *** ] of its receiving all necessary information of its determination as to whether or not such DS Target is also a Kite Target, without disclosing the identity of such DS Target or any Kite Target. If such DS Target is not a Kite Target, then DS shall be free to develop, manufacture and commercialize any CAR-T Product or TCR-T Product against such DS Target in the Territory and outside of the Territory, even if such DS Target subsequently becomes a Kite Target. If such DS Target is the same as a Kite Target, DS shall be prohibited from using any of Kite s Disclosed Know-How in the development, manufacture and commercialization of any CAR-T Product or TCR-T Product against such Kite Target in the Territory and outside of the Territory until such time that the DS Target is no longer a Kite Target, as determined through the Third Party Agent process set forth above. For clarity, DS shall be free to develop, manufacture or commercialize any CAR-T Product or TCR-T Product against a Kite Target in the Territory and outside of the Territory if no Kite s Disclosed Know-How is utilized in such development, manufacture or commercialization, subject to Section Use of Patents Outside Collaboration. To the extent that either Party owns or controls any Patents that could be useful outside the collaboration, at the request of either Party, the Parties will discuss licensing such Patents, provided that neither Party shall have any obligation to grant such license Right of First Negotiation. Upon expiration of the Option Exercising Period and during the Term thereafter, the following provisions shall apply, subject to Section and the exclusive licenses granted hereunder: If Kite intends to develop or commercialize a ROFN Product (as defined below) in the Territory, Kite shall send a written notice to DS that includes a non- binding term sheet with the material financial terms for a license to DS for such ROFN Product in the Territory. Within [ *** ] of receipt of such term sheet, DS shall provide to Kite written notice of its non-binding acceptance or desire to further negotiate, or non- acceptance of such term sheet. If DS accepts or desires to further negotiate such term sheet, Kite and DS will negotiate in good faith, for up to [ *** ] following Kite s receipt of DS s notice or such longer period as the Parties may agree in writing (the Negotiation Period ), with the goal of reaching agreement on a license agreement for such ROFN Product in the Territory on commercially

88 reasonable terms that is satisfactory to each Party in its sole discretion. During the Negotiation Period, Kite will provide to DS due diligence information and data reasonably requested by DS, including, if applicable, [ *** ] [ *** ]. If DS does not notify Kite in writing of its acceptance of the term sheet or its desire to further negotiate such terms prior to expiration of the applicable [ *** ] period, if DS does not accept Kite s term sheet, or if the Parties do not reach agreement upon and execute a license agreement in accordance herewith upon expiration of the Negotiation Period, then, in each such case, Kite shall have the right to proceed with the development and commercialization of such ROFN Product in the Territory, either on its own or with a Third Party, subject to Section As used herein, ROFN Product means any CAR-T Product or TCR-T Product directed against [ *** ] If the Parties engaged in a negotiation for a license agreement for a ROFN Product in the Territory in accordance with Section where such agreement was not executed within the Negotiation Period, and within the [ *** ] period (the ROFN Protection Period ) following the expiration of the Negotiation Period, Kite negotiates a final term sheet (i.e., a term sheet that is to be the basis of a draft agreement), letter of intent or similar agreement with a Third Party for a license to such ROFN Product in the Territory on terms that, [ *** ] (a Third Party Offer ), Kite will notify DS and provide it with the material terms and conditions of such Third Party Offer (but will not identify such Third Party) within [ *** ] after completing negotiations of the Third Party Offer. DS will treat the Third Party Offer as the Confidential Information of Kite. DS will have [ *** ] after receipt of the Third Party Offer to notify Kite whether it wishes to enter into a new agreement with Kite in accordance with all of the material terms and conditions of the Third Party Offer (the ROFN Agreement ). If DS notifies Kite that it intends to enter into the ROFN Agreement, Kite agrees (i) to the extent not previously provided to DS and provided to such Third Party, to provide to DS additional due diligence information and data reasonably requested by DS, including, if applicable, any data package submitted to the FDA to support the initiation of the first human clinical trial of such ROFN Product and any results at a pre-defined interim analysis or at primary analysis of any clinical trial of such ROFN Product, including documents describing the top line results of a Phase 1 clinical trial of such ROFN Product along with any patent or in-license information related to such ROFN Product in the Territory, and (ii) to negotiate a new collaboration and license agreement for such ROFN Product in the Territory with DS in good faith in accordance with the terms and conditions contained in the Third Party Offer for [ *** ] following its receipt of DS s notice or such longer period as the Parties may agree in writing (the Second Negotiation Period ). If DS declines to enter into the ROFN Agreement, or if DS does not notify Kite within the [ *** ] period described above that DS wishes to enter into the ROFN Agreement, or if the Parties do not enter into the ROFN Agreement prior to the expiration of the Second Negotiation Period, then, during the remainder of the ROFN Protection Period, Kite may enter into an agreement with any Third Party for such ROFN Product in the Territory on terms and conditions that are the [ *** ], taken as a whole, taken as a whole, to Kite, as those contained in the Third Party Offer. Following the expiration of the ROFN Protection Period, Kite will have no further obligations to DS under this Section 2.10 with respect to such ROFN Product For clarity, if Kite or its Affiliate obtains rights to commercialize any ROFN Product as a result of (a) a merger with, or acquisition of or by, any Third Party, or (b) the acquisition of assets that include the business of commercializing a ROFN Product, then Kite (or its successor) may elect in its sole discretion to either offer such ROFN Product to DS pursuant to this Section 2.10 or to wind down and/or divest, or cause its relevant Affiliate to wind down and/or divest, such ROFN Product in accordance with Section ARTICLE III GOVERNANCE 3.1 Alliance Managers. Promptly after the Effective Date, each Party shall appoint an individual who shall be an employee of such Party having appropriate qualifications and experience to act as the alliance manager for such Party (the Alliance Manager ). Each Alliance Manager shall be responsible for coordinating and managing processes and interfacing between the Parties on a day-to-day basis throughout the Term. Each Alliance Manager shall be permitted to attend meetings of the JSC, JOC and any subcommittee as non-voting participants. The Alliance Managers shall be the primary contact for the Parties regarding the activities contemplated by this Agreement and shall facilitate all such activities hereunder. Each Party may replace its Alliance Manager with an alternative representative at any time with prior written notice to the other Party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment between the Parties. [ *** ]. 3.2 JSC Formation and Purpose. Within [ *** ]of the Effective Date, the Parties shall establish a joint steering committee (the JSC ), composed of three (3) senior executive officers from each Party, to coordinate and oversee the Parties activities under this Agreement. Except as otherwise provided herein, the role of the JSC will be to: oversee and provide strategic direction to the Parties collaboration under this Agreement, and coordinate the Parties activities under this Agreement; provide a forum for and facilitate communications and discussions between the Parties under this Agreement; oversee the operation of the JOC and other subcommittees that may be created by the JSC as it deems appropriate, including to resolve any disputed matters of the JOC and other subcommittees; consult and coordinate with respect to the Development and Commercialization of the Licensed Products in the Kite Territory;

89 3.2.5 perform such other functions as may be appropriate to further the purpose of this Agreement as expressly assigned to the JSC in this Agreement or by the Parties written agreement; and oversee the status or stage of the research and development of the Products and the three-year plan of future IND submission or approval for such Product, provided that no Pre-IND Data, Clinical Data and intellectual property rights information for any particular IND Product (including any then-existing agreement(s) that would be deemed to be In-License Agreement(s) if DS were to exercise its Option for such IND Product) shall be provided until such time that DS requests the same pursuant to Article II. 3.3 JOC Formation and Purpose. On a Licensed Product-by-Licensed Product basis, within [ *** ] after the Effective Date (for KTE-C19) or [ *** ] after DS s exercise of the Option (for any Opt-in Product), the Parties shall establish a joint operating committee (the JOC ), composed of three (3) representatives from each Party with appropriate qualifications and expertise to oversee the Development and Commercialization of such Licensed Product under this Agreement. The JOC shall be subordinate to the JSC and shall: oversee the Development and Commercialization of the applicable Licensed Product in the Field in the Territory; oversee the manufacturing of the applicable Licensed Product in the Field for the Territory; review, discuss, and approve the overall strategy for seeking Regulatory Approval of the applicable Licensed Product in the Field in the Territory; review, discuss and approve the Development Plan for the applicable Licensed Product, including any amendments or revisions thereto, and oversee the implementation of the Development Plan; review, discuss and approve the Commercialization Plan for the applicable Licensed Product, including any amendments or revisions thereto, and oversee the implementation of the Commercialization Plan; and perform such other functions as may be appropriate to further the Development and Commercialization of the applicable Licensed Product, as directed by the JSC within the scope of its authority. 3.4 Membership and Procedures Membership. Within [ *** ] after the Effective Date (or DS s exercise of the Option, as applicable), each Party shall appoint its representatives on the JSC and the JOC. The Parties may agree in writing to vary the number of representatives that serve on the JSC or JOC, provided that in all cases the JSC and JOC maintain an equal number of representatives from each Party. Each Party may replace its representatives on the JSC or JOC at any time upon written notice to the other Party. Each Party shall appoint one (1) of its representatives on the JSC and JOC to act as a co-chairperson of such committee. The co-chairpersons shall jointly be responsible for organizing meetings, preparing and circulating an agenda in advance of each meeting, and preparing minutes of each meeting. Each committee representative shall review and approve such minutes in writing; provided that if a representative does not object to the accuracy of such minutes within [ *** ] after the circulation of such minutes, such minutes shall be deemed approved by such representative Meetings. Unless the Parties otherwise agree, the JSC and JOC shall each hold meetings [ *** ] for the JSC and [ *** ] for the JOC. Additional meetings may also be held as required under this Agreement or with the consent of each Party and neither Party will unreasonably withhold or delay its consent to hold such an additional meeting. Meetings of any joint committee shall be effective only if at least one (1) representative of each Party is present or participating. The JSC and JOC may meet either in person at either Party s facilities or at such locations as the Parties may otherwise agree, or by audio or video teleconference Non-Member Attendance. With the prior consent of the other Party s representatives (such consent not to be unreasonably withheld or delayed), each Party may invite a reasonable number of non-members to participate in the discussions and meetings of the JSC and JOC, provided that such participants shall have no right to vote in such meetings and shall be subject to the confidentiality provisions set forth in ARTICLE XI. 3.5 Decision-Making All decisions of the JSC and JOC (or a joint subcommittee) shall be made by unanimous vote, with each Party s representatives collectively having one (1) vote. If after reasonable discussion and good faith consideration of each Party s view on a particular matter before the JOC (or a joint subcommittee), the representatives of the Parties cannot reach an agreement as to such matter within [ *** ] after such matter was brought or referred to such committee for resolution, such disagreement shall be referred to the JSC for resolution. If after reasonable discussion and good faith consideration of each Party s view on a particular matter before the JSC, the representatives of the Parties cannot reach an agreement as to such matter within [ *** ] after such matter was brought or referred to such committee for resolution, such disagreement shall be referred to the Executive Officers for resolution. If the Executive Officers cannot resolve such matter within [ *** ] after such matter has been referred to them, then:

90 [ *** ], provided that if Kite believes that there is a reasonable likelihood that [ *** ]; and [ *** ], subject to the limitations described in Section None of the JSC, JOC or DS shall have any decision-making authority with respect to the Development, manufacture and Commercialization of the Licensed Products for the Kite Territory Any dispute regarding the interpretation of this Agreement, the performance or alleged nonperformance of a Party s obligations under this Agreement, [ *** ], or any alleged breach of this Agreement will be resolved in accordance with the terms of ARTICLE XV and shall not be subject to the JSC s, JOC s or any other joint committee s decision-making authority. 3.6 Day-to-Day Responsibilities. Each Party shall: (a) [ *** ]; and (b) keep the other Party informed as to the progress of such activities as reasonably requested by the other Party and as otherwise determined by the JOC. 3.7 Limitation of Authority. The JSC and JOC shall have only such powers as are specifically delegated to it hereunder and will not be a substitute for the rights of the Parties. Without limiting the generality of the foregoing, the JSC and JOC will not have any power to amend this Agreement (without limiting its right to approve amendments to the Development Plans) or waive compliance with any term or condition of this Agreement, and the JSC and JOC are otherwise subject to the express terms and conditions of this Agreement. Any amendment to the terms and conditions of this Agreement may only be implemented pursuant to Section Expenses. Each Party will be responsible for [ *** ]. 3.9 Discontinuation of the JSC. The activities to be performed by the JSC and JOC shall solely relate to governance under this Agreement, and are not intended to be or involve the delivery of services. Each joint committee shall continue to exist until the first to occur of: (a) the Parties mutually agree to disband such committee; or (b) Kite provides written notice to DS of its intention to disband and no longer participate in such committee. Once the Parties mutually agree or Kite has provided written notice to disband a committee, such committee shall have no further obligations under this Agreement and, thereafter, each Party shall designate a contact person for the exchange of information under this Agreement or such exchange of information shall be made through the Alliance Managers. In the event a committee is disbanded as provided above, any decisions that are designated under this Agreement as being subject to the review or approval of such committee shall be subject to the review and approval of the Parties directly, subject to the other terms and conditions of this Agreement. ARTICLE IV DEVELOPMENT 4.1 Overview. Subject to, and in accordance with, the terms and conditions of this Agreement, the Parties shall collaborate with respect to the Development of the Licensed Products in the Field in the Territory and the Kite Territory and shall share the data resulting from such collaboration to facilitate the Development of the Licensed Products in the Field. [ *** ]. 4.2 Development Plan. The Development of each Licensed Product in the Field in the Territory shall be conducted pursuant to a comprehensive written development plan which sets forth the timeline and details of all pre-clinical, clinical and regulatory activities to be conducted by or on behalf of DS or its Affiliates or Sublicensees to obtain Regulatory Approval of such Licensed Product in the Territory (each, a Development Plan ). DS shall prepare and submit to Kite for review and comment a Development Plan for each Opt-in Product within [ *** ] after the Option exercise therefor, or, in the case of KTE-C19, within [ *** ] after the Effective Date. DS shall [ *** ] update and amend, as appropriate, the then-current Development Plan for each Licensed Product and submit such updated or amended Development Plan to the JOC for review and approval. Once approved by the JOC, the updated or amended Development Plan shall become effective and supersede the previous Development Plan. If the terms of any Development Plan contradict, or create inconsistencies or ambiguities with, the terms of this Agreement, then the terms of this Agreement shall govern. 4.3 Development Diligence. DS shall use Commercially Reasonable Efforts to Develop each Licensed Product according to the applicable Development Plan and obtain Regulatory Approval for each Licensed Product in the Territory. 4.4 Development Records. DS shall (and shall ensure its Affiliates and Sublicensees will) maintain complete, current and accurate records of all Development activities for the Licensed Products in the Territory, and all data, results and other information resulting from such activities. Such records shall fully and properly reflect all work done and results achieved in the performance of the Development activities in good scientific manner appropriate for regulatory and patent purposes. DS shall document all non-clinical studies and clinical trials in formal written study records according to Applicable Laws, including applicable national and international guidelines such as ICH, GCP and GLP. Kite shall have the right to review and copy such records maintained by DS, its Affiliates and Sublicensees [ *** ] and to obtain access to the original to the extent necessary or useful for regulatory and patent purposes. 4.5 Development Reports. DS shall provide the JOC with written reports (in English) summarizing the Development activities for the Licensed Products in the Territory and the results of such activities at JOC meeting, but no more than [ *** ]. Such reports shall include reasonable level of details to be agreed by the JOC; provided, however, that

91 any such report shall include at least a summary of the data for all preclinical studies and all clinical trials of the Licensed Product in the Territory. The Parties shall discuss the status, progress and results of the Development of the Licensed Products in the Territory at JOC meetings. 4.6 Subcontractors. DS, its Affiliates and Sublicensees shall have the right to engage subcontractors to Develop the Licensed Products in the Territory, provided that any such subcontractor is bound by written obligations of confidentiality and non-use consistent with this Agreement and has agreed to assign to DS all inventions or other intellectual property made by such subcontractor in the course of performing such subcontracted work that relate to the Licensed Products or their use, manufacture or sale. DS shall remain responsible for any obligations that have been delegated or subcontracted to any subcontractor, and shall be responsible for its subcontractors performance. 4.7 Kite Assistance. Upon DS s reasonable request, Kite shall provide reasonable research and technical assistance to DS in connection with the pre-clinical Development of the Licensed Products in the Territory. Such assistance may include providing DS with access to Kite s technical personnel, training and information that may help DS to understand and use the Kite Technology to Develop the Licensed Products. DS shall [ *** ]. At any time Kite provides assistance pursuant to this Section 4.7 in an aggregate amount of more than [ *** ], DS shall [ *** ] of Kite personnel (calculated at the FTE Rate) allocated to the efforts spent to provide such assistance within [ *** ] of the end of the applicable Calendar Quarter. To the extent necessary for DS s Regulatory Filings for the Licensed Products, including maintenance of the same, in the Territory, Kite shall maintain or cause to be maintained records of Development activities for the Licensed Products in the Kite Territory in accordance with Applicable Laws and shall make such records available to DS upon DS s reasonable request and to Regulatory Authorities in the Territory as required by Applicable Laws. 4.8 Cross-Territory Development Coordination; Data Exchange Global Development Program. As between the Parties, Kite shall [ *** ]. Subject to Section 4.8.3, if DS exercises its Option for a Opt-in Product [ *** ] by Kite for such Opt-in Product (i.e., within [ *** ] of such date), then [ *** ] of such Product, the Parties shall discuss in good faith whether to include the Territory as part of a global development program for such Opt-in Product, and if so, how DS will participate in such global development program. For clarity, if the Parties agree to include the Territory in a global development program, DS shall [ *** ] Mutual Data Exchange and Use. DS shall own all data and results generated by or on behalf of DS in the Development of the Licensed Products in the Territory. Kite shall own all data and results generated by or on behalf of Kite in the Development of the Licensed Products in the Kite Territory. Subject to Section : In addition to its adverse event and safety data reporting obligations pursuant to Section 5.7, each Party shall promptly provide the other Party with copies of all data and results and all supporting documentation (e.g. protocols, CRFs, analysis plans) generated from such Party s Development of the Licensed Products for its territory (collectively, the Collaboration Data ); and Each Party shall have the right to use and reference to, without additional consideration, any and all Collaboration Data generated by or on behalf of the other Party for the purpose of Developing the Licensed Products, obtaining and maintaining Regulatory Approval for the Licensed Products, and Commercializing the Licensed Products, in each case in its own territory Kite Partner. DS acknowledges that Kite may, in its sole discretion, enter into one or more agreements with Third Parties and grant such Third Parties a license to Develop and/or Commercialize the Licensed Products in the Kite Territory (each such Third Party, a Kite Partner and each such agreement, a Kite Partner Agreement ). If Kite enters into such a Kite Partner Agreement, then Kite s obligation to allow DS s participation in the global development program and to share the safety data related to the Licensed Products generated by Kite Partner for DS s use in the Territory in accordance with Applicable Laws shall be stipulated in the Kite Partner Agreement. Kite shall use reasonable efforts to include in each Kite Partner Agreement the right for DS to use efficacy data for Licensed Products generated by such Kite Partner in the Territory, provided that should such right not be included in a particular Kite Partner Agreement, DS shall not be required to share, and Kite shall be prohibited from sharing, any clinical study data generated under this Agreement with such Kite Partner until such time that such efficacy data generated by such Kite Partner is shared with DS or such Kite Partner Agreement is amended to provide for the same. 4.9 References to Kite. DS shall not name Kite or any of its Affiliates as a sponsor of any clinical trial for any Licensed Product in the Territory nor state or otherwise imply in any Regulatory Filing or other documentation relating to any clinical trial of any Licensed Product in the Territory (including, without limitation, any informed consent document) that Kite or any of its Affiliates has any responsibility or liability in connection with the conduct of such clinical trial. ARTICLE V REGULATORY MATTERS 5.1 Regulatory Responsibilities. Each Development Plan shall set forth the regulatory strategy for seeking Regulatory Approval for

92 the applicable Licensed Product in the Territory. DS shall [ *** ], which activities shall be conducted in accordance with the regulatory strategy set forth in the applicable Development Plan. DS shall keep Kite informed, via participation on the JOC, of regulatory developments related to the Licensed Products in the Territory. The JOC shall discuss regulatory matters relating to the Licensed Products in the Territory and, Kite, through participation on the JOC, shall have the right to contribute to the regulatory plans and strategies. 5.2 Regulatory Filings Preparation and Review. DS shall prepare and submit all Regulatory Filings for the Licensed Products in the Territory and shall own all Regulatory Filings and Regulatory Approvals for the Licensed Products in the Territory. The JOC shall coordinate communication and the exchange of information between the Parties with respect to Regulatory Filings for the Licensed Products to be prepared and submitted by or for DS to Regulatory Authorities in the Territory. Without limiting the foregoing, DS will provide Kite with summaries, overviews, or excerpts (in English) of all Key Regulatory Filings (as defined below) prior to filing thereof. DS shall not submit any MAA for any Licensed Product in the Territory until Kite has had the opportunity to review and comment on the content of such MAA filing, provided that Kite s review shall not exceed [ *** ]. DS shall give reasonable consideration to Kite s comments with respect to such MAA filing and, in any event, except as required by Applicable Laws, shall not include in any MAA filing any information or statement that is inconsistent with any previously submitted Kite MAA filing for the same Licensed Product (and received by DS) without having first discussed the inconsistency with Kite in good faith during Kite s review period. Except as required by Applicable Laws, DS shall not submit any Regulatory Filings to, or communicate with, any Regulatory Authority in the Kite Territory regarding the Licensed Products. As used herein, Key Regulatory Filings means IND, CTA, CTN and MAA filings, protocols and substantive protocol amendments, substantive amendments to CTN and MAA, or any material documents, information or correspondence received from or delivered to a Regulatory Authority, in each case for the Licensed Product. For purposes of this Section 5.2.1, material documents, information or correspondence includes any communications from a Regulatory Authority that could potentially impact safety or labeling for a Licensed Product in the Territory Accelerated Reporting. In the event that a Regulatory Authority in the Territory requires DS to report information related to any regulatory activity on an accelerated basis such that DS is unable to comply with Section 5.2.1, DS will nonetheless provide to Kite a prompt and detailed description of the event that triggered the accelerated reporting obligation as soon as reasonably practicable after DS obtains actual knowledge of such triggering event, and, in any event, in accordance with the safety agreement described in Section Copies. Each Party will provide: (a) electronic copies of Key Regulatory Filings for the Licensed Products as submitted to or received from Regulatory Authorities promptly following submission or receipt, and summaries of such Regulatory Filing in English, (b) summaries (in English) of material communications to the other Party from any Regulatory Authority in the Territory with respect to the Licensed Products, promptly following receipt thereof, and (c) a brief statement (in English) of any material changes in the final Key Regulatory Filings from the summaries previously provided to the other Party. For the avoidance of doubt, Kite shall have the right to provide copies of all Key Regulatory Filings it receives from DS (and extend its rights therein) to Kite Partners. To the extent permitted under the applicable Kite Partner Agreement, Kite shall provide copies of Key Regulatory Filings it receives from Kite Partner (and extend its rights therein) to DS upon DS s request. Kite shall use reasonable efforts to include in each Kite Partner Agreement the right for DS to receive a copy of Key Regulatory Filings for Licensed Products received from a Kite Partner, provided that should such right not be included in a particular Kite Partner Agreement DS shall not be required to share, and Kite shall be prohibited from sharing, any Key Regulatory Filings generated under this Agreement with such Kite Partner until such time that such Key Regulatory Filings generated by the Kite Partner are shared with DS or such Kite Partner Agreement is amended to provide for the same. 5.3 Regulatory Meetings. DS shall provide Kite with reasonable advance notice of any scheduled formal meeting related to the Licensed Products with any Regulatory Authority in the Territory, and shall provide Kite with a brief description (in English) of the topics to be presented or discussed at each such meeting. DS shall take into account any advice Kite provides in relation to the topics to be discussed and provide a summary of such meeting to Kite. In the event that Regulatory Authority require DS to hold a meeting on an accelerated basis such that DS is unable to comply with this Section, DS will nonetheless provide to Kite a prompt and detailed description of the event that triggered the accelerated reporting obligation as soon as reasonably practicable after the meeting. 5.4 Rights of Reference. Kite hereby grants to DS a right of reference to all Regulatory Filings for the Licensed Products filed by or on behalf of Kite, which right of reference DS may use for the sole purpose of seeking, obtaining and maintaining Regulatory Approvals of the Licensed Products in the Territory. DS hereby grants to Kite a right of reference to all Regulatory Filings for the Licensed Products filed by or on behalf of DS, which right of reference Kite may use for the sole purpose of seeking, obtaining and maintaining Regulatory Approvals of the Licensed Products in the Kite Territory. Each Party shall support the other Party, as reasonably requested by such other Party and at such other Party s expense, in obtaining Regulatory Approvals for the Licensed Products in such other Party s territory, including (a) providing necessary documents or other materials required by Applicable Laws, (b) participation in meeting with Regulatory Authority, and (c) respond to queries from Regulatory Authority to obtain Regulatory Approval in such territory, all in accordance with the terms and conditions of this Agreement. 5.5 Audit; Inspection. Upon reasonable advance notice ([ *** ]), DS shall (and shall cause its Affiliate and Sublicensees to) permit Kite s authorized representatives to examine and inspect DS s (and its Affiliates and Sublicensees ) facilities used in the Development,

93 manufacture and/or Commercialization of the Licensed Products in the Territory and the data, documentation and work products relating thereto. In addition, DS shall promptly notify Kite of any inspections relating to the Development, manufacture and/or Commercialization of the Licensed Products by or on behalf of any Regulatory Authorities in the Territory of which it becomes aware. Unless prohibited by Applicable Laws, DS shall permit Kite s representative to observe such inspection. DS shall also provide Kite with copies of all correspondence submitted to or received from the Regulatory Authority relating to such inspection. Kite will cooperate reasonably with DS for inspections relating to the Licensed Products implemented by or on behalf of any Regulatory Authorities in the Territory and DS shall reimburse Kite for such activities at the FTE Rate. Kite will share the information about inspections conducted at Kite s and its Affiliates manufacturing facilities in the Kite Territory for the Licensed Products including the inspection results and the measures to be taken. Kite will share the information about inspections conducted at any Kite Partner s manufacturing facilities in the Kite Territory for a Licensed Product that would reasonably be expected to indicate a potential safety issue for such Licensed Product or that would otherwise reasonably be expected to have a material impact on such Licensed Product in the Territory. 5.6 Regulatory Matters Outside the Territory. As between the Parties, Kite shall [ *** ]. Kite, through the JOC, shall keep DS reasonably informed of all material events and developments occurring in the course of the regulatory activities with respect to the Licensed Products in the Kite Territory, including the overall content and outcome of any strategy discussions and meetings with applicable Regulatory Authorities in the Kite Territory which relate to the Licensed Products. 5.7 Safety; Adverse Event Reporting Pharmacovigilance and Drug Safety Data. Kite shall establish and maintain, [ *** ], a global drug safety management system for the Licensed Products. DS shall have the right to access by requesting from Kite such global drug safety database all drug safety data necessary for DS to comply with all Applicable Laws in the Territory. DS will [ *** ]. Kite shall have the right to provide information received by Kite pursuant to this Section 5.7 to its Affiliates, Kite Partners and appropriate Regulatory Authorities within the Kite Territory. Upon reasonable prior notice and during normal business hours [ *** ], Kite has the right to review DS s internal processes and procedures for the collection and processing of safety data relating to the Licensed Products. For clarity, this review by Kite could occur in a variety of formats, including through questionnaires, meetings, quality assessments, onsite visits and audits Safety Agreement. Prior to the initiation of any clinical trial of any Licensed Products in the Territory, the JSC will develop a mutually acceptable safety agreement (to be agreed upon and executed by the Parties) setting forth the Parties respective obligations in detail regarding pharmacovigilance and the exchange of drug safety data with respect to the Licensed Products (the Safety Agreement ). Such safety agreement shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of adverse event reports, pregnancy reports, and any other information concerning the safety of any Licensed Products. Such guidelines and procedures shall be in accordance with, and enable the Parties to fulfill, local and national regulatory reporting obligations under Applicable Laws. Furthermore, such agreed procedure shall be consistent with relevant ICH guidelines, except where said guidelines may conflict with existing local regulatory reporting safety reporting requirement, in which case local reporting requirement shall prevail. 5.8 Remedial Action DS and Kite will, through the JSC, confer upon and coordinate their respective internal standard operating procedures (and any changes thereto) with respect to Licensed Product recalls and the treatment of and response to Licensed Product complaints and inquiries regarding the safety, quality or efficacy of the Licensed Products If either Party becomes aware of information indicating that any Licensed Product may be subject to any withdrawal, corrective action or other regulatory action with respect to such Licensed Product taken by virtual of Applicable Laws (a Remedial Action ), it shall [ *** ] (but in any event within such period of time as the Parties may mutually establish to ensure their respective compliance with Applicable Laws) so notify the other Party. The Parties will assist each other in gathering and evaluating such information as is necessary to determine the necessity of conducting a Remedial Action. Each Party shall, and shall ensure that its Affiliates, licensees and Sublicensees will, maintain adequate records to permit the Parties to trace the manufacture, distribution and use of the Licensed Products. In the event DS determines that any Remedial Action with respect to a Licensed Product in the Territory should be commenced or is required by applicable Regulatory Authority, DS shall, at its expense, control and coordinate all efforts necessary to conduct such Remedial Action in the Territory. In the event Kite determines that any Remedial Action with respect to a Licensed Product in the Kite Territory should be commenced or is required by applicable Regulatory Authority, Kite shall, at its expense, control and coordinate all efforts necessary to conduct such Remedial Action in the Kite Territory. ARTICLE VI COMMERCIALIZATION 6.1 Overview. Subject to, and in accordance with, the terms and conditions of this Agreement and all Applicable Laws, DS, [ *** ].

94 6.2 Commercialization Plan. Without limiting the generality of the other provisions in this ARTICLE VI, DS will prepare and submit to the JOC a plan containing the strategy and proposed activities and timelines for the Commercialization of each Licensed Product in the Territory (the Commercialization Plan ). DS will submit a proposed draft of the Commercialization Plan for a Licensed Product to the JOC for review and approval no later than [ *** ] prior to the anticipated date of the Regulatory Approval of such Licensed Product in the Territory. DS will deliver to the JOC an update of the relevant sections of the Commercialization Plan [ *** ] during the Term. DS will [ *** ]. 6.3 Commercial Diligence. DS shall use Commercially Reasonable Efforts to Commercialize each Licensed Product in the Territory after it receives Regulatory Approval for such Licensed Product in the Territory. 6.4 Pricing DS shall be responsible, [ *** ], for seeking Pricing Approval for each Licensed Product in the Territory. Kite shall provide DS [ *** ]. DS shall keep Kite informed on an ongoing basis of DS s strategy for seeking, and the results it obtains in seeking, Pricing Approval, including, without limitation, the results of any material discussion or other communication with relevant governmental authorities regarding Pricing Approval, via regular reports to the JOC no less frequently than such committee is required to meet. DS shall use Commercially Reasonable Efforts to obtain Pricing Approval for the Licensed Products in the Territory Subject to Sec tion 6.4.3, DS [ *** ]. Notwithstanding anything in this Agreement to the contrary, Kite shall [ *** ]. DS shall [ *** ] In the event DS [ *** ]. 6.5 Marketing and Promotional Materials. DS shall prepare all marketing and promotional materials related to Licensed Products for use in the Territory in accordance with Applicable Laws, and, if requested by Kite or otherwise required herein, shall provide Kite with copies. Upon DS s reasonable request, Kite shall provide DS with copies of its applicable marketing materials and global brand plans. 6.6 Labeling Marking. Subject to, and in accordance with, Applicable Laws, DS may identify Kite as the licensor of the Licensed Products using the Kite Housemarks designated by Kite for such use in marketing and promotional materials for the Licensed Products in the Territory where such identification is appropriate, in a manner approved in advance in writing by both Parties, and in accordance with (and subject to) the Trademark License set forth in Section To the extent permitted by Applicable Law, DS will mark all Licensed Products sold in the Territory by DS, its Affiliates, or Sublicensees with appropriate Product Trademarks. DS may, in its sole discretion, include any DS Housemark on the Licensed Products, and on the labels, packaging, promotional materials, and other materials therefor, in compliance with Applicable Law. 6.7 Selection of Product Trade Name. The trade names for use in connection with the Commercialization of Licensed Products in the Territory in the Field shall be determined in accordance with this Section 6.7. DS acknowledges that Kite intends to have each Licensed Product commercialized worldwide under a global product trade names (including key distinctive colors, logos, images and symbols), where feasible and appropriate. Accordingly, Kite shall have the right to select and propose such global product trade names for the Licensed Products, and DS agrees to, at good time in course of the Development, evaluate in good faith such Kite proposed trade names for use in connection with the Commercialization of the Licensed Products in the Territory, including the appropriateness of such trade names for the Japanese market, any existing confusingly similar trademarks or trade names of any drug product, etc. If DS in good faith believes that any Kite proposed trade name is not appropriate for the Territory, it shall so inform Kite, and shall propose [ *** ] potential trade name as alternatives to the Kite proposed trade name for use in the Territory. The Parties shall then review and discuss such proposed alternative trade names for the Licensed Products, and DS shall have the right to proceed with the alternative trade names but only if approved and agreed to by Kite, which approval not to be unreasonably withheld or delayed. The trade names selected in accordance with this Section 6.7 for use in connection with the Commercialization of Licensed Products, whether it is a Kite proposed trade name or an alternative proposed by DS and agreed upon by Kite, shall be deemed the Product Trademarks and shall solely be owned by Kite throughout the world. 6.8 Reports. DS shall update the JOC at each regularly scheduled meeting regarding DS s significant Commercialization activities (such as promotion campaign and planned Phase 4 studies) for the Licensed Products in the Territory. In addition, DS shall present [ *** ] written reports (in English) to the JOC summarizing DS s significant Commercialization activities for the Licensed Products in the Territory. Such reports shall cover subject matter at a level of detail reasonably sufficient to enable Kite to determine DS s compliance with its diligence obligations pursuant to Sec tion Cross Territory Coordination. The Parties recognize that their collaboration may benefit from the coordination of certain activities in support of the Commercialization of the Licensed Products in both the Territory and the Kite Territory. As such, the Parties will coordinate such activities where appropriate, which may include scientific, clinical and medical communication, pricing and product positioning Marketing and Sales in the Kite Territory. Beginning approximately [ *** ] prior to the first commercial sale of a

95 Licensed Product in the Kite Territory, Kite, through the JOC, shall keep DS reasonably informed of all material activities and developments with respect to the marketing and sale of Licensed Products in the Kite Territory. Subject to DS s prior written approval on a case by case basis, Kite shall have the right to use the DS Housemark, only in the form and manner as reasonably prescribed in writing to Kite in advance from time to time by DS, on the Licensed Products, and on the labels, packaging, promotional materials, and other materials therefor, solely in connection with marketing activities or medical affairs activities in the Kite Territory that describe DS as Kite s partner with respect to the Licensed Product in the Territory. 7.1 Product Supply. ARTICLE VII MANUFACTURE AND SUPPLY Supply by Kite. Until the completion of the Technology Transfer for a Licensed Product set forth in Section 7.2 below, Kite shall, either by itself or through a Third Party contractor, [ *** ] for Development use in the Territory, [ *** ]. The Parties shall discuss and agree on a reasonable forecasting and ordering mechanism for the supply of the Licensed Products by Kite to DS, which shall take into account [ *** ]. Kite shall manufacture the Licensed Products in accordance with all Applicable Laws, including GMP, and all Licensed Products supplied by Kite to DS shall comply with the specifications mutually agreed by the Parties for such Licensed Products. DS shall [ *** ]. Kite and DS shall execute a mutually acceptable quality agreement that allocates roles and responsibilities to each Party with respect to quality control and regulatory compliance with respect to the manufacture and supply of Licensed Products hereunder (the Quality Agreement ) Supply by DS. Except for the supply of the Licensed Products by Kite under Sec tion 7.1.1, DS shall [ *** ]. If the Technology Transfer is not completed (or in DS s reasonable opinion, will not be completed) in time for DS to be able to manufacture and supply commercial quantities of any Licensed Product for Commercialization use following Regulatory Approval in the Territory, then upon DS s request, the Parties shall promptly discuss in good faith mutually agreeable terms to ensure the availability of the commercial supply of the Licensed Products for the Territory. 7.2 Manufacturing Technology Transfer. In order to enable DS to manufacture and supply the Licensed Products, Kite shall perform a manufacturing technology transfer (the Technology Transfer ) to DS or the Approved CMO as set forth below: [ *** ], the Parties shall discuss and agree on a plan for the Technology Transfer for such Licensed Product, which plan shall set forth the schedule and each Party s role and responsibility for such Technology Transfer. The Parties shall perform the Technology Transfer in accordance with such agreed plan as expeditiously as is reasonably practicable. The JOC shall establish a subcommittee to oversee the Technology Transfer Pursuant to the Technology Transfer plan agreed by the Parties, Kite shall make available and transfer to DS or the Approved CMO copies of the Kite Know- How that are necessary or reasonably useful for DS or the Approved CMO to manufacture the applicable Licensed Product and as of such time are being used or have been used by Kite to manufacture such Licensed Product (the Kite Manufacturing Know-How ). Subject to the provisions in Article 2.8, DS and the Approved CMO shall use the Kite Manufacturing Know- How solely to manufacture and supply the Licensed Product to DS. Upon DS s reasonable request, Kite shall make available to DS or the Approved CMO [ *** ] of appropriately trained personnel to provide, on a mutually convenient time and place, technical assistance in the transfer and demonstration of the Kite Manufacturing Know-How in the manufacture of the Licensed Products. In addition, upon DS s reasonable request, Kite shall provide DS or the Approved CMO with a reasonable opportunity to observe the manufacture of the Licensed Products at Kite s facility for the purpose of facilitating an effective and efficient Technology Transfer. Furthermore, Kite shall make reasonable efforts to make available to DS, [ *** ], the raw materials available from single source suppliers necessary for the manufacturing of the Licensed Products for the Territory. DS shall use any such materials solely in connection with Kite s processes for such Licensed Products DS shall [ *** ] after the end of the applicable Calendar Quarter The Technology Transfer for a Licensed Product shall be deemed completed ( Successful Completion ) when DS [ *** ] by the Applicable Laws. ARTICLE VIII FINANCIAL TERMS 8.1 Upfront Payment. Within [ *** ] after the Effective Date, as a material inducement to Kite entering into this Agreement and to forego pursuing other commercial arrangements for the Licensed Products in the Territory, DS shall pay to Kite a non- refundable, noncreditable upfront payment of fifty million Dollars ($50,000,000). 8.2 Development and Commercialization Milestones. On a Licensed Product-by- Licensed Product basis, DS shall pay to Kite the non-refundable, non-creditable milestone payments set forth in the table below within [ *** ] of the first achievement by such Licensed Product of the applicable milestone event (whether by DS or its Affiliate or Sublicensee). For the avoidance of doubt, [ *** ].

96 Development and Commercialization Milestone Events Development and/or Commercialization Milestone Payment (in US$) KTE-C19 Opt-in Product 1) [ *** ] $[ *** ] $[ *** ] 2) [ *** ] $[ *** ] $[ *** ] 3) [ *** $[ *** ] $[ *** ]* * [ *** ] 8.3 Sales Milestones. On a Licensed Product-by-Licensed Product basis, DS shall pay to Kite the additional non-refundable, noncreditable milestone payments set forth in the table below within [ *** ] of the end of the Calendar Quarter during which the aggregated annual Net Sales of such Licensed Product in the Territory first reach the values indicated below. If two or more sales milestone events are achieved in the same Calendar Quarter, then DS shall pay to Kite all of the applicable milestone payments achieved in such Calendar Quarter. [ *** ]. Aggregate annual Net Sales of the Licensed Product in the Territory [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] Sales Milestone Payment (in US$) $[ *** ] $[ *** ] $[ *** ] $[ *** ] $[ *** ] 8.4 Running Royalties Royalty Rate. Subject to the other terms of this Section 8.4 and on a Licensed Product-by-Licensed Product basis, DS shall make [ *** ] non-refundable, non-creditable royalty payments to Kite on the Net Sales of such Licensed Product sold in the Territory, as calculated by [ *** ]. For the portion of annual Net Sales of a Licensed Product in the Territory [ *** ] [ *** ] [ *** ] [ *** ] Royalty Rate [ *** ]% [ *** ]% [ *** ]% [ *** ]% Royalty Term. DS shall pay the royalties to Kite on the Net Sales of each Licensed Product for as long as DS, its Affiliates and Sublicensees continues to Commercialize such Licensed Product in the Territory ( Royalty Term ) Royalty Reductions Royalty Rate Reductions. Subject to Section : (a) On a Licensed Product-by-Licensed Product basis, for Net Sales of Licensed Product sold after the later of: (i) [ *** ] from the First Commercial Sale of such Licensed Product in the Territory, and (ii) the expiration of the last-to-expire Valid Claim in the Territory that claims the composition of matter, manufacture, use, sale, importation or distribution of such Licensed Product, the royalty rate applicable to such Net Sales shall be reduced to [ *** ] ([ *** ]%) of the royalty rate(s) otherwise applicable under Section Once the royalty rate is reduced for a Licensed Product to [ *** ] ([ *** ]%) of the royalty rate(s) otherwise applicable under Section pursuant to this Section (a)(ii), such royalty rate reduction shall be maintained during the Royalty Term even if a subsequent Valid Claim that claims the composition of matter, manufacture, use, sale, importation or distribution of such Licensed Product subsequently issues. (b) The applicable royalty rate under Section will be reduced by [ *** ] ([ *** ]%) if during the Royalty Term a Generic Product is sold in the Territory in the Field Patent Payment Offset. Subject to Section :

97 (a) If DS finds any Patent rights that are owned or controlled by a Third Party and which DS believes is necessary to sell a Licensed Product in the Territory, DS will notify Kite in writing of such Patent rights. If the Parties agree that it is necessary for DS to obtain a license from such Third Party under such Patent in the Territory in order to sell a Licensed Product in the Territory, such agreement not to be unreasonably withheld, conditioned, or delayed, and DS obtains such a license, DS may deduct, from the royalty payment that would otherwise have been due pursuant to Section with respect to Net Sales of such Licensed Product in the Territory [ *** ], an amount equal to [ *** ] ([ *** ]%) of the royalties paid by DS to such Third Party pursuant to such license on account of the sale of such Licensed Product in the Territory during such [ *** ]. (b) If any Necessary IP for the Development, manufacture or Commercialization of KTE-C19 in the Territory is included in the Kite Technology pursuant to Section , then DS may deduct an amount equal to [ *** ] ([ *** ]%) of its share of such Third Party royalty payment (DS s share of the Third Party royalty payment shall be calculated pursuant to Section 8.5.4) in a particular [ *** ] from the royalty payment that would otherwise have been due from DS to Kite with respect to Net Sales of KTE-C19 in the Territory during such [ *** ] Royalty Floor. In no event will the royalty payable to Kite hereunder for any sale of any Licensed Product be less than [ *** ] ([ *** ]%) of the applicable royalty rate set forth in in Section Payment under In-License Agreements Kite shall [ *** ] arising from the Development, manufacture and Commercialization of KTE-C Kite and DS shall [ *** ] (as defined below) under all In-License Agreements arising from the Development, manufacture and Commercialization of Licensed Products, other than KTE-C19, in the Territory. With respect to any In-License Agreements existing as of the Effective Date, in no event and at no time shall DS be responsible for more than an aggregate of such third party royalty obligations in excess of [ *** ]% of Net Sales of the applicable Licensed Product. For clarity, the foregoing up to [ *** ]% limit shall not apply to any In-License Agreement that became an In-License Agreement pursuant to Section Japan Milestone Payment means [ *** ], to be agreed in good faith by the Parties DS shall [ *** ] for any intellectual property rights that are useful but not necessary for the Development, manufacture and Commercialization of the Licensed Products in the Territory, and [ *** ] under Section For clarity, such license from Third Party shall neither be deemed as DS Technology nor the Collaboration Technology and shall not be sublicensed to Kite [ *** ] Subject to the royalty offset described in Section (b), Kite and DS shall [ *** ] under all In-License Agreements entered into during the Term arising from the Development, manufacture and Commercialization of KTE-C19 in the Territory. ARTICLE IX RECORDS AND REPORTS 9.1 Royalty Reports; Payment. Within [ *** ] after each Calendar Quarter, commencing with the Calendar Quarter during which the First Commercial Sale of a Licensed Product is made anywhere in the Territory, DS shall provide Kite with a report that contains the following information for the applicable Calendar Quarter, on a Licensed Product-by-Licensed Product basis: (a) the amount of gross sales of the Licensed Products, (b) an itemized calculation of Net Sales in the Territory showing separately each type of deduction provided for in the definition of Net Sales, and (c) a calculation of the royalty payment due on such sales, including the application of any reduction made in accordance with Section In addition, if and as requested by Kite, DS shall provide Kite with any additional information relating to the sales of Licensed Products in the Territory during such Calendar Quarter that is necessary for Kite to calculate the payments owed under the applicable In-License Agreement(s). Within [ *** ] after delivery of the applicable quarterly report, DS shall pay Kite in Dollars all royalties owed with respect to Net Sales of the Licensed Products for such Calendar Quarter. 9.2 Currency. All payments to be made by DS to Kite under this Agreement shall be made in Dollars by bank wire transfer in immediately available funds to a bank account designated by written notice from Kite. The rate of exchange to be used in computing the amount of currency equivalent in Dollars owed to a Party under this Agreement shall be the monthly average exchange rate between each currency of origin and Dollars as reported by [ *** ]. The monthly average exchange rate shall be the average of (a) the exchange rate published on the last day of the month; and (b) the exchange rate published on the last day of the preceding month. 9.3 Interest on Late Payments. Any amounts not paid when due under this Agreement will be subject to interest from and after the date payment is due through and including the date upon which such amount is paid at the annual interest rate equal to [ *** ] or the maximum rate allowable by Applicable Law, compounded monthly. The payment of such interest shall not limit or restrict any other remedies available for the lateness of any payment. 9.4 Taxes.

98 9.4.1 Taxes on Income. Each Party shall be solely responsible for the payment of all Taxes imposed on its share of income arising directly or indirectly from the collaborative efforts of the Parties under this Agreement Cooperation and Coordination. The Parties acknowledge and agree that it is their mutual objective and intent to minimize Taxes in accordance with applicable Law with respect to their collaborative efforts under this Agreement and that they shall use all commercially reasonable efforts to cooperate and coordinate with each other to achieve such objective Tax Withholding If DS is required under any Applicable Law to withhold or deduct any Taxes with respect to payments under this Agreement, [ *** ], DS will make necessary steps to pay such withholding Tax on behalf of Kite or its designee. Kite or its designee will bear such withholding Tax and the amount of the consideration to be borne by DS under this Agreement will not change as stipulated in this Agreement DS and Kite shall reasonably cooperate to reduce otherwise applicable withholding Taxes by providing tax forms requested by either Party for the purpose of claiming reductions or exemptions in otherwise applicable Taxes. DS also agrees to inform Kite of any audit of DS with respect to withholding of Taxes hereunder, and in such event to reasonably consult with Kite with respect to such matter. Kite shall provide DS with appropriate certification from relevant revenue authorities that Kite is a tax resident of that jurisdiction, if Kite wishes to claim the benefits of an income tax treaty to which that jurisdiction is a party. Upon the receipt thereof, any deduction and withholding of taxes shall be made at the appropriate treaty tax rate In the event that a governmental authority requires Kite to provide additional information and records to establish its right to a credit, exemption or refund of any amounts withheld by DS, DS shall fully and promptly cooperate with Kite and provide to Kite, no later than [ *** ] of Kite s request, such additional information and records as Kite may request. DS shall provide Kite with such assistance and documentation as Kite shall request in connection with any application by Kite to qualify for the benefit of a reduced rate of withholding taxation under the terms of any applicable tax treaty Assessment. Either Party may, at its own expense, protest any assessment, proposed assessment, or other claim by any Governmental Authority for any additional amount of taxes, interest or penalties or seek a refund of such amounts paid if permitted to do so by applicable Law. The Parties shall cooperate with each other in any protest by providing records and such additional information as may reasonably be necessary for a Party to pursue such protest Other Tax Liability. In the case of value added or similar taxes incurred by a Party with respect to payments made hereunder or the activities underlying such payments ( VAT ), each Party and their Affiliates will use Commercially Reasonable Efforts to secure available exemption(s) from VAT and/or to cooperate with the other Party s efforts to obtain maximum recovery of VAT paid or incurred by such Party or any Affiliate, to the extent permitted by Applicable Law Payments Treated as Royalties for Tax Purposes. The Parties agree that, to the extent consistent with Applicable Law, the payments under Section (Opt-In Payment), Section (Extension Fee), Section 8.1 (Upfront Payment), Sec tion 8.2 (Development Milestones), Section 8.3 (Sales Milestones) and Section 8.4 (Running Royalties) are payments received as consideration for the use of, or the right to use, a patent or patents, a secret process, or information concerning industrial, commercial, or scientific experience between Japan and United States and, if applicable, within the meaning of the Income Tax Convention for the Avoidance of Double Taxation between Japan and The Netherlands. Accordingly, such payments constitute royalties for Tax purposes, and the Parties intend and agree (to the extent consistent with Applicable Law) to treat them as such for Tax purposes. 9.5 Records; Audits. DS shall (and shall ensure that its Affiliates and Sublicenses will) maintain complete and accurate records in sufficient detail in relation to this Agreement to permit Kite to confirm the accuracy of the royalty payments and other amounts payable under this Agreement and to verify the achievement of any sales milestones. DS will keep such books and records for at least [ *** ] following the end of the Calendar Year to which they pertain. Upon reasonable prior notice, such records may be inspected during regular business hours at such place or places where such records are customarily kept by an independent certified public accountant selected by Kite for the sole purpose of verifying for Kite the accuracy of the financial reports furnished by DS pursuant to this Agreement or of any payments made, or required to be made, by DS to Kite pursuant to this Agreement. Such audits shall occur no more often than once each Calendar Year. Kite shall only be entitled to audit the books and records from the [ *** ] prior to the Calendar Year in which the audit request is made. Such auditor shall not disclose DS s Confidential Information, except to the extent such disclosure is necessary to verify the accuracy of the financial reports furnished by DS or the amount of payments by DS under this Agreement. Any amounts shown to be owed but unpaid as a result of such audit shall be paid within [ *** ] from the auditor s report (plus interest on such amounts pursuant to Section 9.3 ). Any amounts shown to have been overpaid shall be credited along with interest (as calculated herein) against future payment due from DS to Kite. Kite shall bear the full cost of such audit unless such audit discloses an underpayment of the amount actually owed of more than [ *** ] ([ *** ]%), in which case DS shall bear the full out-of-pocket, external cost of such audit. ARTICLE X INTELLECTUAL PROPERTY

99 10.1 Ownership of Inventions. Ownership of all Inventions shall be based on inventorship, as determined in accordance with the rules of inventorship under United States patent laws. Each Party shall solely own any Inventions made solely by its and its Affiliates employees, agents, or independent contractors ( Sole Inventions ). All Patents claiming Sole Inventions shall be referred to herein as Sole Patents. The Parties shall jointly own any Inventions that are made jointly by employees, agents, or independent contractors of one Party and its Affiliates together with by employees, agents, or independent contractors of the other Party and its Affiliates ( Joint Inventions ). All Patents claiming Joint Inventions shall be referred to herein as Joint Patents. Except to the extent either Party is restricted by the licenses and covenants granted to the other Party under this Agreement, each Party shall be entitled to practice, license, assign and otherwise exploit the Joint Inventions and Joint Patents without the duty of accounting or seeking consent from the other Party Disclosure of Inventions. Each Party shall promptly disclose to the other Party all Sole Inventions of such Party and all Joint Inventions, including any invention disclosures, or other similar documents, submitted to it by its employees, agents or independent contractors describing such Inventions, and shall promptly respond to reasonable request from the other Party for additional information relating to such Inventions Prosecution of Patents Kite-Prosecuted Patents. As between the Parties, Kite shall have the sole right and authority to prepare, file, prosecute, and maintain the Kite Patents, Kite s Sole Patents and the Joint Patents (collectively, Kite-Prosecuted Patents ) in the Kite Territory and the first right and authority to prepare, file, prosecute, and maintain the Kite- Prosecuted Patents in the Territory, all at Kite s own cost and expense. Kite shall provide DS reasonable opportunity to review and comment on such efforts regarding the Kite-Prosecuted Patents in the Territory, including by providing DS with a copy of material communications from any patent authority in the Territory regarding the Kite- Prosecuted Patents, and by providing drafts of any material filings or responses to be made to any patent authorities in the Territory in advance of submitting such filings or responses. If Kite determines in its sole discretion to abandon or not maintain any Kite-Prosecuted Patent in the Territory, then Kite shall provide DS with written notice of such determination at least [ *** ] prior to any filing or payment due date, or any other due date that requires action, for such Kite- Prosecuted Patent. In such event, Kite shall permit DS, at its discretion and expense, to continue prosecution or maintenance of such Kite-Prosecuted Patent in the Territory. DS s prosecution or maintenance of such Kite-Prosecuted Patent in the Territory shall not change the Parties respective rights and obligations under this Agreement with respect to such Kite- Prosecuted Patent other than as expressly set forth in this Section DS Sole Patents. DS shall have the first right and authority to prepare, file, prosecute, and maintain DS s Sole Patents anywhere in the world, at DS s own cost and expense. DS shall provide Kite reasonable opportunity to review and comment on such efforts regarding DS s Sole Patents, including by providing Kite with a copy of material communications from any patent authority regarding DS s Sole Patents, and by providing drafts of any material filings or responses to be made to any patent authorities in advance of submitting such filings or responses. If DS determines in its sole discretion to abandon or not maintain any of DS s Sole Patents in any country, then DS shall provide Kite with written notice of such determination at least [ *** ] prior to any filing or payment due date, or any other due date that requires action, for such Sole Patent. In such event, DS shall permit Kite, at its discretion and expense, to continue prosecution or maintenance of such Sole Patent in such country, provided that Kite shall provide DS with the same rights of review and comment as set forth above for Kite. Kite s prosecution or maintenance of such Sole Patent in such country shall not change the Parties respective rights and obligations under this Agreement with respect to such Sole Patent other than as expressly set forth in this Section Cooperation in Prosecution. Each Party shall provide the other Party all reasonable assistance and cooperation in the Patent prosecution efforts provided above in this Sec tion 10.3, including providing any necessary powers of attorney and executing any other required documents or instruments for such prosecution. As used herein, prosecution of such Patents shall include, without limitation, all communication and other interaction with any patent office or patent authority having jurisdiction over a patent application throughout the world in connection with pre-grant proceedings. Post-grant proceedings shall be governed by Sections 10.5 and Confidential Information. All communications between the Parties relating to the preparation, filing, prosecution, or maintenance of the Kite Patents, DS Patents, or Joint Patents, including copies of any draft or final documents or any communications received from or sent to patent offices or patenting authorities with respect to such Patents, shall be considered Confidential Information and subject to the confidentiality provisions of ARTICLE XI Patent Term Extensions in the Territory. The JSC will discuss and recommend for which, if any, of the Patents within the Kite Patents and Collaboration Patents in the Territory the Parties should seek patent term extensions in the Territory. Kite, in the case of the Kite Patents, and DS in the case of the Collaboration Patents, shall have the final decision- making authority with respect to applying for any such patent term extension in the Territory, and will act with reasonable promptness in light of the development stage of applicable Licensed Product(s) to apply for any such patent term extension, where it so elects; provided, however, that if in the Territory only one such Patent can obtain a patent term extension, then the Parties will consult in good faith to determine which such Patent(s) should be the subject of efforts to obtain a patent term extension. The Party that does not apply for an extension hereunder will cooperate fully with the other Party in making such filings or actions, for example and without limitation, making available all required regulatory data and information and executing any required authorizations to apply for such patent term extension. All expenses incurred in connection with activities of each Party with respect to the Patent(s) for which such Party seeks patent term extensions pursuant to this Section 10.4 shall be solely borne by [ *** ].

100 10.5 Infringement of Patents by Third Parties Notification. Each Party will notify the other within [ *** ] of becoming aware of any actual or potential infringement by a Third Party of any of the Kite Patents, Collaboration Patents or DS Patents through the making, using or selling of a Licensed Product or any Competing Product in the Field in the Territory, including any declaratory judgment, opposition, or similar action alleging the invalidity, unenforceability or non-infringement of any of such Patent Rights in the Territory (collectively Product Infringement ) Enforcement For any Product Infringement of a Kite Patent, as between the Parties, Kite shall have the first right, but not the obligation, to bring an appropriate suit or other action (an Action ) to enforce such Kite Patent against such Product Infringement. Kite shall have a period of [ *** ] after the first notice unde r to elect to enforce such Kite Patent against such Product Infringement. In the event Kite does not so elect, Kite shall so notify DS in writing, and DS shall have the right to bring an Action to enforce the applicable Kite Patent against such Third Party perpetrating such Product Infringement in the Territory For any Product Infringement of a Collaboration Patent, as between the Parties, DS shall have the first right, but not the obligation, to bring an Action to enforce such Collaboration Patent against such Product Infringement. DS shall have a period of [ *** ] after the first notice unde r to elect to enforce such Collaboration Patent against such Product Infringement. In the event DS does not so elect, DS shall so notify Kite in writing, and Kite shall have the right to bring an Action to enforce the applicable Collaboration Patent against such Third Party perpetrating such Product Infringement in the Territory Cooperation. Each Party shall provide to the Party bringing any Action under Sec tion reasonable assistance in such enforcement, at such enforcing Party s request and expense, including joining such Action as a party plaintiff if required by Applicable Law to pursue such action. The enforcing Party shall keep the other Party regularly informed of the status and progress of such enforcement efforts and shall reasonably consider the other Party s comments on any such efforts. The non-enforcing Party shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense, but shall at all times cooperate fully with the enforcing Party in such enforcement Action Settlement. In connection with any enforcement Action under Sec tion , the enforcing Party shall not enter into any settlement admitting the invalidity of, or otherwise impairing the other Party s rights in, the Kite Patents or Collaboration Patents without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. Nothing in this ARTICLE X shall require a Party to consent to any settlement that is reasonably anticipated by such Party to have a materially adverse impact upon any Kite Patent or Collaboration Patent in its territory, or the Commercialization, manufacture, use, importation or exportation of the Licensed Products in its territory Expenses and Recoveries. [ *** ] shall be solely responsible for the costs and expenses incurred by the Parties in connection with any enforcement Action under Section Any recoveries resulting from an Action against Product Infringement shall be first applied pro rata against payment of each Party s costs and expenses in connection therewith. Any such recoveries in excess of such costs and expenses shall be retained by [ *** ], provided that any such recoveries retained by DS shall be deemed Net Sales subject to royalty payment to Kite under Section Other Infringement of Kite Patents and Joint Patents. For any and all infringement of Kite Patents or Joint Patents that is not a Product Infringement, as between the Parties, Kite shall have the sole and exclusive right to bring an appropriate suit or other action against any Person engaged in such other infringement of any Kite Patents or Joint Patents, in its sole discretion, and shall bear all related expenses and retain all related recoveries Infringement of Third Party Rights in the Territory Notice; Defense. If the manufacture, sale, or use of a Licensed Product in the Territory pursuant to this Agreement results in, or may result in, any claim, suit, or proceeding by a Third Party alleging patent infringement by DS (or its Affiliates or Sublicensees), DS will promptly notify Kite thereof in writing. Subject to the provisions of Sec tion , DS will have the first right, but not the obligation to defend and control the defense of any such claim, suit or proceeding at its own expense, using counsel of its own choice. Upon DS s request, Kite shall participate in any such claim, suit or proceeding with counsel of its choice at DS s expense. In addition, Kite may participate in any such claim, suit or proceeding with counsel of its choice at its own expense. If DS elects (in a written communication submitted to Kite within a reasonable amount of time after notice of the alleged patent infringement) not to defend or control the defense of, or otherwise fails to initiate and maintain the defense of, any such claim, suit or proceeding, within such time periods so that Kite is not prejudiced by any delays, Kite may conduct and control the defense of any such claim, suit or proceeding at its own expense. Each Party will keep the other Party reasonably informed of all material developments in connection with any such claim, suit, or proceeding. Each Party agrees to provide the other Party with copies of all pleadings filed in such action and to allow the other Party reasonable opportunity to participate in the defense of the claims. If DS is

101 controlling the defense of any such claim, suit or proceeding, DS agrees to provide at [ *** ] English translations, or summaries thereof, of all pleadings, discovery-requests, and key documents filed with the court reasonably promptly Possible Claims in Kite Territory. In addition to the DS obligations set out in the preceding paragraph, and regardless of whether Kite elects to participate in the defense of the claim, suit or proceeding under Sec tion , DS further agrees that, in the event such claim, suit or preceding is brought by a Third Party that is also pursuing or has threatened to pursue similar claims outside the Territory against Kite, its Affiliates, agents or marketing or development partners, DS shall: (a) provide to Kite at Kite s expense English translation drafts of all official papers or other statements (whether written or oral) prior to their submission to the court in the lawsuit, in sufficient time to allow Kite to review, consider and substantively comment thereon; (b) reasonably consider taking action to incorporate Kite comments on all such official papers and statements, (c) not take positions in its defense that are inconsistent or at odds with positions that Kite is taking in defense, or anticipated defense, of related claims outside the Territory, to the extent such positions have been communicated to DS; (d) allow Kite the opportunity to participate in preparation of witnesses or other participants in the claim, suit or proceeding; (e) not settle any such claim, suit or proceeding without Kite s prior consent, which consent shall not be unreasonably withheld or delayed, and (f) enter into a reasonable and customary joint defense agreement with Kite, upon Kite s request Patent Oppositions and Other Proceedings Challenges to Third-Party Patent Rights. If either Party desires to bring an opposition, action for declaratory judgment, nullity action, invalidation action, interference, declaration for non-infringement, reexamination, inter partes review (IPR), post grant review (PGR), or other attack upon the validity, title, or enforceability of a Patent owned or controlled by a Third Party and having one or more claims that covers the Licensed Products, or the manufacture, use, sale, offer for sale, or importation of the Licensed Products, in each case in the Territory (except insofar as such action is a counterclaim to or defense of, or accompanies a defense of, a Third Party s claim or assertion of infringement under Sec tion 10.6, in which case the provisions of Section 10.6 shall govern), such Party shall so notify the other Party and the Parties shall promptly confer to determine whether to bring such action or the manner in which to settle such action. Kite shall have the exclusive right, but not the obligation, to bring at its own expense and in its sole control such action in the Kite Territory and DS shall have the first right, but not the obligation, to bring at its own expense and in its sole control such action in the Territory. If DS does not bring such an action in the Territory, within [ *** ] of notification thereof pursuant to this Section (or earlier, if required by the nature of the proceeding), then Kite shall have the right, but not the obligation, to bring, at [ *** ] sole expense, such action. The Party not bringing an action under this Section shall be entitled to separate representation in such proceeding by counsel of its own choice and at [ *** ] expense, and shall cooperate fully with the Party bringing such action at the request and expense of [ *** ] action. Any awards or amounts received in bringing any such action shall be allocated between the Parties as provided in Section Parties Patent Rights. If a Kite Patent or Collaboration Patent becomes the subject of any proceeding commenced by a Third Party within the Territory in connection with an opposition, reexamination request, action for declaratory judgment, nullity action, invalidation action, interference, or other attack upon the validity, title, or enforceability thereof (except insofar as such action is a counterclaim to or defense of, or accompanies a defense of, an action for infringement against a Third Party under Section 10.5, in which case the provisions of Section 10.5 shall govern), then the Party responsible for filing, preparing, prosecuting, and maintaining such Patent as set forth in Section 10.3 shall have the right to control such defense at [ *** ]. The controlling Party shall permit the non-controlling Party to participate in the proceeding to the extent permissible under Applicable Law, and to be represented by its own counsel in such proceeding, at [ *** ] expense. If either Party decides that it does not wish to defend against such action, then, to the extent the other Party has a backup prosecution right under Section 10.3, such other Party shall have a backup right to assume defense of such Third-Party action at [ *** ]. Any awards or amounts received in defending any such Third-Party action shall be allocated between the Parties as provided in Section Patent Licensed To or From Third Parties. DS s rights under this ARTICLE X with respect to the prosecution, maintenance, defense and enforcement of any Kite Patents that is licensed by Kite from a Third Party shall be subject to the rights of such Third Party to prosecute, maintain and enforce such Patents. ARTICLE XI CONFIDENTIALITY 11.1 Nondisclosure. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, during the Term and [ *** ] thereafter, the receiving Party shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as expressly provided for in this Agreement any Confidential Information of the other Party, and both Parties shall keep confidential and, subject to Sections 11.2, 11.3, and 11.4, shall not publish or otherwise disclose the terms of this Agreement. Notwithstanding the foregoing, a receiving Party s obligation of confidentiality and restriction on use with respect to the disclosing Party s Confidential Information identified as trade secrets, or typically held in the pharmaceutical industry as trade secrets such as applicable CMC Know- How and promotional and marketing information, shall continue perpetually for so long as none of the exceptions set forth in Section 1.18 (a), (b), (c), or (d) applies to such Confidential Information. Each Party may use the other Party s Confidential Information solely to the extent required to accomplish the purposes of this Agreement, including exercising such Party s rights or performing its obligations under this Agreement. Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own (but no less than

102 reasonable care) to ensure that its employees, agents, consultants, contractors, and other representatives do not disclose or make any unauthorized use of the Confidential Information of the other Party. Each Party will promptly notify the other Party upon discovery of any unauthorized use or disclosure of the Confidential Information of the other Party Authorized Disclosure. The receiving Party may disclose Confidential Information belonging to the disclosing Party only to the extent such disclosure is reasonably necessary in the following instances: filing or prosecuting Patents as permitted by this Agreement; filing Regulatory Filings in order to obtain or maintain Regulatory Approvals; prosecuting or defending litigation, including responding to a subpoena in a Third Party litigation; complying with Applicable Laws or regulations (including regulations promulgated by securities exchanges) or court or administrative orders; to its Affiliates, actual or prospective licensees, sublicensees, subcontractors, consultants, agents, and advisors on a need-to-know basis in order for the receiving Party to exercise its rights or fulfill its obligations under this Agreement, each of whom prior to disclosure must be bound by obligations of confidentiality and restrictions on use of such Confidential Information that are no less restrictive than those set forth in this ARTICLE XI ; provided, however, that, in each of the above situations, the receiving Party shall remain responsible for any failure by any Third Party who receives Confidential Information pursuant to this Section 11.2 to treat such Confidential Information as required under this ARTICLE XI ; or to bona fide potential and actual investors, acquirors, merger partners, licensees, and other financial or commercial partners solely for the purpose of evaluating or carrying out an actual or potential investment, acquisition, or collaboration, in each case under written obligations of confidentiality and non-use at least as stringent as those herein Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party s Confidential Information pursuant to Sections through , it will, except where impracticable, give at least [ *** ] advance notice to the other Party of such disclosure, reasonably consider the comments of the other Party with respect to limiting such disclosure, and use efforts to secure confidential treatment of such Confidential Information at least as diligent as such Party would use to protect its own confidential information, but in no event less than reasonable efforts. In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information hereunder. Any information disclosed pursuant to Sections through shall remain the Confidential Information of the disclosing Party and subject to the restrictions set forth in this Agreement, including the foregoing provisions of this ARTICLE XI Publications Prior to public disclosure or submission for publication of a proposed publication describing the results of any Development activities for the Licensed Product conducted under this Agreement, DS shall provide Kite with a copy of the proposed publication and shall allow Kite a reasonable time period (but no less than [ *** ] from the date of confirmed receipt) in which to determine whether the proposed publication contains subject matter for which patent protection should be sought (prior to publication of such proposed publication) for the purpose of protecting an invention, or whether the proposed publication contains the Confidential Information of Kite. Following the expiration of the applicable time period for review, DS shall be free to submit such proposed publication for publication or otherwise disclose to the public such scientific or clinical results, subject to the procedures set forth in Secti on If Kite believes that the subject matter of the proposed publication or other disclosure contains Confidential Information of Kite or a patentable Invention, then prior to the expiration of the applicable time period for review, Kite shall notify DS in writing. Upon receipt of such written notice from Kite, DS shall remove Kite s Confidential Information from such proposed publication or disclosure, and shall delay public disclosure of such information or submission of the proposed publication for an additional period of [ *** ] (or such other time period mutually agreed by the Parties in writing) to permit preparation and filing of a patent application on the disclosed subject matter Prior to public disclosure of a publication describing the results of any Development activities for any Licensed Product conducted outside of the Territory, Kite shall provide DS with a copy of the proposed publication Publicity The Parties agree that the both Party will issue a public announcement on the same day after the execution of this Agreement, however the contents of the announcement to be issued by each Party may be different and may be written in English and/or Japanese. Each Party will review the contents of such announcement of the other Party before the other Party issues the announcement, and will have the right to determine to approve it or not, which approval shall not be unreasonably withheld or delayed.

103 After release of such initial press release, if either Party desires to make a public announcement concerning the material terms of this Agreement, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and approval (except as otherwise provided herein), such approval not to be unreasonably withheld or delayed. A Party commenting on such a proposed press release shall provide its comments, if any, within [ *** ] after receiving the press release for review. Where required by Applicable Law or by the regulations of the applicable securities exchange upon which a Party may be listed, such Party shall have the right to make a press release announcing the achievement of each milestone under this Agreement as it is achieved, and the achievements of Regulatory Approvals in the Territory as they occur, subject only to the review procedure set forth in the preceding sentence. In relation to DS s review of such an announcement, DS may make specific, reasonable comments on such proposed press release within the prescribed time for commentary, but shall not withhold its consent to disclosure of the information that the relevant milestone has been achieved and triggered a payment hereunder. Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement that has already been publicly disclosed by such Party, or by the other Party, in accordance with this Section , provided such information continues as of such time to be accurate The Parties acknowledge that Kite may be obligated to file a copy of this Agreement with the U.S. Securities and Exchange Commission (the SEC ) or other applicable entity having regulatory authority over Kite securities or the exchange thereof, as a material agreement of Kite. Kite shall be entitled to make such a required filing, provided that it requests confidential treatment of certain commercial terms and sensitive technical terms hereof to the extent such confidential treatment is reasonably available to Kite, and to the extent consistent with the legal requirements governing redaction of information from material agreements that must be publicly filed. In the event of any such filing, Kite will provide DS with a copy of the Agreement marked to show provisions for which Kite intends to seek confidential treatment and shall reasonably consider and incorporate DS s comments thereon to the extent consistent with the legal requirements governing redaction of information from material agreements that must be publicly filed. DS will as promptly as practical provide any such comments. DS recognizes that U.S. laws and SEC policies and regulations to which Kite is and may become subject to may require Kite to publicly disclose certain terms of this Agreement that DS may prefer not be disclosed, and that Kite is in all cases entitled hereunder to make such required disclosures to the extent necessary to comply with such U.S. laws and SEC policies and regulations. ARTICLE XII REPRESENTATIONS, WARRANTIES, & COVENANTS Date: 12.1 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party that as of the Effective Corporate Existence and Power. It is a company or corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including, without limitation, the right to grant the licenses granted by it hereunder Authority and Binding Agreement. As of the Effective Date, (a) it has the corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder; (b) it has taken all necessary corporate action on its part required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder; and (c) this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms No Conflict; Covenant. It is not a party to any agreement that would materially prevent it from granting the rights granted to the other Party under this Agreement or performing its obligations under this Agreement. During the Term of this Agreement, each Party covenants that it will not enter into any contractually binding agreement which would in any way materially impair its ability to complete its obligations under this Agreement in a timely fashion No Debarment. In the course of the Development of Licensed Products, neither Party shall use, during the term of this Agreement, any employee or consultant who has been debarred by any Regulatory Authority, or, to the best of such Party s Knowledge, is the subject of debarment proceedings by a Regulatory Authority DS s Representations and Warranties. DS hereby represents and warrants to Kite that as of the Effective Date DS has no Knowledge of any pending filing, complaint, matter, or action against or involving either DS or its Affiliates with any Regulatory Authority that could be reasonably anticipated to have a material adverse effect on its ability to obtain Regulatory Approvals for the Licensed Products in the Territory Kite s Representations and Warranties. Kite hereby represents and warrants to DS as of the Effective Date: Kite Patents. Kite owns, or has an exclusive license to, the Kite Patents listed on Sche dule 1.51 is a complete list of all patents and patent applications Controlled by Kite as of the Effective Date which claim the Licensed Products, or the manufacture or use thereof in the Territory.

104 Title; Encumbrances. Kite has sufficient legal and/or beneficial title, ownership or license, free and clear from any Third Party mortgages, pledges, liens, security interests, conditional and installment sale agreements, encumbrances, charges or claims of any kind, of the Kite Technology to grant the licenses to DS as purported to be granted pursuant to this Agreement No Conflict. Kite has not granted any assignment, license, covenant not to sue, or other similar interest or benefit, exclusive or otherwise, to any Third Party relating to any patent, know-how, or other proprietary right that conflicts with or limits the rights granted to DS hereunder or which falls within the scope of the licenses granted in ARTICLE II Non-Infringement of Third Party s Patents. To Kite s Knowledge, the Development, manufacture, and Commercialization of the Licensed Products and IND Products can be carried out in the Territory in the manner reasonably contemplated as of the Effective Date without infringing any issued Patents of any Third Party Non-Infringement of Kite Technology by Third Parties. To Kite s Knowledge, Kite is not aware of any activities by Third Parties that constitute infringement or misappropriation of the Kite Technology within the Territory No Claims of Third Party Rights. Kite has not received any written notice, claim, or demand from any Person asserting that the development, manufacture, use or sale of the Licensed Products and IND Products infringes a patent of a Third Party in the Territory No Action or Claim. To Kite s Knowledge, there are no actual, pending, or threatened in writing, adverse actions, suits, claims, interferences, or formal governmental investigations involving the IND Products, or Kite Technology by or against Kite, any of its Affiliates, licensees, or contractors in or before any court, governmental entity or Regulatory Authority No Adverse Patent Proceedings. To Kite s Knowledge, none of the Kite Patents are subject to any pending reexamination, opposition, interference or litigation proceedings as of the Effective Date Compliance. To Kite s Knowledge, Kite, its Affiliates, licensees and contractors have performed in all material respects development work, including manufacturing, supply, packaging, and distribution of clinical supplies, in compliance with all Applicable Laws (including GMP and the Anti-Corruption Laws); and there is no actual, pending, or threatened in writing, adverse action of any Regulatory Authority, with respect to the IND Products, or Kite Technology Regulatory Materials. To Kite s Knowledge, no Regulatory Authority has commenced or threatened in writing to initiate any action or proceeding to refuse to file, reject, not approve, or withdraw any Regulatory Filings related to the IND Products, nor has Kite received any notice to such effect Third Party Agreements. Schedule 1.44 contains a complete list of all Third Party agreements under which rights to any Kite Technology are granted, licensed or otherwise provided to Kite or its Affiliates as of the Effective Date. All In- License Agreements existing as of the Effective Date are in full force and effect and no material breach has occurred thereunder (and Kite and its Affiliates have not received any notice of any such breach thereunder) as of the Effective Date Third Party Agreements. All of Kite's employees have executed agreements requiring assignment to Kite of all inventions made during the course of and as a result of their association with Kite obligating each such employee to maintain as confidential the Confidential Information of Kite for reasonable periods of time, in each case material to the Development, manufacture or Commercialization of Licensed Products for the Field in the Territory Disbarred Employees. Neither Kite and none of their employees or officers, who have rendered or will render services relating to the Licensed Products: (i) has ever been debarred or is subject or debarment or convicted of a crime for which an entity or person could be debarred under 21 U.S.C. Section 335a or its foreign equivalent or (ii) has ever been under indictment for a crime for which a person or entity could be debarred under any such provision Protection of Know-How. Kite has entered into agreements with its employees, agents and Third Party manufacturers sufficient to maintain the confidentiality of the Know-How owned or controlled by Kite for a reasonable period of time consistent with customs in the pharmaceutical industry DS Covenants DS will comply in all material respects with all Applicable Laws related to its Development, manufacture and Commercialization of the Licensed Products. Without limiting the generality of the foregoing, DS will not promote any of the Licensed Products in a manner that would conflict with Applicable Laws DS will conduct all Medical Affairs Activities in a manner consistent with Licensed Product labeling, including all package inserts for a Licensed Product, except to the extent otherwise required by Applicable Laws, and will conduct all Medical Affairs Activities in accordance with Applicable Laws DS will, and will ensure that its Affiliates and Sublicensees will, Commercialize the Licensed Products solely within the

105 Territory for use in the Field pursuant to the authority, rights, and licenses granted to DS under this Agreement. DS agrees and acknowledges that it has not been granted any rights other than within the scope of express license granted to Licensed Products under this Agreement, and consequently DS agrees that during the Term it will not, and will ensure that its Affiliates and Sublicensees will not, (i) directly or indirectly Commercialize any Licensed Product outside of the Territory or within the Territory for re-sale outside of the Territory, or (ii) provide any Licensed Product to any Person if it knows or reasonably believes that such Person, either directly or indirectly, has sold, is selling, or intends to sell such Licensed Product outside the Territory Kite Covenants Kite will not, during the Term, (a) amend any provision of an In- License Agreement that would adversely impact DS s rights under this Agreement, or (b) assign (except an assignment to a party to which this Agreement has been assigned as permitted under Section 16.4 or to any Affiliate), in whole or in part, any of the In-License Agreements in any manner that would adversely impact DS s rights under this Agreement, in each case, without the prior written consent of DS (not to be unreasonably withheld, conditioned or delayed) Disclaimer EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY MAKES NO AND EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PRODUCTS, KITE TECHNOLOGY, DS TECHNOLOGY OR ANY OTHER SUBJECT MATTER OF THIS AGREEMENT, WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR NON- MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION OR WARRANTY BY KITE THAT THE KITE TECHNOLOGY IS NOT INFRINGED BY ANY THIRD PARTY OR THAT THE PRACTICE OF THE KITE TECHNOLOGY WILL NOT INFRINGE ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY. FURTHER, DS ACKNOWLEDGES THAT THE PRODUCTS ARE SUBJECT TO ONGOING RESEARCH AND DEVELOPMENT AND KITE MAKES NO REPRESENTATION OR WARRANTY THAT THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED AND COMMERCIALIZED. ARTICLE XIII INDEMNIFICATION AND INSURANCE 13.1 Indemnification by Kite. Kite shall defend, indemnify, and hold DS and its Affiliates, and DS s and its Affiliates officers, directors, employees, and agents (the DS Indemnitees ) harmless from and against any and all Third Party claims, suits, proceedings, damages, expenses (including court costs and reasonable attorneys fees and expenses), and recoveries (collectively, Claims ) to the extent that such Claims arise out of, are based on, or result from (a) the Development, manufacture, storage, handling, use, promotion, sale, offer for sale, and importation of the Licensed Products by Kite or its Affiliates, contract manufacturers, distributors, or licensees (other than DS Group, as defined below); (b) a breach of any of Kite s representations, warranties, and obligations under this Agreement; or (c) the willful misconduct or negligent acts of Kite, its Affiliates, or the officers, directors, employees, or agents of Kite or its Affiliates in connection with their performance under this Agreement; or (d) any claim of infringement due to Kite s failure to notify DS, as a Necessary IP, of a Patent which would be infringed by the Development, manufacture, or Commercialization of a Licensed Product in the Field in the Territory in the absence of a license under such Patent, in accordance with Section The foregoing indemnity obligation shall not apply to the extent that the DS Indemnitees fail to comply with the indemnification procedures set forth in Section 13.3 and Kite s defense of the relevant Claims is prejudiced by such failure, or to the extent that any Claim arises from, is based on, or results from (i) the Development, manufacture, storage, handling, use, promotion, sale, offer for sale, and importation of the Licensed Products by DS Group; (ii) a breach of any of DS s representations, warranties, and obligations under this Agreement; (iii) the willful misconduct or negligent acts of DS or its Affiliates, or the officers, directors, employees, or agents of DS or its Affiliates; or (iv) any claim of infringement due to DS s failure to obtain a license to any Necessary IP in accordance with Section Indemnification by DS. DS shall defend, indemnify, and hold Kite, its Affiliates and Kite s and its Affiliates officers, directors, employees, and agents (the Kite Indemnitees ) harmless from and against any and all Claims to the extent that such Claims arise out of, are based on, or result from (a) the Development, manufacture, storage, handling, use, promotion, sale, offer for sale, and importation of the Licensed Products by DS or its Affiliates, or its or their Sublicensees, contractors, or distributors (the DS Group ); (b) a breach of any of DS s representations, warranties, and obligations under this Agreement; (c) the willful misconduct or negligent acts of DS or its Affiliates, or the officers, directors, employees, or agents of DS or its Affiliates in connection with their performance under this Agreement or (d) any claim of infringement due to DS s failure to obtain a license to any Necessary IP in accordance with Section The foregoing indemnity obligation shall not apply to the extent that the Kite Indemnitees fail to comply with the indemnification procedures set forth in Section 13.3 and DS s defense of the relevant Claims is prejudiced by such failure, or to the extent that any Claim arises from, is based on, or results from (i) the Development, manufacture, storage, handling, use, promotion, sale, offer for sale, and importation of the Licensed Products by Kite or its Affiliates, contract manufacturers, distributors, or licensees (other than DS Group); (ii) a breach of any of Kite s representations, warranties, and

106 obligations under this Agreement; or (iii) the willful misconduct or negligent acts of Kite, its Affiliates, or the officers, directors, employees, or agents of Kite or its Affiliates; or (d) any claim of infringement due to Kite s failure to notify DS, as a Necessary IP, of a Patent which would be infringed by the Development, manufacture, or Commercialization of a Licensed Product in the Field in the Territory in the absence of a license under such Patent, in accordance with Section Indemnification Procedures. The Party claiming indemnity under this ARTICLE XIII (the Indemnified Party ) shall give written notice to the Party from whom indemnity is being sought (the Indemnifying Party ) promptly after learning of such Claim. The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party s expense, in connection with the defense of the claim for which indemnity is being sought. The Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its sole expense; provided, however, that the Indemnifying Party shall have the right to assume and conduct the defense of the claim with counsel of its choice. The Indemnifying Party shall not settle any claim without the prior written consent of the Indemnified Party, not to be unreasonably withheld, conditioned, or delayed, unless the settlement involves only the payment of money, and no admission of wrong-doing or fault by the Indemnified Party. So long as the Indemnifying Party is actively defending the claim in good faith, the Indemnified Party shall not settle any such claim without the prior written consent of the Indemnifying Party. If the Indemnifying Party does not assume and conduct the defense of the Claim as provided above, (a) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to the Claim in any manner the Indemnified Party may deem reasonably appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), and (b) the Indemnifying Party will remain responsible to indemnify the Indemnified Party as provided in this ARTICLE XIII Mitigation of Loss. Each Indemnified Party shall take and shall procure that its indemnitees take all such reasonable steps and action as are reasonably necessary or as the Indemnifying Party may reasonably require in order to mitigate any Claims (or potential losses or damages) unde r this ARTICLE XIII. Nothing in this Agreement shall or shall be deemed to relieve any Party of any common law or other duty to mitigate any losses incurred by it Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 13.4 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 13.1 OR 13.2, OR DAMAGES AVAILABLE FOR A PARTY S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE XI Insurance. Each Party shall procure and maintain insurance, including product liability insurance, adequate to cover its obligations hereunder and which are consistent with normal business practices of prudent companies [ *** ] at all times during which any Product is being clinically tested in human subjects or commercially distributed or sold by such Party. It is understood that such insurance shall not be construed to create a limit of either Party s liability with respect to its indemnification obligations under this ARTICLE XIII. Each Party shall provide the other Party with written evidence of such insurance upon request. Each Party shall provide the other Party with written notice at least [ *** ] prior to the cancellation, non-renewal, or material change in such insurance or self-insurance which materially adversely affects the rights of the other Party hereunder. ARTICLE XIV TERM AND TERMINATION 14.1 Term. This Agreement shall commence on the Effective Date and, unless terminated earlier as provided in this ARTICLE XIV or by mutual written agreement of the Parties, shall continue, on a Licensed Product-by-Licensed Product basis, until DS permanently ceases at its sole discretion all Development, manufacture and Commercialization of such Licensed Product in the Territory (the Term ) Early Termination Termination for Breach. If either Party believes that the other Party is in breach of its material obligations hereunder, then such Party may deliver notice of such breach to the other Party. For all breaches other than a breach of payment obligations under this Agreement, the allegedly breaching Party shall have [ *** ] from the receipt of the notice to cure or dispute such breach. For any breach of payment obligations under this Agreement, the allegedly breaching Party shall have [ *** ] from the receipt of the notice to cure or dispute such breach. If the alleged breaching Party fails to cure or dispute the breach within the applicable period set forth above, then the Party originally delivering the notice of breach may terminate this Agreement on written notice of termination. If the allegedly breaching Party in good faith disputes such breach or disputes the failure to cure such breach and provides written notice of that dispute to the other Party within the above time periods, the matter will be addressed under the dispute resolution provisions in Sec tion 15.3, and the notifying Party may not terminate this Agreement until it has been determined under Section 15.3 that the allegedly breaching Party is in material breach of this Agreement, and such breaching Party further fails to cure such breach within [ *** ] after the conclusion of the dispute resolution procedure (and such termination shall then be effective upon written notification from the notifying Party to the breaching Party).

107 Termination for Bankruptcy. Each Party shall have the right to terminate this Agreement immediately in its entirety upon written notice to the other Party if such other Party makes a general assignment for the benefit of creditors, files an insolvency petition in bankruptcy, petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets, commences under the laws of any jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization, adjustment of debt, dissolution, liquidation or any other similar proceeding for the release of financially distressed debtors or becomes a party to any proceeding or action of the type described above and such proceeding is not dismissed within [ *** ] after the commencement thereof Termination for Patent Challenge. Except to the extent the following is unenforceable under the laws of a particular jurisdiction, Kite may terminate this Agreement immediately upon written notice to DS if DS or its Affiliates or Sublicensees, individually or in association with any other Person, commences a legal action challenging the validity, enforceability or scope of any Kite Patent Termination Related to New Kite Technology. DS may terminate this Agreement with respect to a particular Licensed Product on [ *** ] prior written notice to Kite pursuant to its option set forth in Sections (c) and (b) Effect of Expiration or Termination. Upon the expiration or termination of this Agreement for any reason, on a Licensed Product by Licensed Product basis, the following shall apply (if this Agreement is terminated only for a particular Licensed Product, then the following shall apply only to the terminated Licensed Product): License to DS Except as set forth in Section , all licenses and other rights granted by Kite to DS hereunder shall terminate, and all sublicenses granted by DS thereunder shall also terminate Notwithstanding Section , the license granted by Kite to DS pursuant to Section 2.8 shall survive (i) expiration of this Agreement, and (ii) termination of this Agreement, unless Kite has terminated this Agreement pursuant to Section , or Notwithstanding the foregoing, such surviving license shall immediately terminate (a) if DS, its Affiliates or their sublicensees practice any of Kite s Disclosed Know-How outside of the scope of such license, or (b) if DS or its Affiliates or sublicensees, individually or in association with any other Person, commences a legal action challenging the validity, enforceability or scope of any Kite Patent License to Kite Except as set forth in Sections and , all licenses and other rights granted by DS to Kite hereunder shall terminate, and all sublicenses granted by Kite thereunder shall also terminate Notwithstanding Section , the license granted by DS to Kite pursuant to Section 2.8 shall survive (a) expiration of this Agreement, and (b) termination of this Agreement, unless DS has terminated this Agreement pursuant to Sections or Notwithstanding the foregoing, such license shall immediately terminate if Kite, its Affiliates or their sublicensees practice any of DS s Disclosed Know-How outside of the scope of such license Notwithstanding Section , unless DS has terminated this Agreement pursuant to Sections or , DS hereby grants to Kite, effective only in event of such expiration or termination, an non-exclusive, perpetual, irrevocable, royalty-free and sublicenseable (through multiple tiers) license under the DS s interest in the Collaboration Technology and Collaboration Data to Develop, make, have made, use, sell, offer for sale, have sold, import, and otherwise Commercialize the Licensed Products world-wide. Notwithstanding the foregoing, the license by DS to Kite provided in this Section will not survive if the termination is due to the breach of this Agreement by Kite, its Affiliate or partners Regulatory Materials; Data. Within [ *** ] of the effective date of such termination, DS shall transfer and assign to Kite, at no cost to Kite, all Regulatory Filings and Regulatory Approvals of the Licensed Products in the Territory, and all data from preclinical, non-clinical and clinical studies conducted by or on behalf of DS, its Affiliates or Sublicensees on the Licensed Products and all pharmacovigilance data (including all adverse event database) on the Licensed Products. At Kite s request, DS shall provide Kite with reasonable assistance in connection with any inquiries and correspondence with Regulatory Authorities in the Territory for a period of [ *** ] after such termination Transition Assistance. If Kite notifies DS that Kite will assume Development and Commercialization of the Licensed Product in the Territory after the Termination, then DS shall reasonably cooperate with Kite to facilitate the orderly transition of the Development and Commercialization of the Licensed Products to Kite. Such assistance shall be [ *** ], unless DS has terminated this Agreement for Kite s material breach, except as expressly set forth otherwise. Without limiting the foregoing: DS shall promptly provide Kite with a copy of each license agreement, collaboration agreement, manufacturing agreement and/or vendor agreement then in effect between DS (or its Affiliates) and a Third Party with respect to the Development, manufacture and/or Commercialization of the Licensed Products in the Territory, and, upon Kite s request, DS shall assign or sublicense, and shall ensure that its Affiliates assign or sublicense, to Kite (a) any such agreement that solely relates to the Licensed Products, and (b) for any agreement that does not solely relates to the Licensed Products and to the extent permitted under the terms of such agreement, the

108 portion of such agreement (e.g., a work order) that relates solely to the Licensed Products. Upon Kite s request, DS shall provide reasonable assistance to Kite in connection with any such agreement that is not assignable to Kite, such as introducing Kite to such Third Party and cooperating with Kite with respect to the negotiation of a new agreement with such Third Party DS shall provide Kite with reasonable technical assistance and transfer (including when available, in electronic format) all DS Know-How used in the Development, manufacture and/or Commercialization of the Licensed Products as of termination, in each case to the extent not already in Kite s possession and necessary or useful for Kite to commence or continue the Development, manufacture and/or Commercialization of the Licensed Products in the Territory If at the time of such termination, DS is conducting any clinical trials for the Licensed Products in the Territory, then DS shall, [ *** ] Coordination of Public Disclosure. In the event of termination of this Agreement for any reason and subject to the provisions of Section 11.4, the Parties shall cooperate in good faith to coordinate public disclosure of such termination and the reasons therefor, and shall not, except to the extent required by Applicable Law, disclose such information without the prior approval of the other Party. The principles to be observed in such disclosures shall be accuracy, compliance with Applicable Law and regulatory guidance documents, and reasonable sensitivity to potential negative reactions to such news Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by a Party to the other Party are, and will otherwise be deemed to be, for purposes of Section 365(n) of the US Bankruptcy Code and any similar laws in other countries (the Code ), licenses of rights to intellectual property as defined under Section 101 of the Code. The Parties agree that each Party, as licensee of such rights under this Agreement, will retain and may fully exercise all of its protections, rights and elections under the Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party, the other Party will be entitled to a complete duplicate of (or complete access to, as such other Party deems appropriate) any such intellectual property and all embodiments of such intellectual property, and the same, if not already in its possession, will be promptly delivered to it: (a) upon any such commencement of a bankruptcy proceeding upon its written request therefor, unless the bankrupting Party elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under (a) above, upon written request therefor by the other Party following the rejection of this Agreement by or on behalf of the bankrupting Party Survival. Expiration or termination of this Agreement shall not affect any rights or obligations of either Party that have accrued prior to such expiration or termination. Without limiting the foregoing, the following provisions shall survive any expiration or termination of this Agreement: Articles I, XIII, XV and XVI, and Sections (1 st sentence only, to the extent that any In-License Agreement has obligations that survive the termination of DS s sublicense thereunder), 2.8, 4.4 (to the extent required by Applicable Laws), 4.6, 5.3, 5.5 (to the extent required by Applicable Laws), 5.7 (to the extent required by Applicable Laws), 5.8 (to the extent required by Applicable Laws), 6.7 (last sentence only), 9.1 (with respect to sales of Licensed Products occurring prior to termination), 9.2, 9.3, 9.4, 9.5, 10.1, 11.1, 11.2, 11.3, 12.6, 14.3, 14.4 and ARTICLE XV DISPUTE RESOLUTION 15.1 Disputes. The Parties recognize that disputes as to certain matters may from time to time arise during the Term which relate to either Party s rights and/or obligations hereunder. It is the Parties objective to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this ARTICLE XV to resolve any controversy or claim arising out of, relating to, or in connection with any provision of this Agreement if and when a dispute arises under this Agreement Arising Between the Parties. With respect to all disputes arising between the Parties, including, without limitation, any alleged failure to perform, or breach, of this Agreement, or any issue relating to the interpretation or application of this Agreement, if the Parties are unable to resolve such dispute within [ *** ] after such dispute is first identified by either Party in writing to the other Party, the Parties shall refer such dispute to the Executive Officers for attempted resolution by good faith negotiations during the subsequent [ *** ] period Binding Arbitration. If the Executive Officers are not able to resolve such dispute referred to them under Section 15.2 within such [ *** ] period, such dispute shall be resolved through binding arbitration, which arbitration may be initiated by either Party at any time after the conclusion of such period, on the following basis: The place of arbitration shall be Los Angeles, California, USA The arbitration shall be made in accordance with the current Rules of Arbitration of International Chamber of Commerce (ICC) Judgment upon the award rendered by such arbitrator shall be binding on the Parties and may be entered by any court or

109 forum having jurisdiction Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Further, either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of such Party pending the arbitration award The arbitrators shall have no authority to award punitive or any other type of damages not measured by a Party s compensatory damages Each Party shall bear its own costs and expenses and attorneys fees and an equal share of the arbitrators and any administrative fees of arbitration Except to the extent necessary to confirm an award or as may be required by Applicable Laws, neither Party nor any arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy, or claim would be barred by the applicable statute of limitations Patent and Trademark Dispute Resolution. Any dispute, controversy, or claim relating to the scope, validity, enforceability, or infringement of any patent rights covering the manufacture, use, or sale of any Licensed Product or of any trademark rights relating to any Licensed Product shall be submitted to a court of competent jurisdiction in the country or jurisdiction in which such patent or trademark rights were granted or arose Injunctive Relief. Nothing herein may prevent either Party from seeking preliminary injunction or temporary restraint order in any court of competent jurisdiction in order to prevent any Confidential Information from being disclosed without appropriate authorization under this Agreement. ARTICLE XVI OTHER PROVISIONS 16.1 Governing Law. This Agreement and all disputes arising out of or related to this Agreement or any breach hereof shall be governed by, and construed and enforced in accordance with, the laws of the State of California, United States, without reference to its conflicts of law principles Performance Through Affiliates. Each Party may discharge any obligation and exercise any right hereunder through any of its Affiliates (without an assignment of this Agreement), provided that such Party shall remain directly responsible for the performance of its Affiliates Force Majeure. Both Parties will be excused from the performance of their obligations under this Agreement, and neither Party will be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement, to the extent that such performance is prevented by force majeure and the nonperforming Party promptly provides notice thereof to the other Party. Such excuse will be continued so long as the condition constituting a force majeure event continues and the nonperforming Party uses reasonable efforts to remove the condition. For purposes of this Agreement, a force majeure event will include conditions beyond the reasonable control and without the fault of a Party, such as an act of God, voluntary or involuntary compliance with any regulation, law, or order of any government, war, an act of terrorism, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm, or like catastrophe, inability to procure necessary raw materials in a commercially reasonable manner or default of suppliers or sub-contractors. Notwithstanding the foregoing, if the payment of invoices due and owing hereunder is delayed by the payor because of a force majeure affecting the payor for more than [ *** ], then the payee may terminate this Agreement upon [ *** ] prior written notice Assignment. Neither this Agreement nor any obligation of a Party hereunder may be assigned by either Party without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement in its entirety without such consent to (a) any of its Affiliates, or (b) any purchaser of all, or substantially all, of its assets to which this Agreement relates, or (c) any successor corporation resulting from any merger, consolidation, share exchange, or other similar transaction provided that any such successor corporation shall assume all obligations of its assignor under this Agreement; and provided further that either Party may assign or sell its rights to receive any amounts due hereunder. This Agreement will inure to the benefit of DS and Kite and their respective successors and permitted assigns. Any assignment of this Agreement that is not made in accordance with this Section 16.4 shall be null and void and of no legal force or effect Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby. The Parties will in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal, and enforceable provision(s) that implement the purposes of this Agreement Notices. Any notice to be given under this Agreement must be in writing and delivered either in person, or by (i) air mail

110 (postage prepaid) requiring return receipt, (ii) overnight courier, or (iii) confirmed thereafter by any of the foregoing, to the Party to be notified at its address(es) given below, or at any address such Party may designate by prior written notice to the other Party in accordance with this Section Notice shall be deemed sufficiently given for all purposes upon the earliest of: (a) the date of actual receipt; (b) if air mailed, [ *** ] after the date of postmark; (c) if delivered by overnight courier, the next

111 day the overnight courier regularly makes deliveries or (d) if sent by , the date of confirmation of receipt if during the recipient s normal business hours, otherwise the next Business Day. If to Kite, notices must be addressed to: Kite Pharma EU B.V. Science Park XH Amsterdam Attention: VP, Operations mvelders@kitepharma.com Kite Pharma, Inc Colorado Avenue Santa Monica, CA USA Attention: Corporate Counsel Tel: legal@kitepharma.com With a copy to (which shall not constitute notice): Cooley LLP 3175 Hanover Street Palo Alto, CA Attention: Barbara A. Kosacz Tel: bkosacz@cooley.com If to DS, notices must be addressed to: Daiichi Sankyo Company, Limited 3-5-1, Nihonbashi Honcho Chuo-ku, Tokyo Japan Attention: VP, Business Development and Licensing Tel: Fax: Entire Agreement; Amendments. This Agreement, including the schedules, and the other Transaction Agreements and the Guarantee contains the entire understanding of the Parties (and ParentCo) with respect to the subject matter herein. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written, or otherwise, concerning any and all matters contained herein. For clarity, the Confidentiality Agreement will terminate as of the Effective Date. Except as expressly set forth herein, this Agreement may be amended or modified only by a written instrument duly executed by both Parties Relationship of the Parties. It is expressly agreed that Kite and DS are independent contractors and that the relationship between the two Parties will not constitute a partnership, joint venture, or agency. Neither Kite nor DS will have the authority to make any statements, representations, or commitments of any kind, or to take any action, which will be binding on the other Party, without the prior written consent of the other Party. Nothing contained in this Agreement shall be deemed to make any member of the JSC, JOC or any subcommittee (or any other committees or working groups) a partner, agent, or legal representative of the other Party, or to create any fiduciary relationship for any purpose whatsoever. Except as may be explicitly provided this Agreement, no member of the JSC, JOC any subcommittee (or any other committee or working group) will have any authority to act for, or to assume any obligation or responsibility on behalf of, any member of the other Party Waiver. The waiver by either Party of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise. Any waiver by a Party of a particular term or condition will be effective only if set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition Third Party Beneficiaries. Except as otherwise expressly provided in this Agreement, nothing herein expressed or implied is intended or will be construed to confer upon or to give to any Third Party any rights or remedies by reason of this Agreement. Except as otherwise expressly provided in this Agreement, there are no intended Third Party beneficiaries under or by reason of this Agreement Further Assurances. Upon the other Party s request, each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all such other acts, as may be reasonably agreed by the Parties as necessary or appropriate to carry out the purposes and

112 intent of this Agreement Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered electronically or by facsimile and upon such delivery such electronic or facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other Party Interpretation. The headings of clauses contained in this Agreement preceding the text of the sections, subsections and paragraphs hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction. All references in this Agreement to the singular shall include the plural where applicable. Unless otherwise specified, references in this Agreement to any Article shall include all Sections, subsections, and paragraphs in such Article, references to any Section shall include all subsections and paragraphs in such Section, and references in this Agreement to any subsection shall include all paragraphs in such subsection. The word including and similar words means including without limitation. The word or means and/or unless the context dictates otherwise because the subject of the conjunction are mutually exclusive. The words herein, hereof, and hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. All references to days in this Agreement mean calendar days, unless otherwise specified. Ambiguities and uncertainties in this Agreement, if any, shall not be interpreted against either Party, irrespective of which Party may be deemed to have caused the ambiguity or uncertainty to exist. This Agreement has been prepared in the English language and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral, or other communications between the Parties regarding this Agreement shall be in the English language. {Signature Page Follows} IN WITNESS WHEREOF, the Patties have executed this Collaboration and License Agreement to be effective as of the Effective Date. KITE PHARMA EU B.V. DAIICHI SANKYO COMPANY, LIMITED By: /s/ Markwin P. Velders By: Name: Markwin P. Velders Name: Joji Nakayama Title: Managing Director Title: Representative Director President and CEO IN WITNESS WHEREOF, the Patties have executed this Collaboration and License Agreement to be effective as of the Effective Date. KITE PHARMA EU B.V. DAIICHI SANKYO COMPANY, LIMITED By: By: /s/ Joji Nakayama Name: Name: Joji Nakayama Title: Title: Representative Director President and CEO List of Schedules Schedule 1.44 List of Existing In-License Agreements

113 Schedule 1.46 Schedule 1.51 Schedule 1.57 Schedule 1.72 List of Existing IND Products List of Existing Kite Patents Description of KTE-C19 List of Products Schedule 1.44 List of Existing In-License Agreements Patent License Agreement (L /0) Exclusive between Kite Pharma, Inc. and The U.S. Department of Health and Human Services, as represented by National Cancer Institute dated September 15, 2016 (the NIH Agreement ). As required by Paragraph 4.2 of the NIH Agreement, Paragraphs , 8.1, 10.1, 10.2, 12.5, and of the NIH Agreement, to the extent applicable, shall be binding upon DS as if DS were a party to the NIH Agreement. These Paragraphs are set forth as Appendix 1 to this Schedule. Capitalized terms used in this Schedule and Appendix 1 and not otherwise defined shall have the meaning ascribed in the NIH Agreement. Pursuant to Paragraph 4.3 of the NIH Agreement, upon termination of the NIH Agreement under Article 13 thereof, DS s sublicense under the NIH Agreement shall terminate or convert to a license directly between DS and the IC, at the option of DS. This conversion is subject to IC approval and contingent upon acceptance by DS of the remaining provisions of the NIH Agreement. Appendix 1 To Schedule 1.44 Required Paragraphs From NIH Agreement 5.1 The IC reserves: (a) on behalf of the Government an irrevocable, nonexclusive, nontransferable, royalty free license for the practice of all inventions licensed under the Licensed Patent Rights throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the Government is a signatory. Prior to the First Commercial Sale, the Licensee agrees to provide the IC with reasonable quantities of Licensed Products or materials or procedures associated with the Licensed Products or materials made through the Licensed Processes for the IC research use. Given the nature of the envisioned Licensed Products as personalized autologous cell therapy products, if any Licensed Products or materials made through the Licensed Processes are not available in reasonable quantities for IC research use, they shall not be subject to the foregoing obligation; and (b) in the event that the Licensed Patent Rights are Subject Inventions made under a Cooperative Research and Development Agreement ( CRADA ), the Licensee grants to the Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive, nontransferable, irrevocable, paid up license to practice Licensed Patent Rights or have Licensed Patent Rights practiced throughout the world by or on behalf of the Government. In the exercise of this license, the Government shall not publicly disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. 552(b)(4) or which would be considered as such if it had been obtained from a non Federal party. Prior to the First Commercial Sale, the Licensee agrees to provide the IC reasonable quantities of Licensed Products or materials made through the Licensed Processes for the IC research use. Given the nature of the envisioned Licensed Products as personalized autologous cell therapy products, if any Licensed Products or materials made through the Licensed Processes are not available in reasonable quantities for IC research use, they shall not be subject to the foregoing obligation. 5.2 The Licensee agrees that products used or sold in the United States embodying the Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from the IC. 5.3 The Licensee acknowledges that the IC may enter into future CRADAs under the Federal Technology Transfer Act of 1986 that relate to the subject matter of this Agreement. The Licensee agrees not to unreasonably deny requests for a Research License from future collaborators with the IC when acquiring these rights is necessary in order to make a CRADA project feasible. The Licensee may request an opportunity to join as a party to the proposed CRADA. 5.4 (a) In addition to the reserved license of Paragraph 5.1, the IC reserves the right to grant Research Licenses directly or to require the Licensee to grant Research Licenses on reasonable terms. In the exercise of this reserved right, the IC shall not publicly disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. 552(b)(4) or which would be considered as such if it had been obtained from a non Federal party. The purpose of these Research Licenses is to encourage basic research, whether conducted at an academic or corporate facility. In order to safeguard the Licensed Patent Rights, however, before granting to commercial entities a Research License or providing to them research samples of materials made through the

114 Licensed Processes, (i) the IC shall give to the Licensee advance written notice to which the IC proposes to grant a Research License, (ii) the IC shall provide the Licensee reasonable opportunity to raise objections thereto and comment thereon, to be provided within [ *** ], and (iii) the IC shall consult with the Licensee to consider in good faith the objections and comments of the Licensee before granting to commercial entities a Research License or providing to them research samples of materials made through the Licensed Processes; and (b) In exceptional circumstances, and in the event that Licensed Patent Rights are Subject Inventions made under a CRADA, the Government, pursuant to 15 U.S.C. 3710a(b)(1)(B), retains the right to require the Licensee to grant to a responsible applicant a nonexclusive, partially exclusive, or exclusive sublicense to use the Licensed Patent Rights in the Licensed Field of Use on terms that are reasonable under the circumstances, or if the Licensee fails to grant this license, the Government retains the right to grant the license itself. The exercise of these rights by the Government shall only be in exceptional circumstances and only if the Government determines: (i) the action is necessary to meet health or safety needs that are not reasonably satisfied by the Licensee; (ii) the action is necessary to meet requirements for public use specified by Federal regulations, and these requirements are not reasonably satisfied by or on behalf of the Licensee; or (iii) the Licensee has failed to comply with an agreement containing provisions described in 15 U.S.C. 3710a(c)(4)(B); and (c) The determination made by the Government under this Paragraph 5.4 is subject to administrative appeal and judicial review under 35 U.S.C. 203(b).; and (d) The IC acknowledges and agrees that a Research License or other right granted pursuant to this Paragraph 5.3 shall only pertain to the Licensed Patent Rights and shall not include a right or license to any patent or other intellectual property right solely owned or solely controlled by the Licensee or its Affiliates other than the Licensed Patent Rights. Without limiting the foregoing, except as expressly provided herein, nothing contained in this Agreement shall be construed as granting, by implication, estoppel or otherwise, any licenses or rights under any patents or other intellectual property rights other than the Licensed Patent Rights The Licensee shall use its reasonable commercial efforts to bring Licensed Products and the Licensed Processes to Practical Application. Reasonable commercial efforts for the purposes of this provision shall include adherence to the Commercial Development Plan in Appendix E and performance of the Benchmarks in Appendix D. The efforts of a sublicensee shall be considered the efforts of the Licensee Upon the First Commercial Sale, until the expiration or termination of this Agreement, the Licensee shall use its reasonable commercial efforts to make Licensed Products and Licensed Processes reasonably accessible to the United States public The Licensee shall indemnify and hold the IC, its employees, students, fellows, agents, and consultants harmless from and against all liability, demands, damages, expenses, and losses, including but not limited to death, personal injury, illness, or property damage to the extent arising out of any suit or proceeding brought by a third party for: (a) the use by or on behalf of the Licensee, its sublicensees, Affiliates, or their respective directors, employees, or third parties (on behalf of the Licensee, its sublicensees or Affiliates) of any Licensed Patent Rights; or (b) the design, manufacture, distribution, or use of any Licensed Products, Licensed Processes or other materials, products or processes developed by or on behalf of the Licensee, its sublicensees or Affiliates in connection with or arising out of the Licensed Patent Rights The IC reserves the right according to 35 U.S.C. 209(d)(3) to terminate or modify this Agreement upon written notice to the Licensee if it is determined that this action is necessary to meet the requirements for public use specified by federal regulations issued after the date of the license and these requirements are not reasonably satisfied by the Licensee within ninety (90) days following written notice from the IC Within thirty (30) days after receipt of written notice of the IC s unilateral decision to modify or terminate this Agreement, the Licensee may, consistent with the provisions of 37 C.F.R , appeal the decision by written submission to the designated IC official or designee. The decision of the designated IC official or designee shall be the final agency decision. The Licensee may thereafter exercise any and all administrative or judicial remedies that may be available Within ninety (90) days after expiration or termination of this Agreement under this Article 13, a final report shall be submitted by the Licensee. Any royalty payments, including those incurred but not yet paid (such as the full minimum annual royalty), and those related to patent expense, due to the IC shall become immediately due and payable upon termination or expiration. If terminated under this Article 13, sublicensees may elect to convert their sublicenses to direct licenses with the IC pursuant to Paragraph 4.3. Unless otherwise specifically provided for under this Agreement, upon termination of this Agreement, the Licensee shall have the right to offer for sale and sell any existing inventory of Licensed Products for [ *** ] following the effective termination date of this Agreement, subject to the royalty obligations as set forth in Appendix C. After this [ *** ] period, the Licensee shall return all remaining Licensed Products or other materials included within the Licensed Patent Rights to the IC or provide the IC with certification of the destruction thereof. The Licensee may not be granted additional IC licenses if the final reporting requirement is not fulfilled. Schedule 1.46 List of Existing IND Products

115 [ *** ] Schedule 1.51 List of Existing Kite Patents STATUS IDENTIFIER SERIAL NO. SUBJECT MATTER Published KN /935,833 Kite Manufacturing Closed System Published KN /614,400 PCT/US2015/ Published Published Published Published Published Published KN SKGF KN SKGF KN SKGF KN SKGF KN KN Kite Manufacturing Closed System 62/167,750 Pre-conditioning Regimen (Cytoxan + Fludarabine) 62/262,143 Pre-conditioning Regimen (Cytoxan + Fludarabine) 15/167,977 PCT/US2016/ Pre-conditioning Regimen (Cytoxan + Fludarabine) 62/167,738 Biomarkers for Preconditioning Treatment 62/262,111 Biomarkers for Preconditioning Treatment PCT/US2016/ Biomarkers for Preconditioning Treatment [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] Schedule 1.57 Description of KTE-C19

116 EXECUTION VERSION CONFIDENTIAL Schedule 1.72 List of Products Chimeric Antigen Receptor [ *** ] Cell Receptor [ *** ] Schedule 1.72 Page 1 *** Confidential Treatment Request

117 Exhibit 10.2 ***Text Omitted and Filed Separately Execution Copy with the Securities and Exchange Commission. Confidential Treatment Requested Under 17 C.F.R. Section 20080(b)(4) and Rule 406 of the Securities Act of 1933, as amended. Execution Version Sino-foreign Co-operative Joint Venture Contract by and between KP EU C.V. and Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. regarding establishment of Fosun Pharma Kite Biotechnology Co., Ltd. Table of Contents Preamble Article 1 Parties to this Contract 3 Article 2 Definitions and Interpretations 4 Article 3 Establishment, Name and Address of the Company 10 Article 4 Legal Form and Independence of the Company 11 Article 5 Goals of the Cooperation 12 Article 6 Scope of Operation 12 Article 7 Total Investment and Registered Capital 12 Article 8 Co-operative Conditions 14 Article 9 Assignment of Equity Interest 15 Article 10 Limitation on Encumbrances on Equity Interest 16 Article 11 Increase of Registered Capital 17 Article 12 Reduction of Registered Capital 18 Article 13 Further Financing 18 Article 14 Responsibilities of the Parties 19 Article 15 Board of Directors 22 Article 16 Board Meetings 26 Article 17 Supervisor 29 Article 18 Management Personnel 30 Article 19 Premises 32 Article 20 Know-how and Trademarks 33 Article 21 Procurement 34

118 Article 22 Labor Management and Trade Union 34 Article 23 Financial Affairs, Accounting and Shareholder Auditing 36 Article 24 Profit Distribution 39 Article 25 Taxation and Insurance 39 Article 26 Confidentiality, Non-competition and Non-solicitation 40 Article 27 Term 44 Article 28 Representations and Warranties 45 Article 29 Termination and Consequences of Termination 50 Article 30 Liquidation and Continuing Obligations 52 Article 31 Breach of Contract 54 Article 32 Force Majeure 54 Article 33 Dispute Settlement 55 Article 34 Applicable Law 56 Article 35 Miscellaneous Provisions 56 Appendix 1 Product and Know-how License Agreement Appendix 2 Technology License Agreement Appendix 3 Key Terms of Technical Service Agreement Appendix 4 Preliminary Business Plan Appendix 5 Articles of Association Appendix 6 Trademark and Name License Agreement Schedule 1 Kite Products Schedule 2 Description of KTE-C19 This Sino-foreign Co-operative Joint Venture Contract is executed on January 10, 2017 ( Effective Date ) by and between KP EU C.V. ( Kite ) and Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. ( Fosun ) (Kite and Fosun may be individually referred to as Party or collectively referred to as Parties.) Preamble Whereas Kite is a clinical-stage biotechnology company engaged, through its Affiliates, in the research, development and commercialization of novel cellular and other immunotherapies, including for the treatment of cancer. Whereas Fosun is a leading pharmaceutical and healthcare company in PRC. Whereas both Parties wish to join forces in the Chinese cancer immunotherapy market by setting up a co-operative joint venture in China. Now, after friendly negotiations held between the Parties conducted in accordance with the principle of equality and mutual benefit, and pursuant to applicable published laws and regulations of the PRC, the Parties hereby agree as follows: Article 1 Parties to this Contract 1.1 Parties to this Contract The Parties to this Contract are:

119 (a) KP EU C.V., a limited partnership that is governed by the laws of the Netherlands, having its registered seat at Amsterdam, the Netherlands and its business address at 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands, registered with the Dutch trade register under number (b) Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., a joint stock company duly organized and existing under the laws of the PRC, with its registered address at Room 350, No.25 Kangshi Road, Shanghai, PRC and registered with the Shanghai Administration for Industry & Commerce under No Legal Representative: Wu Yifang. 1.2 Change of Legal Representative Each Party shall have the right to change its legal representative(s) without requirement to amend this Contract, and shall promptly notify the other Party of such change and the name, position and nationality of its/their new legal representative(s). Article 2 Definitions and Interpretations 2.1 Definitions Unless the terms or context of this Contract provide otherwise, for the purpose of this Contract the following terms shall have the meanings as set out below: Affiliate shall, for the purpose of this Contract, mean, as to a Party, any entity directly or indirectly controlling, controlled by or under common control with such Party, where control means (a) beneficial ownership of greater than fifty percent (50%) of the voting equity interests in such entity or (b) the possession, directly or indirectly, of the power to independently direct or cause the direction of the management and policies of an entity, whether through the ownership of a voting equity interest, by contract or otherwise. Annual Business Plan means the official business plan, including financial projections, covering a [ *** ] of the Company formulated and approved annually according to Article 6.2. Articles of Association shall mean the Company s articles of association attached as Appendix 5 and signed by Kite and Fosun which shall become effective on the Establishment Date. Board or Board of Directors means the Board of Directors of the Company set up according to Article 15. Business Day means a day that is not a Saturday, a Sunday, a statutory holiday in China, or a day on which banking institutions are required by law to be closed in China. Business License means the initial business license of the Company to be issued by the Registration Authority fully reflecting the relevant terms of this Contract and the Articles of Association. Chinese Market means, for the sole purpose of this Contract, the mainland of PRC, the Hong Kong Special Administration Region and the Macau Special Administration Region, but excluding Taiwan. Chop Management Protocols shall mean the internal regulations which stipulate the rules on affixing various corporate stamps on legal documents, including but not limited to the rules regarding company chop, financial chop, legal representative chop and contract chop. Clinical Trial means clinical research, studies and experiments on human participants in the Chinese Market for the purpose of examining the safety and efficacy of investigational pharmaceutical products, and as a precondition for a license application in the Chinese

120 Market. Company means the Sino-foreign co-operative joint venture company to be established in Shanghai by the Parties as shareholders pursuant to this Contract and the Articles of Association. Competitor means any enterprise, entity or natural person, regardless of legal structure, which is not a Party nor an Affiliate of a Party and which either (1) is engaged in the business of T cell immunotherapy research, development, manufacturing, distribution or commercialization, or (2) controls an enterprise or entity coming within the same scope of business above. The term control means (a) beneficial ownership of greater than fifty percent (50%) of the voting equity interests in such entity or (b) the possession, directly or indirectly, of the power to independently direct or cause the direction of the management and policies of an entity, whether through the ownership of a voting equity interest, by contract or otherwise. Confidential Information means formulas, manufacturing know-how, technical process, technical specifications, release specifications, batch records, computer software, database, research and development record, technical reports, examining reports, experimental data, drawings, patterns, samples, prototypes, models, molds, operation manual, technical documentations, related correspondence in relation to KTE-C19 and any other cancer immunotherapy therapy or treatment, which is (i) licensed or otherwise provided for use by Kite to the Company, (ii) disclosed or provided by Kite to Fosun or its Affiliates in the process of negotiating this Contract, setting up and operating the Company, or (iii) developed by the Company during Clinical Trial, license application and any commercialization process of the KTE-C19 or any other cancer immunotherapy treatment. Confidential Information shall in particular include but not limited to any information or method provided by Kite to the Company under the Product and Know-how License Agreement and the Technology License Agreement attached as Appendix 1 and 2 of this Contract. Contract means this Sino-foreign Co-operative Joint Venture Contract signed by the Parties which shall become effective on the Effective Date. Date of Termination has the meaning provided in Article Employment Handbook has the meaning specified in Article 22.1 and includes any amendments thereof. Encumbrance means any lease, loan, mortgage, pledge, right of use or any other form of security interest, including any conditional sale or other title retention agreement or arrangement, or any attachment or any other encumbrance on property, other than any such encumbrance that does not materially affect the use or value of such property. Establishment Date means the date of establishment of the Company as shown on the Business License. Force Majeure means any unforeseen, unavoidable and insurmountable events which are beyond the control of a Party to this Contract, and which arise after the Effective Date preventing total or partial performance by any Party. Such events shall include in particular earthquakes, typhoons, flood, fire, other acts of nature, war, riots, hostility, public disturbance, acts of public enemies, prohibitions or acts of any Governmental Authority or public agency, strikes or other work stoppage, epidemics (including SARS, bird flu, N7H9) or any other events which are accepted as force majeure in general international commercial practice. For clarity, acts by Medical Authorities relating to the Company s product candidates shall not be considered a Force Majeure event. Fosun Sale means the sale of all or substantially all of Fosun s assets, equity or business or a merger, reorganization or consolidation involving at least fifty percent (50%) or more of the voting equity securities of Fosun. Governmental Approval means any consent, approval, authorization, waiver, permit, grant, franchise, concession, contract, license, certificate, exemption, order, registration, declaration, filing, report or notice of, with, by or to any Governmental Authority. Governmental Authority means any governmental ministry, administration, agency or other public authority (and/or any branch of the foregoing), whether at the national, provincial, municipal or local level, or any official of the national or any provincial, municipal or local government in the respective country, including without limitation the Registration Authority. Intellectual Property Rights (IPR) means any and all rights in any invention, discovery, improvement, utility model, copyrightable work, industrial design or mask work, algorithm, data structure, trade secrets or know-how, Confidential Information, or any idea having commercial value. IPR shall include any trade mark, trade dress, trade name, domain name, or other marks that serve to identify and distinguish goods or services as coming from, or falling under the control of, a single source. IPR shall include all rights of whatsoever nature in computer software and data, all intangible rights or privileges of a nature similar to any of the foregoing in every case in any part of the world and whether or not registered, and all rights in any applications and granted registrations for any of the foregoing rights. Kite Product means the product candidates listed on Schedule 1 hereto.

121 Kite Sale means the sale of all or substantially all of Kite Pharma, Inc. s ( Kite Parent ) assets, equity or business or a merger, reorganization or consolidation involving at least fifty percent (50%) or more of the voting equity securities of Kite Parent. KTE-C19 means chimeric antigen receptor ( CAR ), transduced autologous T cells directed against the CD19 antigen for the treatment of B-cell lymphomas and leukemias, as described on Schedule 2. Legal Representative means, for a company registered in PRC the person registered as legal representative on the business license of a company, who is authorized under PRC law to legally represent the company. Liability or Liabilities means damages, claims, losses, charges, actions, suits, proceedings, deficiencies, taxes, interest, penalties, fines, settlement, judgments and costs and expenses (including without limitation, attorney fees and expenses, removal costs, remediation costs, government response costs, fines, penalties and expenses of investigation and ongoing monitoring), whether direct or indirect, present or future, known or unknown, or fixed or contingent. Management By-Laws mean the management by-laws of the Company regarding powers, responsibilities and duties of the Management Personnel including any amendments thereof. Management Personnel mean the CEO, Head of Finance and Chief Technical Officer and any other important management position agreed by both Parties to be part of the Management Personnel. Medical Authority means the National Health and Family Planning Commission of the PRC, the China Food and Drug Administration ( CFDA ) or any competent authority (including any of their competent branches) which have the power to approve the Clinical Trial or commercialization of KTE-C19 or any other cancer immunotherapy products licensed by or developed by the Company for the Chinese Market. Passive Investment means the acquisition or ownership by a Party or its Affiliate of (a) up to [ *** ] percent of the common stock or other voting stock of a Public-traded Company (including any preferred stock, notes, bonds, interests, rights, derivatives or other instruments acquired or owned and convertible into or exchangeable or exercisable for any such common stock or other voting stock or otherwise granting control of such company), or (b) up to [ *** ] percent of the common stock or other voting stock of a company that is not publicly-traded (including any preferred stock, notes, bonds, interests, rights, derivatives or other instruments acquired or owned and convertible into or exchangeable or exercisable for any such common stock or other voting stock or otherwise granting control of such company), in each case so long as such Party does not have any management role or Board seat with such company. Public-traded company means a company listed on the main board of any of the following stock exchanges: (i) Shanghai Stock Exchange; (ii) Shenzhen Stock Exchange; (iii) Taiwan Stock Exchange; (iv) Korea Stock Exchange; (v) Singapore Exchange; (vi) Tokyo Stock Exchange; (vii) Hong Kong Exchanges; (viii) London Stock Exchange; (ix) Euronext; (x) New York Stock Exchange; (xi) NASDAQ, or any other international major stock exchanges or any succeeding exchange to any such exchanges. PRC means the mainland of People s Republic of China, excluding, for the sole purpose of this Contract, the Hong Kong Special Administration Region, the Macao Special Administration Region, and the Taiwan Area. Preliminary Business Plan means, in accordance with Appendix 4, the high level business plan for the initial [ *** ] after the Establishment Date, developed by the Parties to guide the development of the first Annual Business Plan. Proxy means a representative appointed by a Party or by a Board member and as further detailed in this Contract. Registration Authority means the Shanghai Administration for Industry and Commerce or any competent authority which has the power to register the Contract and the Articles of Association, and issue the Business License. Related Agreements means: Appendix 1 Product and Know-how License Agreement, Appendix 2 Technology License Agreement,

122 Technical Service Agreement, Appendix 6 Trademark and Name License Agreement or any other related party agreements concluded between the Company and a Party or any of such Party s Affiliates. Related Party means any entity that a Party or its Affiliates have a beneficial ownership interest of greater than [ *** ] percent ([ *** ]%) of the voting equity of such entity. RMB means Renminbi, the lawful currency of the PRC. Target means an antigen expressed on or in a tumor cell. Term means the business term of the Company as set forth in Article 27.1, approved by the Registration Authority and shown on the Business License, including any extension of such term pursuant to Article Three Funds means the Company s reserve fund, expansion fund and employee welfare and bonus fund as provided in the PRC laws. USA means the United States of America. USD means United States dollar, the lawful currency of USA. Verification Run means the manufacturing and processing of KTE-C19 that meets the required specifications pursuant to investigational new drug application (IND) filing requirements of the U.S. Food and Drug Administration. Working Personnel means all employees and staff of the Company, other than the Management Personnel. 2.2 Interpretation: (a) (b) Articles and headings are inserted for the purpose of convenience and reference only and shall not affect the interpretation or construction of this Contract. In this Contract, except where the context requires otherwise: (i) (ii) (iii) (iv) words indicating one gender include all genders; words indicating the singular also include the plural and words indicating the plural also include the singular; provisions including the word agree, agreed or agreement require the agreement to be recorded in writing, and written or in writing means hand-written, type-written, printed or electronically made, and resulting in a permanent record. Article 3 Establishment, Name and Address of the Company 3.1 Establishment of the Company The Parties hereby agree to establish the Company in accordance with the Company Law of PRC, other relevant laws and regulations, the provisions of this Contract and the Articles of Association. 3.2 Name of the Company (a) The name of the Company shall be: In Chinese:

123 In English: Fosun Pharma Kite Biotechnology Co., Ltd. (b) (c) The Parties acknowledge that the aforesaid Chinese name is subject to approval by and registration with Registration Authority and agree that in the event that the aforesaid Chinese name is rejected by Registration Authority, the Parties will enter into amendment to the Contract and the Articles of Association with respect to the Chinese name only. After expiry or termination of this Contract, neither a Party nor any Affiliates of a Party shall be permitted to the subsequent use of such name without the prior written consent of both Parties. 3.3 Legal Address of the Company The legal address of the Company shall be at No.222 Kangnan Road, Shanghai , PRC. 3.4 Branches, Liaison Offices and Subsidiary Companies In accordance with its business needs, the Company may establish branches, liaison offices and subsidiary companies, provided that the establishment of subsidiary companies and branch companies shall be approved by the Board. Article 4 Legal Form and Independence of the Company 4.1 The Company is a limited liability company. Except as explicitly otherwise provided in this Contract or in any other written contract, a Party shall only be liable to render its subscribed contribution to the Company s registered capital and the committed co-operative conditions, and shall not be liable to make any additional payment. Unless otherwise stipulated in the Contract or in any other written contract, once a Party has paid in its subscribed registered capital and the committed co-operative conditions, it shall not be required to provide any further funds to or on behalf of the Company by way of capital contribution, loan, advance, guarantee or otherwise. 4.2 The Company is a legal person under the laws of the PRC. The activities of the Company shall be governed and protected by the promulgated and publicly available laws, decrees and relevant rules and regulations of the PRC. 4.3 The Parties shall cause the Company to act in its own name and in no case as an agent of either Party, unless otherwise explicitly provided for in writing. 4.4 The Parties shall cause the Company to indemnify each Party against and hold it harmless from any and all Liabilities suffered by that Party or its board members, officers, employees or agents in respect of any third party claims arising out of the operation of the Company; provided that the Liability does not result from intentional misconduct, gross negligence or a violation of criminal laws by the Party (or its board members, officers, employees or agents), which shall be otherwise indemnified. The Company shall be independent from the Parties and shall not be burdened by or charged with or responsible for any Liability of a Party. Neither Party shall impose any obligation or Liability on the Company in the name of the Company or bind the Company otherwise towards third parties, unless explicitly otherwise provided in a written agreement between the Company and that Party as approved by the Board pursuant to the terms of this Contract. Article 5 Goals of the Cooperation

124 The goals of the Parties in entering into this Contract and establishing the Company are to enhance international economic cooperation, and to contribute to the advancement of KTE-C19 and potentially additional cancer immunotherapy products in the PRC. The Parties agree to use advanced and appropriate methods for developing and commercializing KTE-C19 and potentially additional cancer immunotherapy products with the aim of increasing the long-term economic benefits for each Party, and to establish local clinical and commercial manufacturing capacity within the Chinese Market. Article 6 Scope of Operation 6.1 The business scope of the Company shall be technical development, technical transfer, technical consulting and technical services in the areas of bio technology and medical technology; biopharmaceutical manufacturing; import & export, wholesale and commission agency (excluding auction) of chemical products (excluding hazardous chemicals, monitored chemicals, fireworks, civil explosives and precursor chemicals), instrument and meters, mechanical equipment and medical devices; investment consulting and management. 6.2 The Annual Business Plan of the Company shall be formulated by the Management Personnel and approved by the Board of Directors in view of actual market conditions, any sales volumes, the employees capacities, financial condition and any other factors considered important by the Board. The approved Annual Business Plan may be adjusted by the unanimous consent of the Board from time to time in the light of market and other relevant conditions. Article 7 Total Investment and Registered Capital 7.1 Total amount of investment The total amount of investment of the Company shall be USD one hundred million (100,000,000). 7.2 Registered capital The registered capital of the Company shall be USD forty million (40,000,000). 7.3 Equity ratio (a) Kite s subscribed contribution to the registered capital of the Company is USD twenty million (20,000,000), representing a fifty percent (50%) equity interest in the Company. (b) Fosun s subscribed contribution to the registered capital of the Company is USD twenty million (20,000,000), representing a fifty percent (50%) equity interest in the Company. 7.4 Payment of registered capital (a) Subject to a valuation report on its market value, Kite shall contribute the registered

125 capital in kind by the exclusive commercial rights as set forth in the Product and Know-how License Agreement. Kite shall complete the capital contribution in kind by signing the Product and Know-how License Agreement as attached to this Contract as Appendix 1 within twenty (20) Business Days upon the Establishment Date. [ *** ]. (b) Fosun shall contribute the registered capital in cash in RMB. Fosun shall complete the capital contribution within [ *** ] upon the Establishment Date. Conversion between USD and RMB shall be made at the [ *** ]. (c) After each Party s contribution to the registered capital of the Company has been made, the Company shall issue an investment certificate to each Party. Failure by the Company to issue any such investment certificate as described above shall not affect the rights or interests of either Party with respect to any equity interest in the Company. (d) Within [ *** ] after the Parties have made their contribution to the registered capital of the Company, the Company shall hire a qualified certified public accountant to issue a capital verification report regarding the capital contributions from both Parties. 7.5 Delay or failure to contribute (a) The Parties shall pay their contribution to the registered capital as set out herein in accordance with the agreed schedule in Article 7.4. In the event that any Party fails to make its capital contribution, in whole or in part, in due time as agreed between the Parties pursuant to Article 7.4, such Party shall be liable to pay interest to the Company for such amount at a rate of [ *** ] percent ([ *** ]%) per [ *** ] during the delay period. (b) If a contribution is not made by a Party (the Breaching Party ) within [ *** ] after the Breaching Party s receipt of a written demand by the non-breaching Party that payment or contribution be made pursuant to Article 7.4, the non-breaching Party shall have the right to terminate this Contract and claim damages from the breaching Party in the amount of USD [ *** ]. 7.6 Profit distribution ratio The Parties agree that, considering the equity ratio and the committed co-operative conditions by the Parties to the Company and subject to properly resolved Board resolutions, Kite shall be entitled to forty percent (40%) and Fosun shall be entitled to sixty percent (60%) of the distributable profits of the Company. For the avoidance of doubt, each Party shall cause its Directors appointed to the Board to approve such profit distribution from time to time according to this Article 7.6. Article 8 Co-operative Conditions 8.1 Fosun shall pay to the Company as capital reserve, [ *** ] upon the Establishment Date, the co-operative condition of USD forty million

126 (40,000,000) in cash, which shall be used to pay to Kite the Entrance Fee (as defined in the Technology License Agreement as attached to this Contract as Appendix 2 ). [ *** ] so that Kite receives USD forty million (40,000,000) in cash [ *** ]. For clarity, such payment by Fosun [ *** ]. 8.2 Each Party shall make its appointed Board members to approve in signing with Kite the Technology License Agreement in line with Appendix If the Company has met its obligations under the Technical Services Agreement, but does not achieve [ *** ] successful Verification Runs within [ *** ] from the initiation of the first Verification Run and investigations show that the primary cause of the Verification Run failures was due to the protocols, procedures and instructions which were provided by Kite as outlined in Section 5 of Appendix 3, the period for achieving three consecutive successful Verification Runs would be extended by an additional [ *** ] period and Kite shall pay to the Company as capital reserve, USD [ *** ], which shall be used as additional working capital. If the Company does not achieve [ *** ] successful Verification Runs after a [ *** ] period from the initiation of the first Verification Run and such failure was due to Kite s gross negligence or willful misconduct, then Fosun shall have the right to terminate this Agreement pursuant to Article 29.4(a) as if Kite materially breached this Agreement and, upon termination, Kite shall pay Fosun liquidated damages of USD [ *** ]. Article 9 Assignment of Equity Interest 9.1 A Party may sell, transfer or otherwise dispose of all or any part of its equity interest in the registered capital of the Company to any third party only with the prior written consent of the other Party, except that (i) Kite shall have the sole discretion for transfer of any or all of its equity interest in the Company to any of its Affiliates or in connection with a Kite Sale without any obligation mentioned hereof, and Fosun shall promptly cooperate with Kite to effect such assignment in a timely manner; and (ii) Fosun shall have the sole discretion for transfer of any or all of its equity interest in the Company to any of its Affiliates or in connection with a Fosun Sale without any obligation mentioned hereof, and Kite shall promptly cooperate with Fosun to effect such assignment in a timely manner. The Company shall file the equity change with the Registration Authority within [ *** ] upon effectiveness of the equity transfer. Notwithstanding the foregoing, the Party shall only transfer equity to an Affiliate which has the ability to duly perform the obligations under this Contract in all material respects. 9.2 If a Party (the Assigning Party ) proposes to transfer all or any part of its equity interest ( Offered Equity Interests ) in the Company to a third party ( Third Party Transferee ) and has obtained consent of the other Party pursuant to Article 9.1, the other Party shall have the pre-emptive right to purchase the interest under the same commercial conditions offered to the third party. The Assigning Party shall notify in writing the terms and conditions of the proposed transfer to the other Party ( Transfer Notice ). If the other Party does not exercise its preemptive right of purchase within [ *** ] after delivery of the notice, the other Party shall be deemed to have waived its pre-emptive rights. 9.3 Under the situation in above 9.2, however, the other Party shall be entitled to sell its equity interest in the Company on a pro rata basis ( Tag Along Equity Interests ) to the same buyer at the same commercial conditions offered by the Assigning Party. If the Third Party Transferee does not so acquire both the relevant Offered Equity Interests and the Tag Along Equity Interests on such terms within the time frame set forth in this Article 9.3 hereof, the Assigning Party shall not be permitted to transfer any of its equity shares to the Third Party Transferee as provided herein. If the other Party does not exercise its tag along right as stated in this Article 9.3 within [ *** ] after receipt of the Transfer Notice, the Assigning Party shall be free from selling the Offered Equity Interests to such Third Party Transferee.

127 9.4 If a Party desires to sell all or part of its equity interest in the Company to the other Party, and the other Party desires to purchase that equity interest of registered capital, the Parties shall request an independent appraiser to conduct a valuation of the Company. The valuation determined by the independent appraiser shall be used as a reference in determining the equity purchase price for the purposes of this provision. Article 10 Limitation on Encumbrances on Equity Interest Unless the other Party has agreed otherwise in writing in advance, neither Party shall grant any Encumbrance on its equity interest in the Company, nor shall either Party allow any Encumbrance to exist. Article 11 Increase of Registered Capital 11.1 Principle (a) (b) (c) Any increase in the registered capital of the Company shall be subject to both (i) a related written agreement between the Parties, and (ii) a subsequent Board resolution. Any so agreed and approved increase of the Company s registered capital shall be submitted to all relevant Governmental Authorities for respective filing and/or registration, if and to the extent required by law. In principal, any such increase in the Company s registered capital shall be subscribed by the Parties at the following proportion, forty percent (40%) for Kite and sixty percent (60%) for Fosun, unless otherwise agreed by the Parties. Any such increase in the Company s registered capital, whether or not subscribed by the Parties in accordance with the proportion as set out in the above (b), shall not change the Board structure as set forth in Article 15, except for otherwise agreed by the Parties Obligation in capital increase If Kite or Fosun considers it necessary for the development and business operations of the Company, it may request a capital increase under Article 11.1 in writing to the other Party (which request shall contain details as to the amount of increase of both the total amount of investment as well as the registered capital of the Company). For clarity, the Parties must mutually agree to any additional capital increase by either Party Company documentation In case of any increase of the Company s registered capital as provided for herein, the Parties undertake to modify this Contract and the Articles of Association accordingly. The Company shall also, to the extent as required by PRC laws, file and/or register the capital increase and the so modified Contract and the Articles of Association with all relevant Governmental Authorities Delay or failure to contribute the increased capital In the event an increase of the Company s registered capital has been agreed as set out herein and approved by the Governmental Authorities, the Parties shall pay their additional contributions to the registered capital which they may have subscribed in accordance with the related contribution schedule. In the event that a

128 Party fails to make its capital contribution, in whole or in part, in due time as agreed between the Parties, such Party shall be liable with interest and liabilities as such pursuant to Article 7.5, provided that any claim for damages shall not exceed the amount of the additional capital contribution. Article 12 Reduction of Registered Capital Upon agreement of the Parties and a subsequent resolution of the Board, the Company may reduce its registered capital in accordance with PRC law. The same rules in Article 11.1 on the percentage of equity interest and Board structure shall apply to a capital reduction. Article 13 Further Financing 13.1 Subject to an Annual Business Plan approved by the Board, the Company shall spend up to USD [ *** ], or the RMB equivalent to cover the Company expenditures in [ *** ] commencing from the Establishment Date If additional funding is needed according to the respective Annual Business Plan approved by the Board, each Party shall use its reasonable efforts to support the Company for obtaining such additional funding. For clarity, neither Party shall be obligated to provide additional funding other than as provided for in Article 13.4 and Unless otherwise provided under this Contract or approved by the Board of Directors, the Company shall not raise any loans or similar instruments from Fosun or another entity, or grant loans or credit to any other entity or individual, provided that such approval shall not be required for raising any loans or similar instruments as stipulated in the Preliminary Business Plan or the Annual Business Plan then in effect If during the first [ *** ] after Establishment Date, the Company has less than USD [ *** ] of working capital, Fosun or one of its Affiliates shall provide the Company a shareholder loan to the Company in an amount up to USD [ *** ] or RMB equivalent. The interest rate shall be between [ *** ]. Such shareholder loan shall only be repaid after [ *** ]. For clarity, working capital shall mean the Company s total current assets less total current liabilities If the Company has insufficient working capital to pay for the first milestone payment of USD [ *** ] under the Technology License Agreement, Fosun or one of its Affiliates shall provide the Company a separate shareholder loan to the Company in amount up to USD [ *** ] or RMB equivalent. The interest rate shall be between [ *** ]. Such shareholder loan shall only be repaid after [ *** ]. Article 14 Responsibilities of the Parties 14.1 Responsibilities of both Parties

129 In addition to its other obligations under this Contract, each Party shall have the following responsibilities: (a) (b) (c) (d) assist the other Party and the Company with its reasonable best efforts in applying for and obtaining in due time all relevant Governmental Approvals from the competent Governmental Authorities required for the due performance of this Contract, including all Governmental Approvals / formalities required for the establishment of the Company; as of the Establishment Date, to assist the Company in applying for all Governmental Approvals, in particular the legally required approval / filing with the Medical Authorities for Clinical Trial and commercial approval of KTE-C19 and any other cancer immunotherapy licensed by or developed by the Company; assist the Company in recruiting various types of qualified Working Personnel and Management Personnel; assist the Company in developing the Preliminary Business Plan; (e) (f) (g) (h) (i) [ *** ]; assist the Company in obtaining all necessary entry visas, work permits, residence permits and other necessary documents for its expatriate personnel, and assist the Company in obtaining or providing housing for its expatriate personnel; cause the Company to comply with, on top of the applicable PRC law, the Foreign Corrupt Practices Act of 1977 and any other international compliance rules that apply to either Party or its Affiliates; to the extent permitted by PRC law, use its reasonable best efforts to cause the Company to submit Clinical Trial data and any other relevant information of KTE-C19 or any other Kite Product to Kite in order to submit to in-charge medical authorities and governmental authorities with jurisdiction over such product(s) outside the Chinese Market; cause its appointed Board members to take all measures required or recommendable to timely perform this Contract; and (j) all other matters entrusted by the Company and agreed to with the other Party from time to time Responsibilities of Kite In addition to its other responsibilities under this Contract, Kite shall have the following responsibilities: (a) (b) (c) with terms and conditions agreed in the Product and Know-how License Agreement and the Technology License Agreement attached as Appendix 1 and 2 of this Contract, provide (or through any Affiliate provide) Clinical Trial advice, manufacturing technology transfer and know-how support to the Company; with terms and conditions agreed in the Appendix 1 Product and Know-How License Agreement concluded between Kite and the Company, grant exclusive commercial right of KTE-C19 to the Company within the Chinese Market; with terms and conditions agreed in the Technical Service Agreement, which shall be concluded between Kite and the Company in line with the key terms in Appendix 3 within twenty (20) Business Days after the Establishment Date, provide (or through any Affiliate provide) technical support and assistance in commercializing KTE-C19 or any licensed Kite Product in the Chinese Market; (d) (e) (f) subject to the Company s exercise of the option right as provided in Article 28.2(d) and the Board s approval thereof, and with terms and conditions agreed in this Con-tract and a separate license agreement concluded between Kite and the Company, grant the exclusive commercial right to the Company KITE-439 and/or KITE-718; handle other matters agreed between the Parties or entrusted by the Company from time to time; Use its reasonable best efforts to assist the Company in any tax filing related to any payments made by the Company to Kite as well as any other tax filing on behalf of

130 Kite in China Responsibilities of Fosun In addition to its other responsibilities under this Contract, Fosun shall have the following responsibilities: (a) fulfill the co-operative conditions pursuant to Article 8; (b) (c) (d) (e) use its reasonable best efforts to prevent the disclosure of any IPR and/or Confidential Information to any entity other than the Company, including without limitation to cause any Management Personnel and Working Personnel hired by Fosun or its Affiliates and seconded or assigned to the Company to be bound by confidentiality obligations according to Article 26.1 of this Contract; subject to the Board s approval pursuant to Article 22.2, provide certain services (e.g. sales, marketing, human resource, general and administrative) to the Company via its Affiliates (without subcontracting to any third party distributors), subject to the terms and conditions agreed in a Sales, General and Administrative Service Agreement to be concluded between the Company and such Fosun s Affiliate; and handle other matters agreed between the Parties or entrusted by the Company from time to time. Use its reasonable best effort to assist the Company in making any tax filing related to any payments made by Fosun to the Company Costs and Expenses Unless otherwise agreed by the Parties under this Contract or in another written agreement, [ *** ] Should one Party fail to fulfil its obligation under this Article 14, [ *** ]. Article 15 Board of Directors 15.1 Formation of the Board of Directors (a) The Board of Directors shall comprise of six (6) Board members including the Chairman of the Board ( Chairman ) and Vice Chairman of the Board ( Vice Chairman ). Each Party shall appoint three (3) Board members including the Chairman and the Vice Chairman. The Board of Directors shall be officially established on the Establishment Date. (b) Each Board member shall be appointed for a term of three (3) years, provided that the Party which has appointed a Board member may remove that Board member and appoint a replacement at its discretion and at any time to serve out such Board member s term. A Board member may serve consecutive terms if re-appointed. If a seat on the Board is vacated by the retirement, resignation, removal, disability or death of a Board member, the Party which originally appointed such Board member shall appoint a successor to serve out such Board member s term. (c) Fosun shall be entitled to appoint one of its Board members as the Chairman and Kite shall be entitled to appoint one of its Board members as the Vice Chairman. A Party may object to the appointment of Chairman or Vice Chairman upon reasonable grounds. If the position of the Chairman or Vice Chairman is vacated by the retirement, resignation, removal (as provided in subparagraph (e)), disability or death of the incumbent, the Party which originally appointed the Chairman or Vice Chairman, as the case may be, shall appoint a

131 successor to serve out the Chairman s or Vice Chairman s current term. (d) (e) The Chairman and the Vice Chairman shall carry out all functions and tasks as stipulated in this Contract, the Articles of Association or as specifically authorized by the Board of Directors. Whenever the Chairman is unable to perform his responsibilities for any reason, the Vice Chairman shall be authorized by the Chairman to exercise the Chairman s functions. Kite or Fosun, as the case may be, shall notify the other Party and the Company in writing to appoint or remove a Board member, including the Chairman or Vice Chairman. Appointment and removal of Board members shall become effective upon receipt of such notice by the other Party and by the Company. Any appointment and removal of Board members shall be filed with the relevant Governmental Authorities to the extent required by law. (f) The Company shall, in accordance with relevant PRC laws, indemnify each Board member against all claims and Liabilities incurred by reason of his being a Board member of the Company and in the course of performing his official duties as a Board member of the Company, provided that the Liability does not result from intentional misconduct or gross negligence or a violation of criminal laws by the Board member. (g) Unless concurrently serving as an employee of the Company, Board members shall serve [ *** ], pursuant to the Company s travel policy then in effect Powers of the Board of Directors (a) (b) The Board of Directors shall be the highest authority of the Company. The Board of Directors shall decide all strategic business issues of major importance to the Company pursuant to a validly adopted resolution at a duly convened meeting described under Article 16, including, but not limited to, the following matters: (i) change the legal form of the Company, or amendment of the Articles of Association (except changes as otherwise set forth in this Agreement); (ii) formation of, investment in, or merger with another legal entity, or formation of, participation in, or withdrawal from any economic organization; (iii) division of the Company, or spin-off of any assets of the Company in connection with the formation of a new legal entity; (iv) termination (other than in consequence of the unilateral termination of this Contract by a Party as provided for in this Contract), liquidation or dissolution of the Company or the suspension of all or a substantial part of the operation; (v) (vi) increase or decrease of the Company s registered capital; establishment and substantial alteration of the Chop Management Protocols and any amendments thereto proposed by the Management Personnel; (vii) entrance into any research, collaboration, partnership or other business development agreement not covered by the Preliminary Business Plan or the

132 Annual Business Plan, and with a total commitment in excess of RMB seven million (7,000,000); (viii) (ix) (x) establishment of subsidiaries or branch companies; change of the registered company name; conclusion, amendment or termination by the Company of any Related Agreements or waiver of any material rights in such agreements, unless it is covered by the Preliminary Business Plan or the Annual Business Plan or the total commitment is lower than USD one hundred thousand (100,000); (xi) approval of the Company s Annual Business Plan, and any changes thereto, relating for example to: - scope of business - sales and marketing plan (including ex-factory price and pricing strategy) - financial plans - number of Working Personnel and Management Personnel - capital plan - clinical development plan - technical operation plan - any significant change of the Company s organizational structure; (xii) approval of quarterly and annual financial statements of the Company (balance sheet, profit and loss statement, cash flow statement) formulated in accordance with PRC GAAP and converted into US Generally Accepted Accounting Principles ( US GAAP ), which shall be done in a timely manner after completion of such statements and shall not be unreasonably withheld by Directors appointed by both Parties; (xiii) (xiv) (xv) approval of the establishment of and any major changes to the Company s accounting system and procedures in accordance with Article 23.1; establishment of and any changes to compliance policies, which shall be recommended by the Head of Finance based on the laws and regulations applicable to the Company and to both Parties; appointment and dismissal of the Chief Executive Officer ( CEO ), the Head of Finance or the Chief Technical Officer; (xvi) approve the Company s auditor and any change to the auditor pursuant to Article 23.3(a); (xvii) any debt or other financing of the Company, and any repayment of debt or repurchase of equity, except for as stipulated in the Preliminary Business Plan or the Annual Business Plan then in effect; (xviii) approval of the exercise by the Company of the option set forth in Article

133 28.2(d); (xix) sale or purchase by the Company of any fixed or intangible assets with a value in excess of (i) in case of sale or purchase in the ordinary course of business, RMB 1,000,000 of a single sale or purchase, or RMB 5,000,000 in aggregate in any fiscal year; (ii) in case of sale or purchase not in the ordinary course of business, RMB 200,000 of a single sale or purchase, or RMB 1,000,000 in aggregate in any fiscal year, or such higher value determined by the Board of Directors from time to time, except for any sale or purchase as stipulated in the Preliminary Business Plan or the Annual Business Plan then in effect; (xx) (xxi) conclusion, amendment and termination of any contracts not covered by the Preliminary Business Plan or the Annual Business Plan in excess of RMB seven million (7,000,000), or such higher value determined by the Board of Directors from time to time, and any waiver of material rights in such contracts; subject to the provisions of Article 24.1, the amount of allocations to the Three Funds and any expenditure from the Three Funds and distribution of any after-tax profits to the Parties in any fiscal year; and (xxii) any other matters assigned to the Board of Directors by law, this Contract or the Articles of Association. (c) Any Board resolutions on the above matters (i) to (xix) shall require the unanimous affirmative vote of the Board of Directors. Board resolutions on any other matters shall require a simple majority of the Board members present in person or by Proxy at a respective Board meeting duly called for and held or pursuant to a unanimous written consent pursuant to Article 16. (d) Within [ *** ] after Establishment Date, the Board shall meet and review this Article 15.2 in particular regarding the matters subject to Board approval, and recommend to the Parties any amendments thereto The Board of Directors shall approve the first Annual Business Plan within [ *** ] of the Establishment Date, which shall be guided by the Preliminary Business Plan, and thereafter no later than [ *** ] of every year by a formally adopted resolution approve the Annual Business Plan of the Company for the next fiscal year, which shall include reasonable details for the following [ *** ] formulated in accordance with the forecast and strategic planning process adopted by the Company. Unless decided otherwise by the Board of Directors, such Annual Business Plan shall be strictly implemented by the Company. If the Board cannot agree on the Annual Business Plan, the Company may operate under the prior approved business plan, including the Preliminary Business Plan if the first Annual Business Plan is not agreed upon, until the Board agrees on the new Annual Business Plan. Article 16 Board Meetings

134 16.1 The first Board meeting shall be held within twenty (20) Business Days after the Establishment Date. At such first Board meeting the Board shall: (a) (b) appoint the CEO in full compliance with this Contract; adopt the Chop Management Protocols regarding in particular the management rules for using and keeping record for use of the company chop, finance chop, legal representative chop and any other chops the Company may apply; (c) adopt the Preliminary Business Plan agreed between the Parties as attached in the Contract as Appendix 4 ; (d) (e) (f) appoint the Company s auditor; approve the execution of the Product and Know-how License Agreement, the Technology License Agreement, the Trademark and Name License Agreement, and the Technical Service Agreement with key terms in line with Appendix 3 of this Contract; and adopt the initial compliance policies of the Company After the first Board meeting, the Board shall hold at least four (4) regular Board meetings in each calendar year. Upon the written request of one (1) or more Board members specifying the matters to be discussed, the Chairman shall convene an interim Board meeting within thirty (30) days after receiving such request. If the Chairman fails to do so, the Vice Chairman shall convene the interim Board meeting accordingly The Chairman (or the Vice Chairman, as the case may be) shall give written notice in English of each Board meeting to each of the Board members at least thirty (30) days prior to such meeting. Each such notice shall include the time, place and agenda of the meeting, together with any draft of documents to be approved by the Board members at the meeting. A Board meeting held without proper notice having been given to any Board member shall be invalid unless such Board member attends the meeting or, either before or after the meeting, promptly delivers a written waiver of notice to the Chairman. Board meetings shall be held at the registered address of the Company or such other location in the PRC or abroad as may be agreed by the Chairman and the Vice Chairman, provided that any Board member may attend by teleconference. Board meetings may also be held by video or telephone conference upon the request of any Board member. The Chairman shall be responsible for convening and presiding over such meetings A minimum of two (2) Board members from each Party out of all Board members in office, present in person or by Proxy (including presence by way of a video or telephone conference) shall constitute a quorum and a duly convened Board meeting. If no quorum is constituted at any meeting, then the Chairman shall call another meeting with fifteen (15) days written notice to each Board member with the same agenda. Any such second meeting called in line with this Article 16.4 shall be entitled to adopt decisions on matters set out in such agenda regardless of the number of Board members present in person or by Proxy, which shall be explicitly stated in the Chairman s notice for such second meeting A Board member who is unable to attend a Board meeting may issue a Proxy, signed by him, to a designee of his choice (who does not need to be another Board member) to attend the meeting on his behalf. Each person acting as the Proxy of a Board member shall have the same rights and powers as the designating Board member. One Proxy may represent more than one Board members. A Proxy shall be in writing, signed by the designating Board member, and addressed to the Chairman. A Proxy may be presented in or electronic format, provided the signature is clearly shown thereon Board resolutions may be validly adopted by unanimous written consent (including by ) without holding a Board meeting, provided that all Board members are given written notice (including by ) of the resolutions proposed for adoption without a meeting in the same manner as provided in Article 16.3, and agree to such procedure in writing or as otherwise waived by executing the written consent. Electronical signatures of Board members shall be binding for this purpose. Written resolutions adopted in this manner shall have the same force and effect as a resolution adopted at a Board meeting.

135 16.7 The Board of Directors shall cause complete and accurate minutes in English and Chinese to be kept of all Board meetings. Draft minutes of a Board meeting shall be distributed to all Board members within fifteen (15) days from the date of such meeting. Any Board member who wishes to propose an amendment or addition shall submit the same in writing to the Chairman within ten (10) days after receipt of the draft minutes. Once a Board member (either directly or through his Proxy) has signed his approval of the text of a minutes at a Board meeting, he may not propose any subsequent amendments or additions to such minutes. The Chairman shall complete the final minutes and distribute them to all Board members and each Party no later than forty-five (45) days after the meeting. If the Board members cannot agree on any part of the text of the minutes or if there is discrepancy between the English and Chinese versions which cannot be solved via a translation check, they shall complete and distribute the rest of the final minutes as provided above, and the issue at dispute shall be placed on the agenda for the next Board meeting. The Company shall maintain a file of all Board meeting minutes and make the same freely available to the Parties and their authorized representatives The CEO, with the assistance of other Management Personnel, shall provide the Board with briefings on major operational issues on a regular basis and shall provide timely responses to reasonable inquiries from the Board regarding major operational issues. Details shall be set out in the Management By-laws The CEO, the Head of Finance and the Chief Technical Officer shall have the right to attend Board meetings, but do not have voting rights (unless concurrently serving as Board members). Further, each Board member shall have the right to bring along advisors or other support staff to a Board meeting. Such advisors or other support staff shall have no voting rights at the meeting. Notwithstanding the foregoing, the Board may, at its discretion, hold private sessions without the attendance of some or all of the CEO, Head of Finance or the Chief Technical Officer. Article 17 Supervisor 17.1 The Company shall have one (1) Supervisor to be appointed by Kite. The term of office of the Supervisor shall be three (3) years and may be renewed if re-appointed. Any Board member and the Management Personnel are not allowed to concurrently serve as the Supervisor The Supervisor shall exercise the following functions and powers: (a) (b) to examine the Company s financial affairs; to supervise the Board members and Management Personnel in the performance of their company duties and to propose the dismissal of Board members and Management Personnel who violate laws, administrative regulations, the Company s compliance policies or breach the Articles of Association; (c) if an act of any Board member or Management Personnel is detrimental to the interests of the Company, to require him to rectify such act; (d) to propose interim Board meetings and, in the event that the Chairman and the Vice Chairman fail to convene and preside over a Board meeting in person, telephonically or by Proxy, to convene and preside over such a meeting; (e) (f) to submit motions to Board meetings; to institute, upon written request by each Party, legal proceedings against the Board

136 members or Management Personnel if a Board member or Management Personnel violates laws, administrative regulations or the Articles of Association in the course of performing his or her company duties, thereby causing the Company to incur a loss The Supervisor shall have the right to participate in Board meetings as non-voting attendees. For clarity, the Supervisor shall not be a Board member. Reasonable and evidenced expenses incurred by the Supervisor in connection with their function as supervisor of the Company shall be reimbursed by the Company. Article 18 Management Personnel 18.1 Management Personnel (a) (b) (c) Management Personnel shall consist of one (1) CEO, one (1) Head of Finance and one (1) Chief Technical Officer. The term of the members of the Management Personnel shall be three (3) years, unless otherwise approved by the Board. The CEO shall be nominated by Fosun and appointed by the Board. The Head of Finance, which shall be the Chief Financial Officer or the most senior finance officer until such time a Chief Financial Officer is appointed, and the Chief Technical Officer shall be nominated by Kite and appointed by the Board. Unless with reasonable ground, Fosun shall cause its appointed Board members to vote for approval of the nominated Head of Finance and the Chief Technical Officer, and Kite shall cause its appointed Board members to vote for approval of the nominated CEO. After launch of KTE-C19 in the Chinese Market, and if the Chief Technical Officer resigns, term of such appointment expired or is terminated, the subsequent Chief Technical Officer shall be nominated by the CEO and appointed by the Board. The nomination right of the Head of Finance and Chief Technical Officer by Kite shall include the right to revoke at any time the appointed Head of Finance and the Chief Technical Officer and to nominate a replacement, except for as otherwise stipulated in the above Article 18.1 (b). (d) The nomination right of the CEO by Fosun shall include the right to revoke at any time the appointed CEO and to nominate a replacement. (e) The remuneration and benefits of all Management Personnel shall be discussed and approved by the Board Responsibilities and duties of Management Personnel (a) The Management Personnel, in addition to other executive officers who may be appointed to the Company and report to the CEO, shall be in charge of the day-to-day operation and management of the Company, in particular shall: (i) (ii) (iii) submit proposals to the Board; approval of the Employment Handbook and other employment rules; approval of the Management By-Laws, except those Management By-Laws which according to this Contract should be approved by the Board; (iv) (v) manage the production and business operations of the Company, and implement resolutions passed by the Board; implement the Preliminary Business Plan and Annual Business Plan of the Company approved by the Board;

137 (vi) (vii) (viii) approval of any employee benefit plan; formulate the internal management rules of the Company; appointment or dismissal of management staff other than Management Personnel; (ix) provision of any external collateral or other security by the Company to any entity; (x) (xi) carry out all matters designated by this Contract, the Articles of Association, the Management By-laws, etc.; any other matters that are not included in Article 15.2 (b), or as resolved by the Board of Directors to be the responsibility of the Management Personnel. (b) (c) (d) The CEO shall be the Legal Representative of the Company. The Legal Representa-tive shall carry out all functions and tasks as stipulated in this Contract, the Articles of Association or as authorized specifically by the Board of Directors. The Legal Representative may only represent and bind the Company in accordance with this JV Contract, the Articles of Association, the Management By-Laws or otherwise specif-ically authorized by the Board of Directors in writing. The CEO shall coordinate and lead the activities of management. The Head of Finance is responsible for finance, accounting, tax and audit over internal controls, and compliance in accordance with the Board approved compliance policies. The Chief Technical Officer is responsible for manufacturing, quality and supply chain. Both the Head of Finance and the Chief Technical Officer shall report to the CEO, except that the Head of Finance shall also report to the Board. Within the limits of the power of attorney specified in single resolutions of the Board of Directors or in this JV Contract, the Articles of Association or as contained in a budget approved by the Board of Directors, Management Personnel shall be permitted to represent the Company in dealing with third parties and to authorize expenditures and incur Liabilities on behalf of the Company. Matters set out elsewhere in this Contract and/or the Articles of Association to be decided by the Board of Directors shall require prior approval of the Board of Directors, unless delegated by the Board of Directors to Management Personnel or contained in an approved budget Other regulations (a) (b) (c) The CEO, the Head of Finance and the Chief Technical Officer shall perform their duties on a full-time basis and not concurrently serve as a director, a manager or other employee of or have any other non-employed contractual relationship to work for any other company or enterprise, unless otherwise approved by the Board of Directors in writing. The CEO, the Head of Finance and the Chief Technical Officer may not serve as a director of or consultant to, or hold any material interest in, any company or enterprise that is a Competitor of the Company. If any Management Personnel incurs Liabilities towards third parties in the course of performing their duties for the Company, he shall be indemnified by the Company except for intentional misconduct, gross negligence or graft or serious dereliction of duties or breach of criminal laws. Subject to a respective Board resolution and no later than the commercial launch of the Company, the Company shall hire a Compliance Manager who shall report directly to the Head of Finance.

138 Article 19 Premises 19.1 The Company shall lease manufacturing sites and facilities from a qualified property owner by concluding a facility lease agreement in line with Preliminary Business Plan or Annual Business Plan then in effect The Company shall apply for GMP certification for the facility. Both Parties shall provide all necessary assistance in the application. Article 20 Know-how and Trademarks 20.1 Know-how (a) (b) Within twenty (20) Business Days upon the Establishment Date, Kite shall conclude with the Company the Product and Know-How License Agreement in line with the terms and conditions of Appendix 1 of this Contract. Within twenty (20) Business Days upon the Establishment Date, Kite shall conclude with the Company the Technology License Agreement in line with the terms and conditions of Appendix 2 of this Contract Trademarks and name (a) (b) In case the Company wishes to obtain from Kite and/or any of their Affiliates the right to use respective trademarks and/or names in relation to the Company name or the products and services, such use right shall be [ *** ] and subject to the conclusion of a written Trademark and Name License Agreement as attached as Appendix 6 to be concluded within [ *** ] after the Establishment Date between the Company and the owner of the respective trademarks and/or names. The Company shall create Chinese specific brand(s) for the Company name, commercialization of products / services of the Company in the Chinese Market, which shall be approved by the Board Use after termination (a) (b) Upon termination of this Contract, the respective Product and Know-How License Agreement, the Technology License Agreement and Trademark and Name License Agreement shall be concurrently terminated and the respective exclusive commercial right shall cease to be valid. Upon termination of this Contract, unless with written consent from the other Party, each Party shall not and shall use its reasonable best efforts to cause the Company and its Affiliate not to use the Company name, the name of the products and/or services, and any similar names to the above. Article 21 Procurement 21.1 The Company may purchase items and services required for the Company s operation from sources within and outside the PRC, on the basis of the competitiveness of the terms and conditions of procurement, quality, quantity, pricing, and delivery terms of the products and in accordance with the procurement policy formulated by the CEO from time to time.

139 21.2 Where any Party or any of their respective Affiliates is willing to provide services and/or products to the Company, the Company shall only procure such services and/or products on an arm s length basis and, if required pursuant to Article 15.2.(b).(x), subject to review and approval by the Board of Directors. In order for the Board to make an informed decision, the interested Party shall present to the Board all relevant information to the Board s decision, including but not limited to a description of (1) all the parties thereto, (2) the interests, direct and indirect, of any related person in the transaction in sufficient detail so as to enable the Board to fully assess such interests, (3) a description of the purpose of the transaction, (4) all of the material facts of the proposed transaction, including the proposed aggregate value of such transaction, or in the case of debt, the amount of principal that would be involved, (5) the benefits to the Company of the proposed transaction, (6) if applicable, the availability of other sources of comparable products or services, (7) an assessment of whether the proposed transaction is on terms that are comparable to the terms available to or from, as the case may be, unrelated third parties, and (8) the Management Personnel recommendation with respect to the transaction. Any services and/or products proposed to be provided by a Related Party involving a total commitment of greater than USD [ *** ] must be disclosed to the Board in the Annual Business Plan (both the total commitment and the Related Party s relationship with a Party) or otherwise if such services and/or products were not covered in the Annual Business Plan. Article 22 Labor Management and Trade Union 22.1 Governing principles Matters relating to the recruitment, employment, dismissal, resignation, wages, labor insurance, labor discipline, assessment, rewards, bonus and welfare of the Working Personnel and Management Personnel of the Company shall be handled in accordance with the PRC Labor Law, the PRC Labor Contract Law and related PRC laws and regulations (hereinafter collectively referred to as the Labor Laws ). The Company s labor rules and policies (including compliance) shall be set out in more detail in the Employment Handbook set up in accordance with the Labor Laws Personnel (a) Working Personnel shall be locally employed and appointed by the Management Personnel in accordance with the terms of an individual labor contract entered into by the Company and the Working Personnel. (b) Management Personnel shall be employed by the Company, in accordance with the terms of individual employment contracts, which shall include non-compete provisions with non-compete terms to the maximum extent allowed by law unless otherwise approved by the Board. Other members of senior management shall also have employment agreements with non-compete provisions which contain non-compete duration to be approved by the Board. (c) The first labor contract entered into between the Company and an individual employee shall provide for a probation period. Employment contracts with any Management Personnel may provide for such probation period. (d) Personnel to be employed by the Company shall be selected according to their

140 professional qualification and working experience criteria to be formulated by the Management Personnel Reward and disciplinary measures (a) All Working Personnel and Management Personnel must observe PRC laws and the relevant Company regulations as well as undertake responsibilities diligently in accordance with their job descriptions. The Management Personnel shall implement a performance evaluation system for all employees. (b) The Company shall have the right to effect reward and disciplinary measures in accordance with relevant regulations of the Company to be set up by the Management Personnel Labor union The employees of the Company shall have the right to establish a labor union in accordance with the Labor Laws. If required by mandatory laws, the Company shall allot the required amount for payment into a labor union fund for financing the activities of the labor union. The labor union may use these funds in accordance with the relevant control measures for labor union funds formulated by the All-China Federation of Labor Unions. Labor union activities are, whenever possible, to be conducted after normal working hours and, in any event, in such a manner as not to hinder the operation of the Company. Article 23 Financial Affairs, Accounting and Shareholder Auditing 23.1 Accounting system (a) The Company shall set up its accounting system and procedures in accordance with relevant PRC accounting regulations and with a conversion to US GAAP on a monthly basis. The accounting system and procedures to be adopted by the Company shall be approved by the Board of Directors and be filed with the relevant local departments of finance and tax for record to the extent required by law. The accounting system and procedures approved by the Board of Directors shall, to the maximum extent possible, comply with the accounting and reporting requirements of either Party as may be requested by both Parties from time to time. (b) The Company shall adopt RMB as its bookkeeping base currency, but shall, as requested by either Party and to the extent permitted by law, also adopt USD as a supplementary bookkeeping currency. (c) All accounting records, vouchers, books shall be made and kept in the Chinese language, and the financial statements and reports of the Company must be made and kept in the Chinese and English language. (d) For its accounting and bookkeeping the Company shall adopt an IT system which is accepted by both Parties, available in both English and Chinese languages, and meets the requirements of the Company s operation and the Parties applied accounting and bookkeeping standards.

141 23.2 Reports (a) The CEO and Head of Finance shall report directly to the Board of Directors at least on a quarterly basis and the CEO shall be responsible for the operating results of the Company. (b) The Parties, as well as the Chairman, Vice Chairman and Supervisor shall have full and equal access to the Company s accounts and financial statements, which shall be kept at the legal address of the Company. The Company shall, in the form required by the Parties, furnish to the Parties financial reports on a [ *** ] and [ *** ] basis within [ *** ] of the applicable period end date, in accordance with the reporting requirements of both Parties and their respective banks (which shall, upon request by either Party, be audited) so that they may continuously be informed about the Company s financial performance. The Company shall in addition provide a Party with planning financial statements in the form and at the times as required by that Party. (c) The Head of Finance shall be responsible for the timely and accurate preparation of financial reports including but not limited to quarterly and annual financial statements of the Company (balance sheet, profit and loss statement and cash flow statement) formulated in accordance with PRC GAAP and converted into US GAAP. (d) In the event that the Head of Finance or other suitably qualified person nominated by Kite is not available to complete financial reports, the Company shall engage one of the Big Four international practicing accounting firms registered in the PRC that is not the Company s auditor to prepare its quarterly and annual accounts until such time as a Head of Finance is appointed to the Company Auditing (a) The Company shall engage one of the Big Four international practicing accounting firms registered in the PRC to audit its accounts. Such firm shall be nominated by Fosun and retained by the Company upon Board approval, which shall not be unreasonably withheld. Drafts of the audited financial statements and report shall be provided to each Party and to the Board of Directors for review within [ *** ] after the end of each fiscal year, and the final audited financial statements and report shall be completed and provided to the Parties no later than [ *** ] after the end of each fiscal year. Such financial statements shall be prepared in accordance with PRC law and regulations and pursuant to Article 23.1 (a). In case any Board member doubts the service provided by this audit firm, such Board member may propose a replacement of this firm, which shall be discussed and decided by the Board of Directors. For clarity, any such replacement approved by the Board of Directors must continue to be one of the Big Four international practicing accounting firms registered in the PRC to audit its accounts. (b) Each Party may appoint an accountant registered abroad or registered in the PRC to audit the accounts of the Company on behalf of such Party. Access to the Company s financial records shall be given to such accountant and such accountant shall keep confidential all documents examined while conducting audits. All expenses for such audit shall be borne by the Party which has appointed the auditor, unless: (i) (ii) events in the Company (including but not limited to fraud, bribery, loss of records) have required such audit; or the Company s auditor regulated in Article 23.3 (a) has refused to confirm the Company s records. In such events the Company [ *** ] Bank accounts and foreign exchange

142 (a) The Company shall separately maintain foreign exchange accounts and RMB accounts at banks within the PRC authorized to conduct foreign exchange operations. (b) The Company s foreign exchange transactions shall be handled in accordance with relevant PRC regulations relating to foreign exchange control. [ *** ] Fiscal year The Company shall adopt the calendar year as its fiscal year, with the result that each fiscal year shall begin on January 1 and end on December 31 of the same year, except for the first and last fiscal year which shall start / end according to the Term Shareholder auditing Each Party may, on its own or by engaging a third party professional advisor with relevant expertise on behalf of such Party ( Professional Advisor ), audit important Company matters, including but not limited to finance, IPR protection status, local compliance, sales practices and business operation. Access to the Company s financial records, business records, clinical records and other documents shall be given to the Party, and both the Party and such Professional Advisors shall keep confidential all documents examined while conducting audits. All expenses for such audits shall be borne as set forth in Article 23.3 (b). Article 24 Profit Distribution 24.1 After the payment of enterprise income tax by the Company, the Company shall make the annual allocations from after-tax profits to the Three Funds, if and to the extent required by law. The amount of any annual allocation to such funds shall be determined by the Board of Directors The Board of Directors shall, at least once every year by a formally adopted resolution, decide the profit distribution plan according to the agreed percentage of profit distribution in Article No profit shall be distributed unless the Company s deficit from the previous years is made up. Profits retained by the Company and carried over from the previous years may be distributed together with any distributable profits of the current year. Profits for distribution shall be aftertax profits, as defined under PRC GAAP, and after annual allocation to the Three Funds. For clarity, any payment of milestone or royalties shall be treated as expenses or asset costs for the calculation of profits All remittance of profits and other sums payable to Kite out of PRC under this Contract shall be made to a foreign bank account designated by Kite respectively in RMB, USD or other freely convertible foreign currencies, as so informed by Kite in writing and in accordance with the foreign exchange regulations in PRC. Article 25

143 Taxation and Insurance 25.1 Income tax, customs duties and other taxes (a) The Company shall timely pay taxes and customs duty under the relevant national and local laws and regulations of the PRC, subject to any further tax holidays, tax reductions, waivers, exemptions, or exclusions granted to the Company from time to time by any Governmental Authorities, and applicable treaties for the avoidance of double taxation in effect between the PRC and other countries. The Company shall provide copies of all tax filings to the Parties immediately after filing. (b) (c) (d) The Company s Chinese and expatriate staff shall pay individual income tax and other Taxes in accordance with the IndividualIncome TaxLawofthePRCand relevant treaties for the avoidance of double taxation in effect between the PRC and other countries. In any case the Company shall apply for all available tax and customs exemptions, holidays and reductions. In any case the Company is required to withhold taxes from the payments to either Party or the Affiliates of either Party, the following shall apply: (i) The Company shall exercise its best effort to attain that the payment to both Parties or their respective Affiliates will be taxed at the lowest taxation rate available (in particular under double taxation treaties) at the time of payment. (ii) The Company shall provide both Parties or their Affiliates with an original copy of the tax assessment and the tax receipt without undue delay, and no later than [ *** ]. These documents shall specify both Parties or their Affiliates as the taxpayer, the amount of tax paid, the tax rate or the amount of fee on which such rate is based, the tax law and the legal regulation on which such tax payment is based, and the date of payment of the tax. (iii) If the documents of the tax authority are issued in a language other than English, the Company shall have the documents translated into English at its own expense at the request of Kite Insurance The Company shall, throughout the Term, maintain insurance coverage of the types and in the amount as the Management Personnel determined. The Company shall obtain insurance from insurance companies or organizations in compliance with PRC laws and regulations. Article 26 Confidentiality, Non-competition and Non-solicitation 26.1 Confidentiality Each Party covenants that, during the Term and for [ *** ] thereafter it shall: (a) (b) maintain the confidentiality of any Confidential Information; not disclose the Confidential Information to any person or entity, including its or its Affiliate s directors, managers, staff and advisors, except to those who are associated with the Company s business operation and the confidential Information is only disclosed on a strict must-know basis, provided that the recipient is subject to legally binding nondisclosure restrictions; and

144 (c) not use or exploit the Confidential Information in any way, except use within the permitted business scope of the Company and any other agreement by both Parties; 26.2 Safeguarding Confidential Information (a) (b) Each Party shall advise its board members, managers, senior or other relevant staff and other employees, advisors, and those of their Affiliates, who receive any Confidential Information of the other Party or its Affiliates of the existence and importance of complying with the obligations set forth in Article 26.1, and require such persons to sign a confidentiality undertaking in a form acceptable to the Parties. Each Party shall be jointly and severally liable for breach of the confidentiality liability of its Affiliate, their directors, managers, senior or other relevant staff and other employees, advisors etc. The Parties shall cause the Company to formulate rules and regulations to cause the Board members, Management Personnel and Working Personnel to also comply with the confidentiality obligations set forth in this Article All Board members, Management Personnel and Working Personnel having access to Confidential Information shall be required to sign a confidentiality undertaking in a form acceptable to the Parties Exceptions to confidentiality The provisions of Article 26.1 shall not apply to Confidential Information that can be proven: (i) to be known by one Party by written records made prior to disclosure by the other Party; (ii) is or becomes public knowledge other than through either Party s breach of this Contract; (iii) was obtained by one Party from a third party having no obligation of confidentiality with respect to such Confidential Information; or (iv) is required by laws, regulations, stock exchange rules or by order of any competent court, Governmental Authority to be disclosed. Each Party shall have the right to issue a press release to announce the execution of this Agreement as approved in writing by the other Party, which shall not be unreasonably withheld by the other Party Fosun Non-competition Fosun undertakes that, for the duration of this Contract and for an additional (i) [ *** ] if terminated due to a breach of this Contract by Fosun or (ii) [ *** ] if terminated under Articles 29.2(a) (unless Kite has provided any of its know-how to the Company pursuant to the Technical Services Agreement, in which case Article 26.4(i) shall apply. If the Contract is terminated due to Kite not making its capital contribution in kind, this Article 26.4 shall [ *** ]), 29.2 (c) and 29.2(d) of this Contract, it will not (a) engage, either directly or indirectly via any of its Affiliates, in the research (other than to meet the definition of a Fosun Target), development, commercialization, manufacturing or sale of T cell immunotherapy products; and (b) enter into any undertaking or co-operation with third parties in the research (other than to meet the definition of a Fosun Target), development, commercialization, manufacturing, sale of T cell immunotherapy products, be it a joint venture company or any other contractual cooperation form, either directly or indirectly via an Affiliate (collectively, the Fosun Non-Compete ). For the avoidance of doubt, any Passive Investment by Fosun or any of its Affiliates shall not be considered as a breach of this Article Notwithstanding the foregoing, the Fosun Non-Compete shall not apply in any territory outside of the Chinese Market with respect to any T cell immunotherapy

145 product that is not directed against a Kite Target. Prior to Fosun or any of its Affiliates engaging in any of the activities covered by the Fosun Non-Compete in any territory outside of the Chinese Market, Fosun or its applicable Fosun Affiliate shall notify Kite in writing of the T cell immunotherapy product that is directed against a bona fide Fosun Target it intends to advance and Kite will inform Fosun or the applicable Fosun Affiliate in writing within [ *** ] and with reasonable ground following its receipt thereof whether such Target is a bona fide Kite Target, failure of which or upon Kite s confirmation that such Target is not a Kite Target shall entitle Fosun or its applicable Fosun Affiliate to advance with such Target. Fosun Target means a Target (a) against which Fosun or its Affiliates is researching one or more CAR or TCR products following the commencement of (i) for CAR products, [ *** ]; and (ii) for TCR products, [ *** ]. Kite Target means (a) a Target listed in a separate letter delivered to Fosun on the Effective Date, or (b) a Target against which Kite or its Affiliates (or their respective Third Party partners) is researching one or more CAR products or TCR products following the commencement of (i) for CAR products, [ *** ]; and (ii) for TCR products, [ *** ]. For clarity, Kite Target shall exclude any product of the Third Party partner of Kite or its Affiliates which is not the subject of cooperation between Kite or its Affiliates and the Third Party partner. For the avoidance of doubt, this Article 26.4 shall not prohibit any of Fosun s Affiliates in the medical service sector to sell, or offer for sale any third party T cell immunotherapy products and related medical services to the patients of such Fosun Affiliate, provided that, subject to the exception herewith, such Fosun Affiliate shall still comply with its non-compete obligations according to this Contract Kite Non-competition Kite undertakes that in the Chinese Market, for the duration of this Contract and for an additional [ *** ] if terminated due to a breach of this Contract by Kite, it will not (a) engage, either directly or indirectly via any of its Affiliates, in the research, development, commercialization, manufacturing or sale of any T cell immunotherapy products being developed or sold by the Company; and (b) enter into any undertaking or cooperation with third parties for the research, development, commercialization, manufacturing or sale of any T cell immunotherapy products being developed or sold by the Company, be it a joint venture company or any other contractual cooperation form, either directly or indirectly via an Affiliate. For purposes of this Article 26.5, Affiliate shall not include any entity that controls Kite Parent after the consummation of a Kite Sale or any of such controlling entity s Affiliates that were not Affiliates of Kite prior to the Kite Sale, provided that such Affiliates do not use Kite technology in contravention of this Article Kite technology refers to any technology (including but not limited to patents, trade-marks or know-how, data, and other technical information) licensed to the Company from Kite. For the avoidance of doubt, any Passive Investment by Kite or any of its Affiliates shall not be considered as a breach of this Article Liability If a Party breaches any provisions of this Article 26 (other than Article 26.7), for each single case of breach, the breaching Party shall pay liquidated damages of USD [ *** ] to the non-breaching Party. If a Party breaches the undertakings under Article 26.7, for each single case of breach, the breaching Party shall pay liquidated damages of USD [ *** ] to the non-breaching Party. If the liquidated damages is not sufficient to cover the non-breaching Party s actual damage, the non-breaching Party may further claim for damage compensation from the breaching Party according to this Contract and according to law Non-solicitation Each Party undertakes that, during the Term and, with respect to any Breaching Party an additional [ *** ] after the termination of this Contract, without obtaining the prior written consent of the other Party, it shall not and shall cause its Affiliates not to, directly or indirectly, for itself or on behalf of a third party:

146 (a) (b) solicit for employment or otherwise induce to terminate employment with the other Party, its Affiliates, or the Company, or employ or engage as an independent contractor, any directors, managers or key staff; or solicit business from or induce, any client, customer, supplier or other similar third party of the other Party, its Affiliates, or the Company to alter, terminate or breach its contractual or other business relationship with the Company or the other Party. Notwithstanding the foregoing, nothing in this Article 26.7 (b) shall restrict any business relationship with the above mentioned parties in the normal course of business, so long as no Confidential Information is used by the Party or its Affiliate in the business relationship. Article 27 Term 27.1 Term The Term shall be twenty (20) years, commencing on the Establishment Date. Unless otherwise mutually agreed by both Parties in writing, this Contract, together with the Appendices, shall become effective on the Effective Date and shall expire on the date of expiry of the Term, unless the Term is extended according to Article Extension of the Term The Term may be extended upon agreement by the Parties. In such case the Parties shall amend this Contract and the Articles of Association, and shall cause the Company to timely apply for all relevant Governmental Approvals or filings to the extent as required by law. Article 28 Representations and Warranties 28.1 Representations, warranties and Undertakings In addition to any other representations, warranties or guarantees made by either Party in this Contract and its Appendices, each Party represents, warrants and undertakes to the other Party as of the Effective Date that: (a) it is a corporation duly incorporated and validly existing under the laws of the place of its establishment or incorporation; (b) (c) (d) (e) (f) it has all requisite power, authority and approvals required to enter into this Contract and its Appendices and upon the Effective Date will have all requisite power, authority and approvals to perform its obligations under this Contract; it has taken all action necessary to be authorized to enter into this Contract and its Appendices and such Party s representative whose signature is affixed to this Contract is fully authorized to sign this Contract and its Appendices; as of the Effective Date, this Contract shall constitute its legal, valid and binding obligation; neither the execution of this Contract, nor the performance of such Party s obligations under this Contract, will conflict with, or result in a breach of, or constitute a default under, any provision of its documents on establishment, business licence, by-laws or articles of association, or any law, rule, regulation, authorization or approval of any government agency or body under its jurisdiction of incorporation, or of any contract or agreement to which it is a party or is subject; it (or in the case of Kite, Kite s Parent) has established and maintains reasonable internal policies and controls, including codes of conduct and ethics and reasonable reporting requirements, intended to insure compliance with anti-corruption laws and other applicable laws in relevant legislations, to the extent applicable to such Party, including healthcare compliance, privacy protection, environmental protection and data security laws.

147 (g) there is no litigation, administrative investigation or any other dispute pending or, to the best of its knowledge, threatened against it with respect to the subject matter of this Contract or that would affect in any way its ability to enter into or perform this Contract; and (h) it has no outstanding commitments or obligations, contractual or otherwise, which would in any way impede its ability and right to enter into and perform this Contract or the Articles of Association Representations, Warranties and Undertakings of Kite In addition to any other representations, warranties or guarantees made by Kite in this Contract and its Appendices, Kite further represents, warrants and undertakes to Fosun: (a) (b) (c) (d) as of the Effective Date, it has full power and authority to grant the licenses according to Article 7.4 without the consent of any other party; as of the Effective Date, it is not aware of any patents, patent applications, trademarks, trademark applications, or other intellectual property rights belonging to third parties and covering, in whole or part, the practice of the Licensed Know-how as defined in the Product and Know-How License Agreement in the Territory; as of the Effective Date and the Establishment Date and until the Date of Termination that, it will comply with any of its obligations under the Product and Know-how License Agreement, the Technology License Agreement and the Technical Service Agreement. as of the Effective Date and the Establishment Date and until [ *** ] after the Establishment Date, the Company enjoys an option to license two (2) additional products from Kite for an option of USD [ *** ], such option can be exercised by the Company upon unanimous Board approval: (i) KITE-439, a T cell receptor ( TCR ) therapy directed against the human papillomavirus type 16 E7 (HPV-16 E7) oncoprotein that is believed to cause several different cancers, including cervical, head and neck and other urogenital cancers; and (ii) KITE-718, a TCR therapy directed against MAGE A3/A6 that is believed to cause several different cancers, including non-small cell lung cancer and bladder cancer. This option shall expire [ *** ] after the Establishment Date, and such products shall not be considered Kite Products for purposes of Article 28.2(g) after the option expiration date. For each option product Kite is entitled to charge, based on a related license agreement, (i) [ *** ]% royalties of its commercial revenue, and (ii) total milestone payments of USD [ *** ], which consists of USD [ *** ] for CFDA approval, USD [ *** ] for annual sales of USD [ *** ] and USD [ *** ] for annual sales of USD [ *** ] in the Chinese Market. (e) as of the Effective Date and the Establishment Date and until [ *** ] after the Establishment Date, if Kite or Kite s Parent initiates the development of an engineered autologous CAR T cell-based product targeting CD19 utilizing a Switch Technology and has the right to develop and commercialize such product in the Chinese Market, the Company and Kite shall negotiate a license for such product for the Chinese Market. Switch Technology means a [ *** ]. The terms of such license shall be negotiated in good faith by Kite and the

148 Company, subject to approval by Fosun. For clarity, such product shall be considered a Kite Product for purposes of Article 28.2(g) if no license is agreed upon during the initial [ *** ] period. (f) (g) as of the Effective Date and the Establishment Date and until [ *** ] after the Establishment Date, the Company enjoys an option to license an engineered autologous fully human CAR T cell-based product targeting CD19 for the Chinese Market that is subject to a Kite or Kite Parent investigational new drug application in the USA. The terms of such license shall be negotiated in good faith by Kite and the Company, subject to approval by Fosun, but in no case [ *** ]. For clarity, such product shall be considered a Kite Product for purposes of Article 28.2(g) [ *** ]. Fosun acknowledges that certain of the Kite technology to be licensed pursuant to Article 28.2(d), (e), (f) or (g) has been licensed to Kite under third party agreements, and that any Company license under such Kite technology is therefore a sublicense under and subject in all cases to the terms of such agreements. as of the Effective Date and the Establishment Date and until [ *** ] after the Establishment Date, if Kite intends, whether directly or through any of its Affiliates to develop or commercialize any of the Kite Products or any products directed against a Target that is the same Target as a product licensed by the Company from Kite in the Chinese Market or intends, whether directly or through any of its Affiliates to develop or commercialize any products licensed to the Company in the [ *** ] ( Proposed Transaction ) through a third party (including for the sole purpose of this Article 28.2(g) any Affiliate of Kite in the Chinese Market) licensee ( Third Party Licensee ), Kite shall send a written notice ( Transaction Notice ) to the Company and Fosun that includes a written non-binding term sheet inclusive of the material financial terms for a license to such Kite Product that have been agreed upon with a Third Party Licensee. Within [ *** ] of receipt of such term sheet, Fosun, on behalf of the Company, shall provide to Kite written notice of its acceptance of such term sheet. If Fosun has not exercised its right upon expiration of the applicable [ *** ] period, or if Fosun does not accept the term sheet, or if the Parties do not reach agreement upon and execute a license agreement in accordance herewith within a [ *** ] period, then, in each such case, Kite shall be free during the next [ *** ] period to enter into the Proposed Transaction or any transaction more beneficial to Kite with any third party. For clarity, Kite shall not be obligated to disclose the name of such third party. This Article 28.2(g) shall only apply for a period of [ *** ] after the Establishment Date. (h) (i) As of the Establishment Date, if Kite intends, whether directly or through any of its Affiliates, to develop or commercialize any of the Kite Products or any products directed against a Target that is the same Target as a product licensed by the Company from Kite in the Chinese Market through a Third Party Licensee, and under the conditions that: (i) the Company and Kite failed to reach agreement for concluding a definite license agreement as according to Paragraph (e) of this Article 28.2; (ii) Kite and any third party entered into a definite license agreement as according to Paragraph (e) of this Article 28.2, then Kite shall (i) cause such Third Party Licensee to negotiate with the Company for a exclusivity period of [ *** ]; (ii) and use commercially reasonable efforts to support the Company during such [ *** ] negotiation period in the negotiation for a definite agreement of granting the Company with the exclusive clinical manufacturing rights. For purposes of Article 28.2(g) and 28.2(h), Affiliate shall not include any entity that controls Kite Parent after the consummation of a Kite Sale or any of such controlling entity s Affiliates that were not Affiliates of Kite prior to the Kite Sale, provided that such Affiliates do not use Kite technology in contravention of Article 28.2(g) and 28.2(h). Kite technology refers to any technology (including but not limited to patents, trade-marks or know-how, data, and other technical information) licensed to the Company from Kite. As of the Establishment Date, during the term of the Product and Know-how License Agreement, Technology License Agreement and Technical Service Agreement ( the Agreements ), Kite will not exercise its termination right under the Agreements based on material breach of the Agreements by the Company, if such breach is caused by any directors and/or management personnel appointed or nominated by Kite according to the Joint Venture Contract Representations, Warranties and Undertakings of Fosun In addition to any other representations, warranties or guarantees made by Fosun in this Contract and its Appendices, Fosun further represents, warrants and undertakes to Kite as of the Effective Date that: (a) it will use its reasonable best efforts to cause the Company not to use, apply, test or have trials of any services/products of the Company on any patients before [ *** ]; and

149 (b) it is not a State-owned enterprise and is not aware of any corporate merger, acquisition or consolidation of Fosun which will, directly or indirectly, concert Fosun into a State-owned enterprise. For clarity, State-owned enterprise means an enterprise directly or indirectly controlled by, or with majority of the property right directly or indirectly held by, government departments, government agencies or public institutions Indemnification (a) (b) If any representation and warranty made by a Party ( Breaching Party ) in this Contract is found to be untrue, the Breaching Party shall, [ *** ] upon written request of the other Party ( Non-Breaching Party ) undertake to provide every remedy necessary to put the Non- Breaching Party (or, at the Non-Breaching Party s election in writing, the Company) in the position the Non-Breaching Party (or the Company, if so elected by the Non-Breaching Party) would have been in, should the representation and warranty be true. For clarity, the Breaching Party may dispute such breach, which shall be governed by Article 33. Notwithstanding the Breaching Party s obligation to take any such remedial measures, the Breaching Party shall [ *** ] indemnify the Non-Breaching Party for and hold the Non-Breaching Party (or, at the Non-Breaching Party s election in writing, the Company) harmless against all losses and damages (including direct, indirect and consequential damages) the Non-Breaching Party (or, at the Non-Breaching Party s election in writing, the Company) may suffer due to any untrue representation and warranty given by the Breaching Party or any covenant or undertaking not performed in a complete and timely manner. Nothing in this Article 28 shall give the Company the right to make a direct claim against the Breaching Party unless and until the Non-Breaching Party has made its election in writing to require the Breaching Party to indemnify the Company instead of indemnifying the Non-Breaching Party. Each decision by the Non-Breaching Party whether to make such election shall be solely within the Non-Breaching Party s discretion. Article 29 Termination and Consequences of Termination 29.1 Termination upon expiry or by agreement This Contract shall be automatically terminated upon the expiry of the Term set forth in Article 27.1, unless extended pursuant to Article Additionally it may be terminated at any time by the written agreement of the Parties Termination upon failure to meet certain conditions In the event that: (a) any of the capital contribution and/or co-operative conditions pursuant to Article 7, Article 8 and Article 11 is not fulfilled in time, or is still not remedied within a [ *** ] grace period (if any) or Article 16.3(b) occurs under the Technology License Agreement; or (b) the Establishment Date (i.e. issuance of the Business License) does not occur within [ *** ] after the Effective Date, and is still not rectified within an additional [ *** ] grace period; or (c) the Company fails to achieve cash flow positive until [ *** ], or any mutually agreed grace period (if any); for avoidance of doubt, cash flow positive means, for an agreed period of time, a balanced financial statement of the Company where accumulative cash inflow - other than capital investment of the Parties exceeds the accumulative cash outflow of the Company; provided that if the Company exercises its option for an additional product or otherwise develops or in-licenses an additional product, the Company shall have an additional [ *** ] from [ *** ] to achieve positive cash flow; or (d) after the Establishment Date, if any Governmental Authority (including for this purpose

150 any court) having authority over the other Party requires any provision of this Contract to be revised in such a way as to cause significant adverse consequences to the Company or either Party; then Kite and Fosun shall each have the right to terminate this Contract by notifying the other Party in writing, pursuant to the procedures set forth in Article 29.5 and Article 29.6 below; provided that if the condition of Article 29.2(c) is met, the Parties shall first discuss for a period of [ *** ] in good faith whether the Company shall continue to operate prior to either Party exercising its right to terminate pursuant to Article 29.2(c) Unilateral termination by a Party due to Governmental Action or Force Majeure (a) if any Governmental Authority (including for this purpose any court) expropriates, requisitions, or orders the expropriation or requisition of, all or material portion of the assets or properties of a Party or the Company, and such expropriation or requisition is considered by either the Company or the other Party as adversely influencing the performance of the Company s original objectives, a Party over which the government authority mentioned above does not have authority may terminate this Contract; or (b) Without prejudice to any other termination rights set out elsewhere in this Contract, this Contract may be unilaterally terminated by the written notice of a Party to the other Party pursuant to the procedure set forth in Articles 29.5 and 29.6, if the conditions or consequences of Force Majeure significantly interfere with the Company s ability to operate pursuant to the Annual Business Plan for a period in excess of [ *** ] and the Parties have been unable to find an equitable solution pursuant to Article Unilateral termination by a non-breaching Party Without prejudice to any other termination rights set out elsewhere in this Contract, this Contract may unilaterally be terminated by the written notice of the non-breaching Party to the other Party pursuant to the procedure set forth in Article 29.5 and Article 29.6 below: (a) (b) (c) if the other Party ( Breaching Party ) materially breaches this Contract or violates the Articles of Association and such breach or violation is not cured within [ *** ] after receipt of a written notice by the Breaching Party from the non-breaching Party in which it identifies the breach and demands that it be cured by the Breaching Party; or if the other Party ( Breaching Party ) becomes bankrupt, is the subject of proceedings for insolvency, liquidation or dissolution, ceases or is unable to carry on business in accordance with this Contract, becomes unable to pay overdue debts for more than [ *** ], or any of its equity interest in the Company is seized or frozen by a court order and not released within [ *** ] upon such seizure; or Without any limitation to clause (a), if the other Party ( Breaching Party ) or its Affiliates materially breaches any confidentiality obligations pursuant to Article 26.1 or materially breaches any non-competition obligation pursuant to Article 26.4 or Article Negotiations to solve problems If a Party entitled to give a notice pursuant to Article 29.2, Article 29.3 or Article 29.4 gives a notice of its desire to terminate this Contract, the Parties shall immediately conduct negotiations and attempt to resolve the situation which results in the giving of such notice. If (i) no resolution of the dispute is reached to the satisfaction of the notifying Party within [ *** ] after issuance of such notice, or (ii) the notified Party fails to cooperate by promptly commencing negotiations within such [ *** ] period, the notifying Party shall be entitled to terminate this Contract immediately upon giving a second notice to the breaching Party.

151 29.6 Date of termination For purposes of this Article 29, the Date of Termination shall be (i) the date of expiry of the Term or the date of the agreement by the Parties on termination of this Contract, if the termination is effected pursuant to Article 29.1, or (ii) the date of when the notified Party of notice of unilateral termination of this Contract receives the second notice for immediate termination of this Contract, if the termination is effected pursuant to Article Further Rights The termination rights under this Contract shall be in addition to and not in substitution of any other claims or remedies that may be available to the non-breaching Party, and any termination shall not relieve the breaching Party from any accrued Liabilities against the non-breaching Party nor the Company. Article 30 Liquidation and Continuing Obligations 30.1 Liquidation If upon termination of this Contract in accordance with Article 29, the Company will not be continued by either Party, as the case may be, within [ *** ] following the Date of Termination, then the Board shall promptly adopt a resolution on the dissolution and liquidation of the Company. The liquidation shall be conducted in accordance with relevant PRC laws and regulations and with the provisions set forth below (in so far as they do not conflict with such laws and regulations): (a) A liquidation group shall be established within [ *** ] from the Date of Termination, which is made up of a number of members appointed by each Party in accordance with the number of the Board members each Party is entitled to appoint to the Board of Directors under Article 15.1 (a). For the avoidance of doubt, Fosun shall be entitled to appoint the Chairman of the liquidation group, who will lead all the activities of the liquidation group. In such case Kite may decide to retain one of the Big Four accounting firms to supervise or check the liquidation process, with the related cost being part of the liquidation expenses. (b) The liquidation group shall initiate the necessary appraisal and valuation of the property of the Company which shall be performed by the liquidation group or, if so decided by the liquidation group, by an international practicing accounting firm registered in the PRC and selected by the liquidation group, provided that such accounting firm must be independent of both Parties. In the course of valuation and appraisal of the Company s property, the selected accounting firm shall apply such appraisal and valuation method as is appropriate and internationally applied. The liquidation group shall develop a liquidation plan on the basis of the final valuation report prepared by the selected accounting firm. (c) In developing and executing the liquidation plan, the liquidation group shall use every reasonable effort to obtain the highest possible price for the Company s assets. (d) After the liquidation and division of the Company s assets and the settlement of all of its outstanding debts, [ *** ], and any remaining assets (if any) thereafter shall be paid over to the Parties in the profit distribution proportion according to Article 7.6. However, in case of termination of this Contact according to Article 29.4, the non-breaching Party shall [ *** ].

152 (e) After liquidation of the Company, the liquidation group shall report to the relevant Government Authorities to cancel its registration and business license. Additionally, the Company shall publish a formal announcement of the termination and liquidation of the Company. (f) Either Party, at its own expense, shall have the right to obtain copies of all of the Company s accounting vouchers, account books, account statements, minutes and Board resolutions, and other relevant documents after the conclusion of liquidation Continuing obligations The rights, benefits and obligations provided in this Contract in relation to compensation of damages, indemnification, confidentiality, noncompetition, settlement of disputes, termination, buy-out and liquidation of the Company shall survive the termination of this Contract. Article 31 Breach of Contract 31.1 In the event of a breach of contract committed by a Party, the breaching Party shall bear Liabilities towards the other Party and/or the Company. In the event that a breach of contract is committed by more than one Party, each Party shall bear its individual share of the Liabilities towards the other Party and the Company. Any Liability shall include both direct losses and indirect or consequential losses or damages (including reasonably foreseeable profits), unless otherwise provided in this Contract or in any of the Related Agreements Notwithstanding anything to the contrary herein, other than for indemnification obligations relating to third party claims, breaches of confidentiality, intentional torts, intentional violations of law, gross negligence or intentional misconduct, neither Party shall be liable to the other Party (or the Company) for any indirect, special, incidental, punitive, exemplary, lost profit, cover, or consequential damages arising out of or resulting from this Contract, even if aware of the possibility of such damages. Article 32 Force Majeure 32.1 If an event of Force Majeure occurs, a Party s contractual obligations under this Contract affected by such an event shall be suspended during the period of delay caused by the Force Majeure and shall be automatically extended, without penalty or responsibility for any damage, for a period equal to such suspension The Party claiming Force Majeure shall promptly inform the other Party in writing and shall furnish within [ *** ] thereafter sufficient proof of the occurrence and duration of such Force Majeure. The Party claiming Force Majeure shall also use all reasonable efforts to terminate the Force Majeure and to mitigate the effect of the Force Majeure.

153 32.3 In the event of Force Majeure, the Parties shall immediately consult with each other in order to find an equitable solution and shall use all reasonable efforts to minimize the consequences of such Force Majeure. Article 33 Dispute Settlement 33.1 If any dispute arises between the Parties out of or in relation to this Contract, including any dispute regarding its existence, validity, interpretation, performance, breach or termination, or if the Board is deadlocked on a matter for approval, the Parties shall attempt in the first instance to resolve such dispute through friendly consultations If the dispute has not been resolved by such friendly consultation within [ *** ] after either Party has given written notice to the other Party requesting the commencement of friendly consultation, then the Parties shall attempt to settle it by talks between the CEOs of both Parties If the dispute has not been resolved by CEO discussions within [ *** ] after either Party has given written notice to the other Party requesting the commencement of such CEO discussions, then either Party may submit the dispute to the Hong Kong International Arbitration Center ( HKIAC ) for arbitration in accordance with its then applicable arbitration rules. The arbitration shall be conducted by three (3) arbitrators appointed in accordance with the said arbitration rules and in accordance with the following directions: (a) The arbitration proceedings shall be conducted in English and the arbitration tribunal shall refer to the English version of this Contract only; (b) (c) all arbitrators shall be fluent in English; the arbitration proceedings shall be administered by HKIAC in Hong Kong and the seat of arbitration as well as the place of hearings and other procedural steps shall be Hong Kong; (d) The losing Party shall bear, in proportion to the percentage it has lost the case, the arbitration costs and other Party s reasonable attorney fees The Parties hereby agree that any arbitration award rendered in accordance with the provisions of this Article 33 shall be final and binding upon the Parties, and the Parties further agree that such award may be enforced by any court having jurisdiction over any Party against which the award has been rendered, or where the assets of such Party is located In any arbitration proceedings, any legal proceedings to enforce the arbitration award, or any other legal proceedings between the Parties pursuant to or relating to this Contract, each Party expressly waives the defence of sovereign immunity and any other defence based on the fact or allegation that it is an agency or instrumentality of a sovereign state or is otherwise entitled to immunity Upon submission of any dispute to arbitration, the Parties shall continue to exercise their remaining respective rights, and fulfil their remaining respective obligations under this Contract, except for any matters related to the dispute in arbitration. Article 34 Applicable Law

154 The formation, validity, interpretation and implementation of this Contract shall be governed by the laws of the PRC. Contracts which are attached as Appendices to this Contract shall be governed by the law stated in those contracts. Article 35 Miscellaneous Provisions 35.1 Waiver To the extent permitted by PRC law, the failure or delay on the part of a Party to exercise a right, power or privilege under this Contract and any contracts attached as Appendices hereto shall not operate as a waiver thereof, nor shall any single or partial exercise of a right, power or privilege preclude any other future exercise thereof, unless explicitly otherwise regulated herein Assignment Except as otherwise agreed in this Contract, including permitted assignments of equity pursuant to Article 9, this Contract may not be assigned in whole or in part by any Party without the prior written consent of the other Party hereto Binding Effect and Amendments This Contract is made for the benefit of the Parties and their respective lawful successors and assignees. No amendment or other modification of this Contract shall in any event be effective unless the same is made in writing and signed by an authorized representative of each Party. To the extent required by law, the effectively amended Contract shall be submitted to the relevant Governmental Authorities for filing and/or registration Severability If any part of this Contract shall become or be declared void or invalid by virtue of law or government order or court decision, the remaining parts shall remain valid and this Contract shall be fulfilled by the Parties in accordance with its general principles, and the void or invalid provision(s) shall be replaced by such valid provision(s) agreed to by the Parties as closest reflecting the economic intentions of the Parties at the time of signing this Contract Language This Contract is executed in the Chinese and English language in six (6) originals each (at least one (1) for Kite and one (1) for Fosun and the remaining four (4) originals for submission to the Governmental Authorities. The English and Chinese version shall be equally binding Entire Contract This Contract and the Appendices attached hereto together constitute the entire agreement between the Parties with respect to the subject matter of this Contract and they together supersede all prior discussions, negotiation and agreements between the Parties. In the event of any conflict between the terms and provisions of this Contract and the Articles of Association, the terms and provisions of this Contract shall prevail.

155 35.7 Notice Any notice or written communication provided for in this Contract by each Party to the other shall be made in English by or by courier service delivered letter, promptly transmitted or addressed to the appropriate Party. The date of receipt of a notice or communication hereunder shall be deemed to be [ *** ] after the letter is given to the courier service in the case of a courier service delivered letter and [ *** ] after dispatch of an , unless an earlier delivery date can be evidenced. All notices and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party. Kite: KP EU C.V. 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands legal@kitepharma.com Fosun: Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. Building A, No.1289 Yishan Road, Shanghai , PRC qiyy@fosunpharma.com [Signature Page Follows] This Contract has been duly executed by the duly authorized representatives of the Parties at the date set out above. KP EU C.V. By Intertrust Directors (Cayman) Ltd. Name: L.I. da Ascencăo Jacqueline Haynes Title: authorised signatories Signature: /s/ L.I. da Ascencăo /s/ Jacqueline Haynes Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. (Chop) By Name: Title: Signature:

156 This Contract has been duly executed by the duly authorized representatives of the Parties at the date set out above. KP EU C.V. By Name: Title: Signature: Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. (Chop) By Name: Title: Wu Yifang Legal Representative Signature: /s/wuyifang Appendix 1 PRODUCT AND KNOW-HOW LICENSE AGREEMENT

157 between KP EU C.V. and Fosun Pharma Kite Biotechnology Co., Ltd. Contents Article 1. Definitions 3 2. License 6 3. Deliver Licensed Know-how 6 4. Quality Control 7 5. Improvements 7 6. Consideration 9 7. Protection of the Intellectual Property Rights Confidentiality Non-compete Right to Swap Additional Obligations of the Company Additional Obligations of Kite Assignment Duration and Termination Effect of Termination Force Majeure Liability, Indemnity and Insurance Governing Law and Dispute Settlement Miscellaneous 19 Schedule 1: List of Licensed Know-how

158 Schedule 2: Valuation Report Schedule 3: Capital Contribution Agreement This License Agreement (the Agreement ) is effective as of April 27 th, 2017 by and between: (1) KP EU C.V., a limited partnership that is governed by the laws of The Netherlands, having its registered seat at Amsterdam, the Netherlands and its business address at 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands, registered with the Dutch trade register under number ( Kite ). (2) Fosun Pharma Kite Biotechnology Co., Ltd., a limited liability company organized and existing under laws of the People s Republic of China whose registered office is at No.222 Kangnan Road, Shanghai , PRC. (the Company or the Licensee ). (Kite and the Company are hereinafter referred to individually as a Party and collectively as the Parties ) Preambles WHEREAS, the Company is a joint venture established by Kite and Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. ( Fosun ) in the pursuit of successful commercialization of KTE-C19 and potentially additional cancer immunotherapy products in the Territory (as defined below). WHEREAS, pursuant to the Sino-foreign Co-operative Joint Venture Contract concluded between Kite and Fosun on January 10, 2017 ( JV Contract ), Kite has agreed to grant, and the Licensee has agreed to be granted with the license of exclusive commercial use rights in the Territory (as defined below) for the related know-how. NOW THEREFORE, in consideration of the mutual promises of the Parties, and for good and valuable consideration, it is agreed by and between the Parties as follows: 1. Definitions Unless otherwise provided herein, the capitalized terms used in this Agreement shall have the same meanings as defined in the JV Contract. For the purposes of this Agreement the following capitalized terms are defined in this Article 1 and shall have the meaning specified herein. 1.1 Affiliate means, for the purpose of this Agreement, mean, as to a Party, any entity directly or indirectly controlling, controlled by or under common control with such Party, where control means (i) beneficial ownership of greater than fifty percent (50%) of the voting equity interests in such entity or (ii) the possession, directly or indirectly, of the power to independently direct or cause the direction of the management and policies of an entity, whether through the ownership of a voting equity interest, by contract or otherwise. 1.2 Clinical Trial means clinical research, studies and experiments on human participants for the purpose of examining the safety and efficacy of investigational pharmaceutical products, and as a precondition for a license application. 1.3 Company Improvements mean any improvement, enhancement or modification to the technology that is the subject of or in relation to the Licensed Know-how and/or the Licensed Product and made, discovered, invented or otherwise acquired by the Company. 1.4 Confidential Information has the meaning set forth in Article 9.1 (a). 1.5 Effective Date means the date when this Agreement is signed by both Parties and become legally effective. 1.6 Field of Use means engineered autologous T-cell therapy for the treatment of cancer. 1.7 Fosun means Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. 1.8 Governmental Authority means any governmental ministry, administration, agency or other public authority (and/or any branch of the foregoing), whether at the national, provincial, municipal or local level, or any official of the national or any provincial, municipal or local government in the respective country. 1.9 Intellectual Property Rights means patent rights, rights to inventions, utility models and applications, supplementary protection certificates, know-how and trade secrets, copyright and related rights, trade marks and services marks, trade names and domain names, rights in goodwill and the right to sue for passing off and unfair competition, rights in designs, rights in computer software, database rights, rights to preserve the confidentiality of information, rights to apply for any related intellectual property right registration or certificate, rights to apply any of the above and any related improvements, renewals or extensions in commercial use,

159 as well as rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist, now or in the future, in any part of the world JV Contract means the Sino-foreign Co-operative Joint Venture Contract concluded between Kite and Fosun on January 10, Kite Improvements mean any improvement, enhancement or modification to the Licensed Know-how and/or the Licensed Product made, discovered, invented or acquired solely by Kite during the Term that is necessary or reasonably useful to develop, manufacture or commercialize the Licensed Product in the Field in the Territory and that is not subject to the approval of any third party for granting the Company with such right to use the Kite Improvements, provided that if such approval is required, Kite shall use its commercially reasonable efforts to obtain such approval Kite Territory means worldwide outside the Territory Licensed Know-how means processes, practices, specifications, formulations, formulae, procedures, and other special knowledge, skill and experience pertaining to the Licensed Product, in any tangible or intangible form, controlled by Kite and listed in Schedule 1 of this Agreement, any Company Improvements and any Kite Improvements relating to any of the foregoing Licensed Product means KTE-C19, or if swapped pursuant to Article 10, the swapped Kite Product provided to the Licensee according to Article Medical Authority means the National Health and Family Planning Commission of the PRC, the China Food and Drug Administration (CFDA) or any other competent authorities (including any of their competent branches) which have the power to approve the Clinical Trial or commercialization of the Licensed Products in the Territory Regulatory Approval means any and all approvals (including regulatory approval applications, supplements, amendments, and pre- and post-approvals, where applicable), licenses, registrations, filings or authorizations of any Medical Authority that are necessary for the commercialization of the Licensed Product in the Territory Technical Service Agreement means the Technical Service Agreement to be concluded between Kite and the Company pursuant to the key terms and conditions stipulated under the JV Contract Term has the meaning set forth in Article Territory means, for the sole purpose of this Agreement, the mainland of People's Republic of China, the Hong Kong Special Administration Region and the Macao Special Administration Region, but excluding Taiwan " US " means the United States of America " USD " means US Dollar, the lawful currency of the US. 2. License 2.1 Exclusive Commercial Rights Subject to the terms and conditions of this Agreement, Kite hereby grants to the Company an exclusive license to (i) the development, manufacturing, use, distribution, sale (and offer for sale or contract to sell), promotion, marketing and otherwise commercialization of the Licensed Product, and (ii) the Licensed Know-how for the purposes of development, manufacturing, use, distribution, sale (and offer for sale or contract to sell), promotion, marketing and otherwise commercialization of the Licensed Product in the Field of Use in the Territory. 2.2 Retained Intellectual Property Rights Except for the exclusive commercial use rights as described in above 2.1, Kite shall own and retain all rights, title and interest in and to the Licensed Product and Licensed Know-how, including all Intellectual Property Rights therein. For avoidance of doubt, any rights not expressly granted under this Agreement shall be reserved to be the retained rights of Kite, unless otherwise consented to by Kite. 2.3 Sub-licensing Without Kite's prior written consent, the Company shall not grant any sub-licenses under this Agreement to any third party or Fosun or any Affiliates of Fosun for use of the Licensed Product or Licensed Know-How. 2.4 Nothing in this Agreement shall constitute any representation or warranty regarding the safety, efficacy or quality of the Licensed Product in the Territory of the Licensed Know-How, except for otherwise stated in this Agreement.

160 3. Deliver Licensed Know-how 3.1 Within [ *** ] after the Effective Date, Kite shall provide, access to the Company of the Licensed Know-How according to Schedule 1 of this Agreement that is available in documents or written forms or plans, provided that the Tech Ops and Quality Know-How, including techniques and other tools, listed on Schedule 1 shall be delivered pursuant to a mutually agreed upon technology transfer plan as will be attached to the Technical Service Agreement. 3.2 The Parties acknowledge and agree that Kite shall have met its obligations pursuant to this Article 3.2 by delivering the Licensed Know-how pursuant to this Agreement and completing the technical transfer pursuant to the JV Contract and Technical Service Agreement. 4. Quality Control and Data Exchange 4.1 The Company shall, in exercising its rights under this Agreement, comply with the specifications, standards and directions relating to the Licensed Product as notified in writing by Kite from time to time and with all applicable laws, regulations and codes of practice, provided that such specifications, standards, and directions shall be reasonable and workable for the development, manufacturing, and commercialization of the Licensed Product in the Territory. 4.2 The Company shall promptly provide Kite with copies of material written and communications, including also summary updates of important verbal communications, relating to Clinical Trial, manufacturing, supply chain and commercialization of the Licensed Product, with any regulatory, industry or other authorities, in particular with the Medical Authority. 4.3 The Company shall not submit a package for the Licensed Product to obtain the Regulatory Approval (i) for launching Clinical Trial and (ii) for starting commercialized use in the Territory without Kite s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. 4.4 The Company shall, on Kite s request, provide Kite with details of any product complaints and adverse events it has received relating to the Licensed Product together with reports on the manner in which such complaints are being, or have been, dealt with, and shall comply with the terms and conditions set forth in the Pharmacovigilence Agreement which shall include standard terms and conditions and concluded between Kite and the Company prior to the first Clinical Trial of the Licensed Product. 5. Development and Marketing 5.1 The Company shall not name Kite or any of its Affiliates (for the sole purpose of this Article 5.1, excluding the Company) as an entity responsible for any clinical trial for any Licensed Product in the Territory nor state or otherwise imply in any regulatory filing or other documentation relating to any clinical trial of any Licensed Product in the Territory (including, without limitation, any informed consent document) that Kite or any of its Affiliates has any responsibility or liability in connection with the conduct of such clinical trial, except for as required by any Governmental Authority. 5.2 The Company shall use its commercially reasonable efforts to launch, promote and sell the Licensed Product in the Territory. 6. Improvements 6.1 Any Company Improvements made, discovered, invented or otherwise acquired by the Company arising out of or in relation to use of the Licensed Know-how and Licensed Product shall be immediately without delay notified to Kite by the Company. 6.2 The Parties agree that for Company Improvements related to the subject matter of the licenses under this Agreement, Kite and the Company shall jointly own and otherwise have right, title, and interest in such Company Improvements, including the right to research, study, make, use, sell, offer for sale (other than the prohibited use under this Agreement), and apply for registration of the know-how. 6.3 The Company shall hand over the Company Improvements related technical information to Kite within [ *** ] of the Company notification to Kite. 6.4 The Company, during the Term of this Agreement, shall have an exclusive commercial license to make, use, sell, and offer for sale, such Kite Improvements that are necessary, or, unless subject to Article 6.5, reasonable useful in the Territory and Field of Use, [

161 *** ]. 6.5 If during the Term, Kite obtains control of any Intellectual Property Rights that are owned or controlled by a third party that are not necessary, but are reasonably useful for the development, manufacture, or commercialization of the Licensed Products in the Field of Use in the Territory, then Kite may bring such new Intellectual Property Rights to the attention of the Company in writing, including a description of such Intellectual Property Rights, and the Parties in good faith will discuss whether such new Intellectual Property Rights should be made available for use by the Company pursuant to this Agreement for the development, manufacture or commercialization of Licensed Products in the Field of Use in the Territory. Kite will [ *** ] [ *** ]. The Parties will discuss the rationale of including the new Intellectual Property Rights and the proposed payment allocation. If the Parties agree in writing on the economic terms for the allocation of payments for such new Intellectual Property Rights, then such new Intellectual Property Rights shall thereafter be included in the Kite Improvements. If the Company concludes that such new Intellectual Property Rights should not be licensed pursuant to this Agreement or the Parties cannot agree on the economic terms for the allocation of the payments in connection therewith, then such Intellectual Property Rights shall not be included in the Kite Improvements. 6.6 Kite shall hand over the Kite Improvements related technical information to the Company within [ *** ] of the Kite notification to the Company. 7. Capital Contribution 7.1 Based on (i) original copy of the Valuation Report which is attached to this Agreement as Schedule 2, and (ii) a Capital Contribution Agreement concluded between Kite and Fosun, which is attached to this Agreement as Schedule 3, by signing this Agreement, both Parties agree that Kite has fulfilled its capital contribution obligation under Article 7.4(a) of the JV Contract. 7.2 Taxes [ *** ]. The Company shall be responsible for reporting and [ *** ] to the proper tax authority at its own cost, applying the correct amount and in a timely manner. The Company shall indemnify Kite against any liability or expense incurred by Kite as a result of not fulfilling any tax obligation relating to any payment under this Agreement. The Company shall send evidence of the tax obligation, together with proof of tax payment, to Kite within [ *** ] following that tax payment to enable Kite to support a claim (if permissible) for income tax credit in respect of any amount so levied. The Company shall cooperate with Kite in claiming exemptions from such deductions or withholdings under any agreement or treaty in effect from time to time. Kite shall cooperate with the Company to comply with any requirement from the tax authority. 8. Protection of the Intellectual Property Rights 8.1 The Company shall immediately notify Kite in writing, giving full particulars, if any of the following matters come to its attention in the Territory: (a) any actual, suspected or threatened unauthorised disclosure, misappropriation or misuse of the Licensed Know-how; (b) any claim made or threatened that commercialization of the Licensed Product infringes third party rights; (c) any other form of attack, charge or claim which may affect performance of the license under this Agreement. 8.2 In respect of any of the matters listed in Article 8.1: (a) Kite shall, in its absolute discretion, decide what action, if any, to take, provided that such action or inaction shall not cause any material adverse effect on the Company; (b) Kite shall have exclusive control over, and conduct of, all claims and proceedings; (c) Kite shall bear the cost of any proceedings and shall be entitled to retain all sums recovered in any action for its own account; (d) the Company shall not make any admission other than to Kite and shall at the Kite s expense provide Kite with all assistance that it may reasonably require in the conduct of any claims or proceedings. 8.3 The Company agrees not to commence any infringement actions in respect of any of the matters listed in Article 8.1, unless

162 otherwise agreed in writing by Kite, or according to Article If any third party infringement of any of the Licensed Know-how or any Intellectual Property Rights pertaining to the Licensed Product in the Territory interferes materially in the Company s business of the Licensed Product and Kite decides not to commence infringement actions by itself, prior to commencing any action in connection therewith, the Company shall consult with Kite and consider Kite s recommendations regarding such action. Subject to receiving advice from experienced patent counsel that infringement proceedings stand a reasonable chance of success, the Company shall be entitled to commence proceedings at its own cost and retain all related recoveries, and may require Kite to give the respective authorization to such proceedings and provide reasonable assistance. 8.5 The provisions of this Article 8 shall survive the termination or expiry of this Agreement. 9. Confidentiality 9.1 During the Term and within [ *** ] after expiry or termination of this Agreement, the Company shall: (a) maintain the confidentiality of all Intellectual Property Rights, Licensed Know-how, and any other information (whether or not technical) or method provided to the Company or its Affiliates by, or on behalf of Kite, either preparatory to, or as a result of, this Agreement, and terms and conditions of this Agreement (collectively, Confidential Information ); (b) not use the Confidential Information for any purpose except for the purpose of exercising or performing its rights and obligations under this Agreement; (c) not disclose the Confidential Information to any third party or any of its Affiliates, including its or its Affiliate's directors, officers, employees, advisors and agents, except to those who are associated with the Company's business operation and the Confidential Information is only disclosed on a strict " must-know " basis, provided that the Company has requested the recipient to conclude a similar confidentiality commitment before disclosure. 9.2 The Company shall advise its directors, officers, employees, advisors, agents and those of its Affiliates, who receive any Confidential Information of the existence and importance of complying with the obligations set forth in Article 9.1, and require such persons to sign a confidentiality undertaking in a form acceptable to Kite. The Company shall be jointly and severally liable for breach of the confidentiality liability of its Affiliate, their directors, officers, employees, advisors and agents. 9.3 The Company shall formulate rules and regulations to cause its directors, officers, employees and agents to also comply with the confidentiality obligations set forth in this Article 9. All directors, officers, employees, advisors and agents having access to Confidential Information shall be required to sign a confidentiality undertaking in a form acceptable to Kite. 9.4 The provisions of Article 9.1 shall not apply to Confidential Information that can be proven: (a) to be known by the Company by written records made prior to disclosure by Kite or the Effective Date, whichever is earlier; (b) is or becomes public knowledge otherwise than through a breach of this Agreement; (c) was obtained by the Company from a third party having no obligation of confidentiality with respect to such Confidential Information; or (d) is required by laws, regulations, stock exchange rules, or by order of any competent court or Governmental Authority to be disclosed, provided that it gives Kite prior notice of such disclosure and takes into account the reasonable requests of Kite in relation to the content of such disclosure. 9.5 The Company will not be entitled to claim that a Confidential Information had already been known to it or was rightfully obtained from a third party, if the Company fails to inform Kite in writing (by stating the relevant circumstances) of its prior knowledge of the Confidential Information or of the rightful obtaining of the Confidential Information from a third party within a period of [ *** ] after the particular Confidential Information was known by, disclosed to or obtained by the Company. 9.6 Each Party shall have the right to issue a press release to announce the execution of this Agreement as approved in writing by the other Party, which shall not be unreasonably withheld by the other Party. 9.7 The provisions of this Article 9 shall remain in force notwithstanding expiry or earlier termination of this Agreement.

163 10. Non-compete 10.1 During the Term and for an additional [ *** ] thereafter if terminated due to a breach of this Contract by Kite, Kite shall not: (a) grant any commercial use right, exclusive or non-exclusive for the Licensed Product in the Territory in the Field of Use, to any third party regarding the Licensed Know-how; and (b) conduct any research, development, manufacturing or other clinical or commercial activities for the Licensed Product with the Licensed Know-how (or with any other technology) in the Territory in the Field of Use, except as otherwise mutually agreed by the Parties in writing. For the avoidance of doubt, any Passive Investment by Kite or any of its Affiliates shall not be considered as a breach of this Article During the Term and for an additional five (5) years thereafter if terminated due to a breach by the Company, the Company shall not and shall use its reasonable best efforts to cause its Affiliates, not to own or operate any business engaging T cell immunotherapy except as mutually agreed by the Parties in writing. For avoidance of doubt, the concept of " own " shall mean any type of actual control of a business by way of equity control, control of the board of directors, control of the management board, control by a variable interest entity, etc. 11. Right to Swap In the event that any U.S. FDA Approval for KTE-C19 in the US is not completed by [ *** ] and no Regulatory Approval in the Territory either, the Company may request to swap KTE-C19 with another Kite Product available in the Territory, subject to the same terms and conditions under this Agreement, by providing written notice to Kite by [ *** ]. For avoidance of doubt, any product which commercialized by Kite in the Territory, and which has been rejected by the Company in the exercise of the first right of refusal according to the JV Contract, shall not be raised by the Company for the swap purpose herewith. 12. Additional Obligations of the Company 12.1 The Company shall: (a) be responsible to register this Agreement with the competent authority for administration of technology import contract registration in the Territory, if required by law. (b) ensure to provide safe and compliant premises for the Licensed Product regarding Clinical Trial and commercialized operation; (c) obtain at its own expense all licenses, permits, filing and consents necessary for the Clinical Trial and commercialization of the Licensed Product in the Territory, and promptly supply copies of all of these to Kite and such further information as Kite may reasonably require; (d) perform its obligations in connection with the commercialization of the Licensed Product with all due skill, care and diligence including good industry practice; (e) only make use of the rights granted under this Agreement for the exact and sole purpose of carrying out the commercial operation as described and authorised in this Agreement; (f) comply with all regulations and practices in force in the Territory to safeguard Kite s rights in the Licensed Know-how and Licensed Product The Company shall not, directly nor indirectly, assist any third party including its Affiliates in diminishing the rights of Kite in the Licensed Know-how and Licensed Product The Company acknowledges and agrees that the exercise of the license granted to the Company under this Agreement is subject to all applicable laws, enactments, regulations and other similar instruments in the Territory, and the Company understands and agrees that it shall at all times be solely liable and responsible for such due observance and performance. 13. Additional Obligations of Kite 13.1 Kite shall use its reasonable efforts to assist the Company to register this Agreement with the competent authority for administration of technology import contract registration in the Territory, if required by law.

164 13.2 Kite acknowledges and agrees that the exercise of the license granted to the Company under this Agreement is subject to all applicable laws, enactments, regulations and other similar instruments in the Territory or any other jurisdiction, and Kite understands and agrees that it shall at all times be solely liable and responsible for such due observance and performance Kite hereby represents and warrants to the Company that it has full power and authority to grant the licenses herein granted, without the consent of any other party, and, to Kite s knowledge, without infringing any third party s rights Kite and its Affiliates represents and warrants that it has not entered into any agreement with any third party which is in conflict with the rights granted to the Company in the Territory and pursuant to this Agreement. For clarity, under this Agreement, Kite is not granting any sublicense to any agreement between Kite and a third party Kite and its Affiliates represents that, as of the Effective Date, it is not aware of any patents, patent applications, trademarks, trademark applications, or other intellectual property rights belonging to third parties and covering, in whole or part, the practice of the Licensed Know-how and Licensed Product in the Field of Use in the Territory as contemplated herein Kite represents that the Schedule 1 shall contain enabling Know-how that to Kite s knowledge, and together with the licensed Technical Information under the Technology License Agreement, represents all of the material information that Kite has control of that is necessary or reasonably useful for the development, manufacturing, and commercialization of the Licensed Product in the Chinese Market, and all the Licensed Know-how as provided to the Company shall be true, accurate and not misleading in all material respects. 14. Assignment 14.1 The Company shall not assign, transfer, mortgage, charge or deal in any other manner of its rights and obligations under this Agreement without the prior written consent of Kite Kite shall not assign, transfer, mortgage, charge or deal in any other manner of its rights and obligations under this Agreement without the prior written consent of the Company, except for an assignment by Kite under a Kite Sale or to a Kite Affiliate, provided however that Kite may assign this Agreement to a third party or Kite Affiliate which is capable of performing the duties and obligations under this Agreement. 15. Duration and Termination 15.1 This Agreement shall come into force on the Effective Date and shall continue in full force and effective for a period of twenty (20) years from the Effective Date, unless terminated earlier in accordance with Article 15.2 or Article 15.3 ( Term ) Both Parties may mutually agree to terminate this Agreement by concluding a mutual termination agreement Without prejudice to any rights and remedies that have accrued under this Agreement, any Party may terminate this Agreement immediately by giving a [ *** ] written notice to the other Party if any of the following circumstances occurs: (a) the other Party commits a material breach of this Agreement and (if such breach is remediable) fails to remedy that breach within a [ *** ] grace period; (b) a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the liquidation and early dissolution of the other Party; (c) the other Party is declared bankrupt or insolvent in accordance with law; (d) the other Party suspends or ceases, or threatens to suspend or cease, to carry on all or a substantial part of its business; (e) the JV Contract is terminated; (f) Either Party is unable to perform this Agreement due to the change of laws and regulations Notwithstanding any of the foregoing, for so long as Kite owns at least 40% of the equity of the Company, the termination rights as provided in this Article 15.3 shall be conditioned upon the termination of the JV Contract, except for Article 15.3(e) or as mutually agreed by both Parties. 16. Effect of Termination

165 16.1 On expiration or termination of this Agreement for any reason and subject to any express provisions set out elsewhere in this Agreement: (a) All rights and licenses granted pursuant to this Agreement shall cease and the Company shall not thereafter use, manufacture, advertise, sell or otherwise dispose of any Licensed Know-how and Licensed Product in the Territory or elsewhere; (b) The Company shall be responsible in the cancellation of any registration and licenses registered pursuant to this Agreement and according to law; (c) Within [ *** ] after the date of expiration or termination, the Company shall hand back to Kite, or at Kite s request, destroy, at no cost to Kite all the information (whether or not technical) of a confidential nature communicated to it by Kite. The Company shall not retain copies of any such information required to be handed back to Kite or destroyed. The Company shall furnish to Kite satisfactory evidence of such destruction; (d) The Company shall provide Kite with copies of all Company Improvement and, at Kite s cost, such further information as is reasonably requested by Kite; and (e) The Company shall stop using in any manner the names for the Licensed Product as provided under this Agreement or pursuant to the Trademark and Name License Agreement to be concluded between the Kite and the Company. For the avoidance of doubt, Article 16.1(d) shall not apply in case of termination by the Company due to material breach of Kite The expiry or termination of this Agreement, for any reason, shall not affect any provision of this Agreement which is expressed to survive or operate in the event of expiry or termination, and shall be without prejudice to any rights of either Party which may have accrued to the date of such expiry or termination. 17. Force Majeure Neither Party shall be in breach of this Agreement nor liable for delay in performing, or failure to perform, any of its obligations under this Agreement if such delay or failure result from Force Majeure. In such circumstances the affected Party shall be entitled to a reasonable extension of the time for performing such obligations. If the period of delay or non-performance continues for [ *** ], the Party not affected by such event may terminate this Agreement by giving a [ *** ] written notice to the affected Party. 18. Liability, Indemnity and Insurance 18.1 The Company shall indemnify Kite against any and all liabilities, costs, expenses, damages or losses (including any direct or indirect consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by Kite arising out of any breach by the Company of the terms of this Agreement Kite shall indemnify the Company against any and all liabilities, costs, expenses, damages or losses (including any direct or indirect consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by the Company arising out of any breach by Kite of the terms of this Agreement. Notwithstanding anything to the contrary herein, other than for indemnification obligations relating to third party claims, breaches of confidentiality, intentional torts, intentional violations of law, gross negligence or intentional misconduct, Kite shall not be liable to the Company for any indirect, special, incidental, punitive, exemplary, lost profit, cover, or consequential damages arising out of or resulting from this Agreement, even if aware of the possibility of such damages The Company shall, at its expense, carry product liability and comprehensive general liability insurance coverage of an amount adequate to support its liabilities under this Agreement. The Company shall ensure that such insurance policy names Kite and Fosun as co-insured with the Company and remains in effect throughout the duration of this Agreement and for a period of [ *** ] after termination or expiry of the Agreement, and shall supply Kite with a copy of such policy on request Nothing in this Agreement shall have the effect of excluding or limiting any liability for death or personal injury caused by any Party's gross negligence, fraud or breach of criminal laws.

166 18.5 Without prejudice to any other rights or remedies that any Party may have, each Party acknowledges and agrees that damages alone may not be an adequate remedy for any breach of the terms of this Agreement by itself. Accordingly, each Party shall be entitled to the remedies of injunction, specific performance or other discretionary relief for any threatened or actual breach of the terms of this Agreement. 19. Governing Law and Dispute Settlement 19.1 The formation, validity, performance and interpretation of this Agreement shall be governed by and construed in accordance with the laws of the People s Republic of China In the event of any dispute arises between the Parties out of or in relation to this Agreement, including any dispute regarding its existence, validity, interpretation, performance, breach or termination, the Parties shall attempt in the first instance to resolve such dispute through amicable means If the dispute has not been resolved by amicable means within [ *** ] after either Party has given written notice to the other Party requesting the commencement of such consultation, then the dispute shall be submitted to the discussion between CEOs of both shareholders of the Company, in line with Article 33.2 of the Company's JV Contract If the dispute is still not resolved within [ *** ] upon the CEOs discussion in above 18.3, then either Party may submit the dispute to the Hong Kong International Arbitration Center ( HKIAC ) for arbitration in accordance with its then applicable arbitration rules. The arbitration shall be conducted by three (3) arbitrators appointed in accordance with the said arbitration rules and in accordance with the following directions: (a) The arbitration proceedings shall be conducted in English and the arbitration tribunal shall refer to the English version of this Agreement only; (b) all arbitrators shall be fluent in English; (c) the arbitration proceedings shall be administered by HKIAC in Hong Kong and the seat of arbitration as well as the place of hearings and other procedural steps shall be Hong Kong; (d) The losing Party shall bear, in proportion to the percentage it has lost the case, the arbitration costs and other Party's reasonable attorney fees The Parties hereby agree that any arbitration award rendered in accordance with the provisions of this Article 18 shall be final and binding upon the Parties, and the Parties further agree that such award may be enforced by any court having jurisdiction over any Party against which the award has been rendered, or where the assets of such Party is located In any arbitration proceedings, any legal proceedings to enforce the arbitration award, or any other legal proceedings between the Parties pursuant to or relating to this Agreement, each Party expressly waives the defence of sovereign immunity and any other defence based on the fact or allegation that it is an agency or instrumentality of a sovereign state or is otherwise entitled to immunity Upon submission of any dispute to arbitration, the Parties shall continue to exercise their remaining respective rights, and fulfil their remaining respective obligations under this Agreement, except for any matters related to the dispute in arbitration. 20. Miscellaneous 20.1 Waiver To the extent permitted by PRC law, the failure or delay on the part of a Party to exercise a right, power or privilege under this Agreement and any contracts attached as Appendices hereto shall not operate as a waiver thereof, nor shall any single or partial exercise of a right, power or privilege preclude any other future exercise thereof, unless explicitly otherwise regulated herein Binding Effect and Amendments This Agreement is made for the benefit of the Parties and their respective lawful successors and assignees. No amendment or other modification of this Agreement shall in any event be effective unless the same is made in writing and signed by an authorized representative of each Party. To the extent required by law, the effectively amended Agreement shall be submitted to the relevant Governmental Authorities for filing and/or registration.

167 20.3 Severability If any part of this Agreement shall become or be declared void or invalid by virtue of law or government order or court decision, the remaining parts shall remain valid and this Agreement shall be fulfilled by the Parties in accordance with its general principles, and the void or invalid provision(s) shall be replaced by such valid provision(s) agreed to by the Parties as closest reflecting the economic intentions of the Parties at the time of signing this Agreement Language This Agreement is executed in English language in four (4) originals each (at least one (1) for Kite and one (1) for the Company and the remaining two (2) originals for submission to the Governmental Authorities, where necessary Chinese translation shall be prepared for this Agreement Entire Agreement This Agreement and the Appendices attached hereto together constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and they together supersede all prior discussions, negotiation and agreements between the Parties No Partnership or Agency Nothing in this Agreement is intended to, or shall be deemed to, establish any partnership or joint venture between any of the Parties, constitute either Party the agent of the other Party, or authorise either Party to make or enter into any commitments for or on behalf of the other Party Notices Any notice or written communication provided for in this Agreement by each Party to the other shall be made in English by courier service delivered letter, , promptly transmitted or addressed to the appropriate Party. The date of receipt of a notice or communication hereunder shall be deemed to be [ *** ] after the letter is given to the courier service in the case of a courier service delivered letter and [ *** ] days after dispatch of an , unless an earlier delivery date can be evidenced. All notices and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party. (a) (b) Kite KP EU C.V. 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands legal@kitepharma.com The Company Fosun Pharma Kite Biotechnology Co., Ltd. 2/F, Pilot Building, No.222 Kangnan Road, China (Shanghai) Pilot Free Trade Zone, Shanghai , PRC qiyy@fosunpharma.com This Agreement has been duly signed by the Parties as follows: KP EU C. V. By: Name: Intertrust Directors (Cayman) Ltd. Padraig Hoare

168 Title: Signature: Authorized Signatory /s/ Padraig Hoare and Name: Title: Signature: Julie Hughes Authorized Signatory /s/ Julie Hughes Fosun Kite Biotechnology Co, Ltd. (Chop) By Name: Title: Signature: Richard Liqun Wang Legal Representative /s/ Richard Liqun Wang Schedule 1 List of Licensed Know-how [ *** ] Schedule 2 Valuation Report Valuation report KTE-C19 related exclusive license to be contributed by KP EU C.V. Reference No: H.W.P.B.Z. (2017) No.001

169 Shanghai Huwei Assets Valuation Co., Ltd. January 5, 2017 Important message to any person not authorized to have access to this report Any person who is not Kite Pharma Inc. ( Kite, you or the Engaging Party ) or who has not signed and returned to Shanghai Huwei Assets Valuation Co., Ltd. ( we or Huwei ) a waiver letter is not authorized to have access to this report. Should any unauthorized person obtain access to and read this report, by reading this report and making use of its contents, such person accepts and agrees to the following terms: The reader of this report understands that the work performed by Huwei was performed in accordance with the terms of engagement agreed between Kite and Huwei, and the work was performed exclusively for target audience s sole benefit and use. The basis of preparation of the attached report is discussed in the important notice on page 2. The reader of this report acknowledges that this report was prepared at the requirements of target audience, which is responsible for determining whether relevant terms and the report consider all aspects that may be relevant to target audience s needs. The report reflects the specific information requirements of target audience and may not consider all aspects that may be relevant for the needs of the reader. The report shall thus not be regarded as suitable for use by any person or persons other than target audience. The reader of this report acknowledges that we carried out our work subject to our terms of business as agreed in our engagement letter dated November 18, 2016 (the Engagement Letter ) and the variation letter signed on January 1, 2017 ( Variation Letter ). The terms of business contain, inter alia, clauses that limit Huwei's liability towards such amount as agreed in our Engagement Letter. We point out that the possible risk in connection with this report may be higher than the maximum liability as stated within our Engagement Letter. The reader of this report acknowledges that a party (including the addressee's legal and other professional advisers) other than the addressee may only rely on this report if it has executed a formal letter of reliance with Huwei. If the reader has not executed a formal letter of reliance with Huwei, we (including the legal representative, chief valuer, public valuers and other valuation practitioners who possess professional valuation knowledge): owe the reader no duty (whether in contract or in tort or under statute or otherwise) with respect to or in connection with the report or any part thereof; will have no liability to the reader for any loss or damage suffered or costs incurred by the reader or any other person arising out of or in connection with the provision to the reader of the report or any part thereof, however the loss or damage is caused, including, but not limited to, as a result of negligence but not as a result of the fraud or dishonesty of Huwei. Important Notice Kite, through one of its subsidiaries, KP EU C.V. ( KP EU or the Owner of Target Assets ), is contemplating to contribute an exclusive license to commercialization of KTE-C19, and relevant know-how for the purposes of commercialization of KTE-C19 in China mainland, Hong Kong and Macao (the Subject or the Exclusive License ) to setup a joint venture ( JV ) (the Proposed Transaction ). Kite, as the engaging party, engaged us to estimate the market value of the Subject as at December 31, 2016 (the Valuation Date ). We attach the valuation report in English in accordance with the Engagement Letter and its Variation Letter. The Engagement Letter (and the Variation Letter) is contained in Appendix 1. Please note this document is an English-language translation of the Chinese valuation report, prepared for your reference only. In the event of conflict of meaning between the English and Chinese versions, the Chinese version shall prevail. Our work commenced on November 18, 2016 and was completed on January 5, We have not undertaken the responsibility to update our report for events, circumstances or information provided after that date. Notwithstanding this, we reserve the right, should we consider it necessary, to revise our estimate of market value in light of any information which existed at the Valuation Date but which becomes known to us subsequent to the date of this report. In performing the valuation analysis, the information we used was primarily provided by the management of Kite and KP EU (the Management ). We do not assume any responsibility or liability for the reliability of the information which shall be held by the Management. Details of our principal information sources are set out in the report and we have satisfied ourselves, so far as possible, that the information presented in our report is consistent with other information that was made available to us in the course of our work in accordance with the terms of our Engagement Letter. This engagement is not an assurance engagement conducted in accordance with any generally accepted assurance standards and consequently no assurance opinion is expressed. We must emphasize that the realization of any prospective financial information set out within our report is dependent on the continuing validity of the assumptions on which it is based. The assumptions will need to be reviewed and revised to reflect such changes in trading patterns, cost structures or the direction of the business as they emerge. We accept no responsibility for the realization of any prospective financial information. Actual results are likely to differ from those shown in the prospective financial information because events and circumstances frequently do not occur as expected, and the differences may be material.

170 Except as otherwise provided by applicable law, this valuation is solely for your own use, on a confidential basis, in connection with the purpose mentioned earlier, and is not to be quoted or referred to, in whole or in part, in any other connection without our prior written consent in each specific instance. We do not assume responsibility or liability for losses incurred by any party whatsoever as a result of the circulation, publication, reproduction or use of this report contrary to the provisions of this term. Statement by the valuation professionals Kite, through one of its subsidiaries, KP EU, is contemplating to contribute the Exclusive License to a to-be-setup JV. Kite engaged us to estimate the market value of the Subject as at December 31, As the valuation professionals (including public valuers and other valuation practitioners who possess professional valuation knowledge and practice experience) who execute this engagement, we declare the following: We comply with the related laws, regulations and Asset Valuation Guidelines of the People s Republic of China ( PRC Asset Valuation Guidelines ), and abide by the principles of independence, objectivity and impartiality. The contents of our valuation report are objective, and we are responsible for the reasonableness of the valuation conclusion based on the information obtained in the course of our valuation work. The Valuation Data Pack Provided to Valuation Professionals as provided by the Owner of Target Assets is confirmed by the Owner of Target Assets through signing or stamping on each page of such pack. It is the Owner of Target Assets responsibility to ensure the information provided are authentic, legitimate, and complete. It is your responsibility and responsibility of any other involved party who might have access to this report to use this report appropriately. We have no existing or prospective interest in the Subject as stated in this report, nor with any involved party that are stated in this report. We are not biased for or against any involved party that are stated in this report. We did not perform site inspection of the Subject and involved assets as stated in the valuation report. We have given the necessary attention to the legal ownership of the Subject and involved assets and verified the corresponding legal documentations. We disclosed our findings faithfully in this valuation report. In order to satisfy the requirements of issuing the report, we have requested the client and involved parties to complete necessary procedures to make the legal ownership uncontroversial. Our analysis, judgments and conclusion are limited by the assumptions and conditions as stated in this report. The readers should consider the information stated in Section IX and XI of this report and their impact to the valuation conclusion. Our work is to analyze, estimate and present our professional opinions on the market value of the Subject as at the Valuation Date. We do not accept responsibility of the decision made by the Engaging Party and involved parties, and the valuation conclusion only acts as a reference rather than as the guarantee of the realizable price. Contents Abstract of Valuation Report 6 Valuation Report 7 I. The Engaging Party, the Owner of Target Assets and other users of the valuation report as agreed 7 II. Purpose of valuation 8 III. Subject and scope of valuation 8 IV. Value definition 9 V. Valuation Date 10 VI. Basis of valuation and sources of information 10 VII. Valuation methodologies 12 VIII. Implementation of valuation procedures 13 IX. Valuation assumptions 14 X. Valuation conclusions 15 XI. Special notes to the reader 16 XII. Restrictions on the use of this report 17 XIII. Report date 18 Abstract of Valuation Report KTE-C19 related exclusive license to be contributed by KP EU C.V. Reference No: H.W.P.B.Z. (2017) No. 001 [ *** ] Appendix 19

171 Valuation Report KTE-C19 related exclusive license to be contributed by KP EU C.V. Reference No: H.W.P.B.Z. (2017) No. 001 [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ]. [ *** ] [ *** ] [ *** ] I. Report date Report date is January 5, 2017.

172 Legal representative: Faye Fei Public valuer: Faye Fei Public valuer: Doris Liu Shanghai Huwei Assets Valuation Co., Ltd. January 5, 2017 Appendix Contents Appendix 1: Copy of the supporting document for the Proposed Transaction and purpose of valuation Copy of Engagement Letter (and Variation Letter) Appendix 2: Copy of the Engaging Party s and the Owner of Target Assets corporate business licenses Appendix 3: Copy of the legal ownership documents Platform Contribution Transaction Agreements (2015 and 2017); Amendment No 1, 2 and 3 to 2015 Platform Contribution Transaction Agreement; and Amended and Restated Research And Development Cost Sharing Agreement Appendix 4: Representation letters of the Engaging Party and the Owner of Target Assets Appendix 5: Signed original representation letter of the public valuers Appendix 6: Qualification of Huwei Appendix 7: Copy of Huwei s business license Appendix 8: Copy of certificates of the public valuers Appendix 9: Standard Valuation Schedules

173 Schedule 3 Format of Capital Contribution Agreement Party A: Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. Party B: KP EU C.V. Party A and Party B are shareholders of the Sino-foreign joint venture Fosun Pharma Kite Biotechnology Co., Ltd. ( JV ). Both parties hereby agree that, the JV shall use the exclusive license from Party B to the JV for commercialization of KTE-C19 in the Territory as defined and described under the Product and Know-how License Agreement concluded between Party B and the JV. According to a Valuation Report issued by [valuation firm] on [date], such exclusive license is evaluated to have a market value of [... ]. Based on such and the signed Product and Know-how License Agreement, both Parties agree that the exclusive license under the Product and Know-how License Agreement shall be the capital contribution from Party B to the JV, at an amount of USD [ *** ] (USD [ *** ]). By signing the Product and Know-how License Agreement, Party B has fulfilled its capital contribution obligation under the respective Joint Venture Contract, and the JV shall arrange for a capital verification report to be issued by a licensed CPA in China. Party A: Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. By Name: [...] Title: [...] Signature: Party B: KP EU C.V. By Name: [...] Title: [...] Signature: Appendix 2 TECHNOLOGY LICENSE AGREEMENT between KP EU C.V.

174 and Fosun Pharma Kite Biotechnology Co., Ltd. 1. Definitions 4 2. License 7 3. Deliver Technical Information 7 4. Provision of Technical Assistance 8 5. Quality Control and Data Exchange 8 6. Development and Marketing 9 7. Improvements 9 8. Fees Protection of the Intellectual Property Rights Confidentiality Non-compete Right to Swap Additional Obligations of the Company Additional Obligations of Kite Assignment Duration and Termination Effect of Termination Force Majeure Liability, Indemnity and Insurance Governing law and dispute resolution Miscellaneous 25 Schedule 1 : List of KTE-C19 Licensed Patents Schedule 1 : List of KTE-C19 Licensed Data Schedule 3 : NIH Agreement This License Agreement (the Agreement ) is effective as of April 27 th, 2017 by and between: (1) KP EU C.V., a limited partnership that is governed by the laws of The Netherlands, having its registered seat at Amsterdam, the Netherlands and its business address at 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands, registered with the Dutch trade register under number ( Kite ). (2) Fosun Pharma Kite Biotechnology Co., Ltd. a limited liability company organized and existing under laws of the People s Republic of China whose registered office is at No.222 Kangnan Road, Shanghai , PRC. (the Company ). (Kite and the Company are hereinafter referred to individually as a Party and collectively as the Parties ) Preambles WHEREAS, the Company is a joint venture established by Kite and Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. ( Fosun ) in the pursuit of successful commercialization of KTE-C19 and potentially additional cancer immunotherapy products in the Territory (as defined below).

175 WHEREAS, Kite is in possession of certain technology pertaining to the Clinical Trial (as defined below), manufacturing, using, distribution, selling, promotion, marketing and otherwise commercialization of the Licensed Product (as defined below). WHEREAS, Kite and the Company have concluded a Product and Know-how License Agreement for the exclusive commercial use right of KTE-C19 in the Territory (as defined below) and commercialization of KTE-C19 relies on a series of related enabling patents and data, which should be subject to a separate license arrangement between the Parties. WHEREAS, Kite has agreed to grant, and the Company has agreed to purchase an exclusive license to such enabling patents and data in the Territory (as defined below), subject to certain terms and conditions. NOW THEREFORE, in consideration of the mutual promises of the Parties, and for good and valuable consideration, it is agreed by and between the Parties as follows: 1. Definitions Unless otherwise provided herein, the capitalized terms used in this Agreement shall have the same meanings as defined in the JV Contract. For the purposes of this Agreement the following capitalized terms are defined in this Article 1 and shall have the meaning specified herein. 1.1 Affiliate means, for the purpose of this Agreement, mean, as to a Party, any entity directly or indirectly controlling, controlled by or under common control with such Party, where control means (i) beneficial ownership of greater than fifty percent (50%) of the voting equity interests in such entity or (ii) the possession, directly or indirectly, of the power to independently direct or cause the direction of the management and policies of an entity, whether through the ownership of a voting equity interest, by contract or otherwise. 1.2 Clinical Trial means clinical research, studies and experiments on human participants for the purpose of examining the safety and efficacy of investigational pharmaceutical products, and as a precondition for a license application. 1.3 Company Improvements means any improvement, enhancement or modification to the technology that is the subject of or in relation to the Licensed Technology, Licensed Patents, the Licensed Data and/or the Licensed Product and made, discovered, invented or otherwise acquired by the Company. 1.4 Confidential Information has the meaning set forth in Article (a). 1.5 Effective Date means the date when this Agreement is signed by both Parties and become legally effective. 1.6 Field of Use means engineered autologous T-cell therapy for the treatment of cancer. 1.7 Fosun means Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. 1.8 Governmental Authority means any governmental ministry, administration, agency or other public authority (and/or any branch of the foregoing), whether at the national, provincial, municipal or local level, or any official of the national or any provincial, municipal or local government in the respective country. 1.9 Intellectual Property Rights means patent rights, rights to inventions, utility models and applications, supplementary protection certificates, know-how and trade secrets, copyright and related rights, trade marks and services marks, trade names and domain names, rights in goodwill and the right to sue for passing off and unfair competition, rights in designs, rights in computer software, database rights, rights to preserve the confidentiality of information, rights to apply for any related intellectual property right registration or certificate, rights to apply any of the above and any related improvements, renewals or extensions in commercial use, as well as rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist, now or in the future, in any part of the world JV Contract means the Sino-foreign Co-operative Joint Venture Contract concluded between Kite and Fosun on January 10, Kite Improvements mean any improvement, enhancement or modification to the Licensed Technology made, discovered, invented or acquired solely by Kite during the Term that is necessary or reasonable useful to develop, manufacture or commercialize the Licensed Product in the Field in the Territory and that is not subject to the approval of any third party for granting the Company with such right to use the Kite Improvements, provided that if such approval is required, Kite shall use its commercially reasonable efforts to obtain such approval Kite Territory means worldwide outside the Territory Licensed Data means any and all Licensed Product related commercialization enabling data including pre-clinical data, Clinical Trial data, analytical and quality control data, stability data and other manufacturing data, controlled by Kite and necessary in the manufacture, sale or use of the Licensed Product and listed in Schedule 2 of this Agreement or provided pursuant to the Technical Service Agreement, any Company Improvements

176 and any Kite Improvements relating to any of the foregoing Licensed Patents means the patents and patent applications related to the enabling items of the Licensed Product, including registered patents and patent applications in the Territory, any divisionals, continuations, reissues, re-examinations and the like, short particulars of which are set out in Schedule 1 to this Agreement Licensed Product means KTE-C19 or if swapped pursuant to Article 12, the swapped Kite Product, the exclusive commercial rights of which has been granted by Kite to the Company under the Product and Know-How License Agreement entered into by Kite and the Company as of, Licensed Technology means any technical information and data licensed or transferred from Kite to the Company in connection to this Agreement, including but not limited to the Licensed Patents, Licensed Data and Licensed Product Medical Authority means the National Health and Family Planning Commission of the PRC, the China Food and Drug Administration (CFDA) or any other competent authorities (including any of their competent branches) which have the power to approve the Clinical Trial or commercialization of the Licensed Products in the Territory Net Sales means with respect to any Licensed Product, the gross sales price of such Licensed Product invoiced by the Company, its Affiliates, sub-licensees or their respective Affiliates to customers who are not Affiliates (or are Affiliates but are the end users of such Licensed Product) in bona fide arms-length transactions, less, [ *** ] such Licensed Product. If any sales of Licensed Products are made in transactions that are not at arm s length, the gross amount for such Licensed Products to be included in the calculation of Net Sales [ *** ]. Net Sales shall be determined from the books and records of Company or its Affiliates or sub-licensees, maintained in accordance with U.S. generally accepted accounting principles, consistently applied, or in the case of sub-licensees, such similar accounting principles, consistently applied Regulatory Approval means any and all approvals (including regulatory approval applications, supplements, amendments, and pre- and post-approvals, where applicable), licenses, registrations, filings or authorizations of any Medical Authority that are necessary for the commercialization of the Licensed Product in the Territory Technical Information means the information and data listed in Schedule Technical Service Agreement means the Technical Service Agreement concluded between Kite and the Company pursuant to the key terms and conditions stipulated under the JV Contract Term has the meaning set forth in Article Territory means, for the sole purpose of this Agreement, the mainland of People s Republic of China, the Hong Kong Special Administration Region and the Macao Special Administration Region, but excluding Taiwan US means the United States of America USD means US Dollar, the lawful currency of the US. 2. License 2.1 Technology License Subject to the terms and conditions of this Agreement, Kite hereby grants to the Company an exclusive license to use the Licensed Patents and Licensed Data to enable the development, manufacturing, use, distribution, sale (and offer for sale or contract to sell), promotion, marketing, and otherwise commercialization of the Licensed Product in the Field of Use in the Territory. 2.2 Retained Intellectual Property Rights Except for the exclusive license as described in above 2.1, Kite shall own and retain all rights, title and interest in and to the Licensed Patents, Licensed Data and Licensed Product, including all Intellectual Property Rights therein. For avoidance of doubt, any rights not expressly granted under this Agreement shall be reserved to be the retained rights of Kite, unless otherwise consented to by Kite.

177 2.3 Sub-licensing Without Kite s prior written consent, the Company shall not grant any sub-licenses under this Agreement to any third party or Fosun or any Affiliates of Fosun for any use of the Licensed Technology. 2.4 Nothing in this Agreement shall constitute any representation or warranty regarding the safety, efficacy or quality of the Licensed Product in the Territory of the Licensed Patents or Licensed Data. 3. Deliver Technical Information 3.1 Within [ *** ] after the Company has fully paid the entrance fee pursuant to Article 8, Kite shall provide access to the Company of the Technical Information on the list of Technical Information in the Schedule 2 to this Agreement, except the US Biologics License Application which shall be provided after U.S. FDA approval has been granted. For any delivery, the Company shall be responsible for the payment of all reasonable shipping cost within [ *** ] of an invoice from Kite. 4. Provision of Technical Assistance During the Term, Kite shall provide reasonable technical assistance, [ *** ] and according to the terms and conditions set forth in the Technical Service Agreement concluded between Kite and the Company, to enable the Company to exploit the license under this Agreement. Each Party further undertakes that it will comply with any of its obligations under the Technical Service Agreement. 5. Quality Control and Data Exchange 5.1 The Company shall, in exercising its rights under this Agreement, comply with the specifications, standards and directions relating to the Licensed Product as notified in writing by Kite from time to time and with all applicable laws, regulations and codes of practice, provided that such specifications, standards, and directions shall be reasonable and workable for the development, manufacturing, and commercialization of the Licensed Product in the Territory. 5.2 The Company shall promptly provide Kite with copies of material written and communications, including also summary update of important verbal communications, relating to Clinical Trial, manufacturing, supply chain and commercialization of the Licensed Product, with any regulatory, industry or other authorities, in particular with the Medical Authority. 5.3 The Company shall not submit a package for the Licensed Product to obtain the Regulatory Approval (i) for launching Clinical Trial and (ii) for starting commercialized use in the Territory without Kite s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. 5.4 The Company shall provide Kite with details of any product complaints and adverse events it has received relating to the Licensed Product together with reports on the manner in which such complaints are being, or have been, dealt with, and shall comply with the terms and conditions set forth in the Pharmacovigilence Agreement which shall include standard terms and conditions and concluded between Kite and the Company prior to the first Clinical Trial of the Licensed Product. 6. Development and Marketing 6.1 The Company shall not name Kite or any of its Affiliates (for the sole purpose of this Article 6.1, excluding the Company) as an entity responsible for any clinical trial for any Licensed Product in the Territory nor state or otherwise imply in any regulatory filing or other documentation relating to any clinical trial of any Licensed Product in the Territory (including, without limitation, any informed consent document) that Kite or any of its Affiliates has any responsibility or liability in connection with the conduct of such clinical trial, except for as required by any Governmental Authority. 6.2 The Company shall use its commercially reasonable efforts to launch, promote and sell the Licensed Product in the Territory. 7. Improvements

178 7.1 Any Company Improvements made, discovered, invented or otherwise acquired by the Company arising out of or in relation to use of the Licensed Patents and Licensed Data shall be immediately without delay notified to Kite by Company. 7.2 The Parties agree that for Company Improvements related to the subject matter of the licenses under this Agreement, Kite and the Company shall jointly own and otherwise have right, title, and interest in such Company Improvements, including the right to research, study, make, use, sell, offer for sale (other than the prohibited use under this Agreement), and apply for registration of the Intellectual Property Rights related thereto. 7.3 The Company shall hand over the Company Improvements related technical data to Kite within [ *** ] of the Company notification to Kite. 7.4 The Company, during the Term of this Agreement, shall have an exclusive commercial license to make, use, sell, and offer for sale, such Kite Improvements that are necessary, or, unless subject to Article 7.5, reasonable useful in the Territory and Field of Use, without the need to [ *** ], provided that [ *** ]. 7.5 If during the Term, Kite obtains control of any Intellectual Property Rights that are owned or controlled by a third party that are not necessary, but are reasonably useful for the development, manufacture, or commercialization of the Licensed Products in the Field of Use in the Territory, then Kite may bring such new Intellectual Property Rights to the attention of the Company in writing, including a description of such Intellectual Property Rights, and the Parties in good faith will discuss whether such new Intellectual Property Rights should be made available for use by the Company pursuant to this Agreement for the development, manufacture or commercialization of Licensed Products in the Field of Use in the Territory. Kite will propose an equitable allocation of any non-product specific upfront payments, milestone payments or similar payments payable under such third party license for such new Intellectual Property Rights (including, for example, an upfront payment to access technology, milestone payments that are not product specific or are payable upon the first product to achieve the applicable milestone event, etc.). The Parties will discuss the rationale of including the new Intellectual Property Rights and the proposed payment allocation. If the Parties agree in writing on the economic terms for the allocation of payments for such new Intellectual Property Rights, then such new Intellectual Property Rights shall thereafter be included in the Kite Improvements. If the Company concludes that such new Intellectual Property Rights should not be licensed pursuant to this Agreement or the Parties cannot agree on the economic terms for the allocation of the payments in connection therewith, then such Intellectual Property Rights shall not be included in the Kite Improvements. 7.6 Kite shall hand over the Kite Improvements related technical data to the Company within [ *** ] of the Kite notification to the Company. 8. Fees 8.1 Entrance Fee Within [ *** ] after the Effective Date, the Company shall pay to Kite the sum of USD forty million (40,000,000) as entrance fee. 8.2 Milestone payments Without prejudice to the entrance fee and the royalties agreed in this Agreement, the Company shall make the milestone payments set forth below to Kite within [ *** ] after achievement of each milestone event. Milestone Event Milestone Payment (a) [ *** ] USD [ *** ] (b) [ *** ] USD [ *** ] (c) [ *** ] USD [ *** ] 8.3 Royalties

179 Without prejudice to the entrance fee and milestone payments agreed in this Agreement, as of [ *** ], Kite shall be entitled to receive royalties equal to [ *** ] percent ([ *** ]%) of the Net Sales of the Company. 8.4 Payment of royalty payments The royalty payments are due and payable within [ *** ] after the financial report of the previous quarter has been approved by the Company s board of directors. For purpose of calculating the payable amount, the financial figures in the Company s reviewed quarterly report for the previous quarter shall apply. 8.5 Taxes (a) (b) (c) The Parties acknowledge that the Company may be legally required to withhold and remit a portion of the entrance fee, milestone payments, and royalties to the tax authority in the Territory as a tax, charge or duty. The Company shall be responsible for reporting and payment of all the taxes to the proper tax authority in the Territory at its own cost, applying the correct amount and in a timely manner. The Company shall indemnify Kite against any liability or expense incurred by Kite as a result of not fulfilling any tax obligation relating to any payment under this Agreement. The Company shall send evidence of the tax obligation, together with proof of tax payment, to Kite within [ *** ] following that tax payment to enable Kite to support a claim (if permissible) for income tax credit in respect of any amount so withheld. The Company shall cooperate with Kite in claiming exemptions from such deductions or withholdings under any agreement or treaty in effect from time to time. The Parties agree that the entrance fee, milestone payments, royalties and any other sums payable under this Agreement are [ *** ]. For clarity, any taxes or levies which the tax authority in the Territory requires to be charged on any payments made by the Company to Kite under this Agreement shall be [ *** ]. Any other taxes imposed by the tax authority in Kite s jurisdiction related to Kite s charge under this Agreement shall be [ *** ]. Kite shall cooperate with the Company to comply with any requirement from the tax authority. 8.6 Payment Method All payments under this Agreement shall be paid in cash in USD to the bank account to be designated in writing by Kite. If the Company is prevented or blocked by a Governmental Authority in any country from making any payment due under this Agreement then the Company shall, within the prescribed period for making such payment, use its best endeavours to secure from any such authority permission to make such payment and shall make it within [ *** ] of receiving all the permission. If such permission is not received within [ *** ] of the Company making a request for such permission then, Kite and the Company shall negotiate in good faith for a solution, provided that if no solution is found and payment is not made within [ *** ] of the original payment due date, Kite may terminate this Agreement. 8.7 Late Payment (a) In the event of any delay in paying any sum due under this Agreement by the due date, for each day of delay in payment, the Company shall pay to Kite a liquidated damages equal to [ *** ] percent ([ *** ]%) of the total overdue payment amount (b) In the event that the Company proves any delay in payment, as according to the reasonable judgement of the CEO of the Company, is caused by delay of the in charge tax authority, technology import contract registration authority, foreign exchange authority or any other Governmental Authorities, which is not attributable to the Company in failure to provide any legally required tax filing or foreign exchange administration related documentation, a reasonable grace period shall be given to the Company, of no more than [ *** ], during which the liquidated damages in above Article 8.7(a) shall not apply. In such case the Company shall proactively communicate with the related Governmental Authority and provide a solution, and Kite shall provide reasonable assistance that is necessary. For the avoidance of doubt, if such payment can t be made within the abovementioned grace period due to the reason that is attributed to any Governmental Authority, then Article 8.6 shall apply. (c) In the event that the late payment of the entrance fee set forth in Article 8.1 is caused by Kite s failure to provide a valuation report as according to Article 14.7 of this Agreement, the due date of such payment shall be extended by [ *** ]. If Governmental Authorities do not permit the entrance fee payment after delivery of the valuation report, the Parties shall in good faith work together to resolve the Governmental Authorities concerns over a [ *** ] following the delivery of the valuation report. During such period, the liquidated

180 damages in above Article 8.7(a) shall not apply. If the full entrance fee can t be made within the abovementioned grace period, then Article 8.6 shall apply. For clarity, in no event shall the entrance fee or any other payment due to Kite and set forth herein be adjusted due to the valuation or any Governmental Authority view of valuation. 8.8 File of payment records The Company shall keep proper records and books of account showing the detailed information as are required to determine the payments due under this Agreement, and any other particulars Kite may reasonably require. All such books, records, and accounts shall be retained by the Company until (i) [ *** ] after the termination of this Agreement; or (ii) the expiration of the statutory retention periods as may be required by law, whichever is later. Such records and books shall be open during normal business hours to inspection and audit by Kite (or its authorised representative), who shall be entitled to take copies of or extracts from them. If such inspection or audit should reveal a discrepancy in the fees paid from those payable under this Agreement, the Company shall immediately make up the shortfall and reimburse Kite in respect of any professional charges incurred for such audit or inspection. 8.9 Third party royalties The Company shall be responsible for [ *** ], which is attached to this Agreement as Schedule 3 NIH Agreement. Third party royalty means [ *** ]. Upon Kite s written notice of any payable third party royalties, [ *** ] shall settle such payment within [ *** ]. The payment related provisions in Articles 8.5, 8.6 and 8.7 shall apply to payment of any third party royalties. 9. Protection of the Intellectual Property Rights 9.1 The Company shall immediately notify Kite in writing, with detailed particulars, if any of the following matters come to its attention in the Territory: (a) (b) (c) (d) (e) any actual, suspected or threatened infringement of any of the Licensed Patents; any actual, suspected or threatened unauthorised disclosure, misappropriation or misuse of the Licensed Data; any claim made or threatened that commercialization of the Licensed Product infringes third party rights; any challenge to Intellectual Property Rights under the Agreement; any other form of attack, charge or claim which may affect performance of the license under this Agreement. 9.2 In respect of any of the matters listed in Article 9.1: (a) (b) (c) (d) Kite shall, in its absolute discretion, decide what action, if any, to take, provided that such action or inaction shall not cause any material adverse effect on the Company; Kite shall have exclusive control over, and conduct of, all claims and proceedings; Kite shall bear the out-of-pocket cost of any proceedings and shall be entitled to retain all sums recovered in any action for its own account; The Company shall not make any admissions other than to Kite and shall at the Kite s expense provide Kite with all assistance that it may reasonably require in the conduct of any claims or proceedings. 9.3 The Company agrees not to commence any infringement actions in respect of any of the matters listed in Article 9, unless otherwise agreed in writing by Kite, or according to Article If any third party infringement of any of the Licensed Patents or Licensed Data in the Territory interferes materially in the Company s business and Kite decides not to commence infringement actions by itself, prior to commencing any action in connection therewith, the Company shall consult with Kite and consider Kite s recommendations regarding such action. Subject to receiving advice from patent counsel that infringement proceedings stand a reasonable chance of success, the Company shall be entitled to commence proceedings at its own cost and retain all related recoveries, and may require Kite to give the respective

181 authorization to such proceedings and provide reasonable assistance. 9.5 Nothing in this Agreement shall constitute any representation or warranty that: (a) (b) any Licensed Patents are technically valid or commercially merchantable; any Licensed Patents (if a patent application) will be approved or otherwise granted from the relevant competent patent office. 9.6 The provisions of this Article 9 (except for Article 9.4) shall survive the termination or expiry of this Agreement. 10. Confidentiality 10.1 During the Term and within [ *** ] after expiry or termination of this Agreement, the Company shall: (a) (b) (c) maintain the confidentiality of all Intellectual Property Rights, Licensed Technology, Licensed Patents, Licensed Data, and any other information (whether or not technical) or method provided to the Company or its Affiliates by, or on behalf of Kite, either preparatory to, or as a result of, this Agreement, and terms and conditions of this Agreement (collectively, Confidential Information ); not use the Confidential Information for any purpose except for the purpose of exercising or performing its rights and obligations under this Agreement not disclose the Confidential Information to any third party or any of its Affiliates, including its or its Affiliate s directors, officers, employees, advisors and agents, except to those who are associated with the Company s business operation and the Confidential Information is only disclosed on a strict must-know basis, provided that the Company has requested the recipient to conclude a similar confidentiality commitment before disclosure The Company shall advise its directors, officers, employees, advisors, agents and those of its Affiliates, who receive any Confidential Information of the existence and importance of complying with the obligations set forth in Article 10.1, and require such persons to sign a confidentiality undertaking in a form acceptable to Kite. The Company shall be jointly and severally liable for breach of the confidentiality liability of its Affiliate, their directors, officers, employees, advisors and agents The Company shall formulate rules and regulations to cause its directors, officers, employees and agents to also comply with the confidentiality obligations set forth in this Article 10. All directors, officers, employees and agents having access to Confidential Information shall be required to sign a confidentiality undertaking in a form acceptable to Kite The provisions of Article 10.1 shall not apply to Confidential Information that can be proven: (a) (b) (c) (d) to be known by the Company by written records made prior to disclosure by Kite or the Effective Date, whichever is earlier; is or becomes public knowledge otherwise than through a breach of this Agreement; was obtained by the Company from a third party having no obligation of confidentiality with respect to such Confidential Information; or is required by laws, regulations, stock exchange rules, or order of any competent court or Governmental Authority to be disclosed, provided that it gives Kite prior notice of such disclosure and takes into account the reasonable requests of Kite in relation to the content of such disclosure The Company will not be entitled to claim that a Confidential Information had already been known to it or was rightfully obtained from a third party, if the Company fails to inform Kite in writing (by stating the relevant circumstances) of its prior knowledge of the Confidential Information or of the rightful obtaining of the Confidential Information from a third party within a period of [ *** ] after the particular Confidential Information was known by, disclosed to or obtained by the Company Each Party shall have the right to issue a press release to announce the execution of this Agreement as approved in writing by the other Party, which shall not be unreasonably withheld by the other Party The provisions of this Article 10 shall remain in force notwithstanding expiry or earlier termination of this Agreement. 11. Non-compete

182 11.1 During the Term and for an additional [ *** ] thereafter if terminated due to a breach of this Contract by Kite, Kite shall not: (a) (b) grant any commercial use right, exclusive or non-exclusive for the Licensed Product in the Territory in the Field of Use, to any third party regarding the Licensed Technology; and conduct any research, development, manufacturing or other clinical or commercial activities for the Licensed Product with the Licensed Technology (or with any other technology) in the Territory in the Field of Use, except as otherwise mutually agreed by the Parties in writing. For the avoidance of doubt, any Passive Investment by Kite or any of its Affiliates shall not be considered as a breach of this Article During the Term and for an additional [ *** ] thereafter if terminated due to a breach by the Company, the Company shall not and shall use its reasonable best efforts to cause its Affiliates not to own or operate any business engaging T cell immunotherapy except as mutually agreed by the Parties in writing. For avoidance of doubt, the concept of own shall mean any type of actual control of a business by way of equity control, control of the board of directors, control of the management board, control by a variable interest entity, etc. 12. Right to Swap In the event that any U.S. FDA Approval for KTE-C19 in the US is not completed by [ *** ] and no Regulatory Approval in the Territory either, the Company may request to swap the KTE-C19 related Licensed Patents and Licensed Data with patents and data related to another Kite Product of Kite available in the Territory, subject to the same terms and conditions under this Agreement, by providing written notice to Kite by [ *** ]. For avoidance of doubt, any product which commercialized by Kite in the Territory, and which has been rejected by the Company in the exercise of the first right of refusal according to the JV Contract, shall not be raised by the Company for the swap purpose herewith. 13. Additional Obligations of the Company 13.1 The Company shall: (a) (b) (c) (d) (e) (f) be responsible to register this Agreement with the competent authority for administration of technology import contract registration in the Territory, if required by law. ensure to provide safe and compliant premises for the Licensed Product regarding Clinical Trial and commercialized operation; obtain at its own expense all licences, permits, filing and consents necessary for the Clinical Trial and commercialization of the Licensed Product in the Territory, and promptly supply copies of all of these to Kite and such further information as Kite may reasonably require; perform its obligations in connection with the commercialization of the Licensed Product with all due skill, care and diligence including good industry practice; only make use of the rights granted under this Agreement for the exact and sole purpose of carrying out the commercial operation as described and authorised in this Agreement; comply with all regulations and practices in force in the Territory to safeguard Kite s rights in the Licensed Technology, Licensed Patents, Licensed Data and Licensed Product The Company shall not, directly nor indirectly, assist any third party including its Affiliates in diminishing the rights of Kite in the Licensed Technology, Licensed Patents, Licensed Data and Licensed Product The Company acknowledges and agrees that the exercise of the license granted to the Company under this Agreement is subject to all applicable laws, enactments, regulations and other similar instruments in the Territory, and the Company understands and agrees that it shall at all times be solely liable and responsible for such due observance and performance As required by Paragraph 4.2 of the NIH Agreement (defined below), Paragraphs , 8.1, 10.1, 10.2, 12.5, and of the NIH Agreement, to the extent applicable, shall be binding upon the Company as if the Company were a party to the NIH Agreement. These Paragraphs are set forth in the NIH Agreement, which is set forth in Schedule 3. Pursuant to Paragraph 4.3 of the NIH Agreement, upon termination of the NIH Agreement under Article 13 thereof, the Company s sublicense under the NIH Agreement shall terminate or convert to a license directly between the

183 Company and the IC, at the option of the Company. This conversion is subject to IC approval, which Kite shall use commercially reasonable efforts to obtain on behalf of the Company, and contingent upon acceptance by the Company of the remaining provisions of the NIH Agreement. 14. Additional Obligations of Kite 14.1 Kite shall use its reasonable best efforts to assist the Company to register this Agreement with the competent authority for administration of technology import contract registration in the Territory, if required by law Kite acknowledges and agrees that the exercise of the license granted to the Company under this Agreement is subject to all applicable laws, enactments, regulations and other similar instruments in the Territory or any other jurisdiction, and Kite understands and agrees that it shall at all times be solely liable and responsible for its due observance and performance Kite hereby represents and warrants to the Company that it has full power and authority to grant the licenses herein granted, or will be granted if exercised by the Company of the right to swap according to Article 10 without the consent of any other party, and without infringing any third party s rights, except for the consent required under the Patent License Agreement Exclusive between Kite Pharma, Inc. and The U.S. Department of Health and Human Services, as represented by National Cancer Institute dated September 15, 2016 (the NIH Agreement ). Kite hereby warrants that it has obtained such consent for KTE-C19 as of the Effective Date, and will use its commercially reasonable efforts to obtain any consent related to the swapped product. Kite agrees that it shall use commercially reasonable efforts to maintain the NIH Agreement. If the NIH Agreement is terminated between the NIH and the Company, Kite shall i) continue to provide a non-exclusive license to the Company to the same intellectual property rights covered by the NIH Agreement, ii) not provide such non-exclusive license to any third party in the Territory to the same intellectual property rights covered by the NIH Agreement for the Licensed Product, and iii) subject to reasonable fees to be paid by the JV to Kite, provide to the JV with an exclusive right in the Territory for the use of all the substitution technology for the Licensed Product that are used by Kite or any of its Affiliates for the development, manufacture, and commercialization of the Licensed Product in the USA. For clarity, under this Agreement, Kite is not granting any sublicense to any agreement between Kite and a third party, other than the NIH Agreement Kite and its Affiliates represents and warrants that it has not entered into any agreement with any third party which is in conflict with the rights granted to the Company in the Territory and pursuant to this Agreement Kite and its Affiliates represents that, as of the Effective Date, it is not aware of any patents, patent applications, trademarks, trademark applications, or other intellectual property rights belonging to third parties and covering, in whole or part, the practice of the Licensed Technology and Licensed Product in the Field of Use in the Territory as contemplated herein Kite represents that the Schedule 1 and Schedule 2 shall contain Technical Information that to Kite s knowledge, and together with the licensed Know-how under the Product and Know-how License Agreement, represents all of the material information that Kite has control of that is necessary or reasonably useful for the development, manufacturing, and commercialization of the Licensed Product in the Chinese Market, and all the Technical Information provided to the Company shall be true, accurate and not misleading in all material respects In order to support the Company to make any payment to Kite according to this Agreement, Kite shall provide a valuation report by a valuation firm licensed in China if required by any Governmental Authority, and provide any other documentation reasonably requested by any Governmental Authority relating to the valuation. 15. Assignment 15.1 The Company shall not assign, transfer, mortgage, charge or deal in any other manner of its rights and obligations under this Agreement without the prior written consent of Kite Kite shall not assign, transfer, mortgage, charge or deal in any other manner of its rights and obligations under this Agreement without the prior written consent of the Company, except for an assignment by Kite under a Kite Sale or to a Kite Affiliate, provided however that in the case of such assignment, the assignee is capable of performing the duties and obligations under this Agreement. 16. Duration and Termination

184 16.1 This Agreement shall come into force on the Effective Date and shall continue in full force and effective for a period of twenty (20) years from the Effective Date unless terminated earlier in accordance with Article 16.2 or Article Both Parties may mutually agree to terminate this Agreement by concluding a mutual termination agreement Without prejudice to any rights and remedies that have accrued under this Agreement, any Party may terminate this Agreement immediately by giving a [ *** ] written notice to the other Party if any of the following circumstances occurs: (a) (b) (c) (d) (e) (f) (g) the other Party commits a material breach of this Agreement and (if such breach is remediable) fails to remedy that breach within a [ *** ] grace period, except for Company s delay in making any payments out of the reasons as described in above Article 8.7 (b); failure by the Company to pay any amount under Article 8 of this Agreement, due to reasons described in above Article 8.7 (b) and cannot be solved within [ *** ] upon the respective payment due date; a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the liquidation and early dissolution of the other Party; the other Party is declared bankrupt or insolvent in accordance with law; the other Party suspends or ceases, or threatens to suspend or cease, to carry on all or a substantial part of its business; the JV Contract is terminated; Either Party is unable to perform this Agreement due to the change of laws and regulations. Notwithstanding any of the foregoing, for so long as Kite owns at least 40% of the equity of the Company, the termination rights as provided in this Article 16.3 shall be conditioned upon the termination of the JV Contract, except for Article 16.3(f) or as mutually agreed by both Parties. 17. Effect of Termination 17.1 On expiration or termination of this Agreement for any reason and subject to any express provisions set out elsewhere in this Agreement: (a) (b) (c) All outstanding sums payable by the Company to Kite shall become immediately due and payable or, in the case of termination due to Kite s breach, shall become due and payable according to the terms of this Agreement as if this Agreement had not been terminated; All rights and licences granted pursuant to this Agreement shall cease and the Company shall not thereafter use, manufacture, advertise, sell or otherwise dispose of any Licensed Technology, Licensed Patents, Licensed Data and Licensed Product in the Territory or elsewhere; The Company shall be responsible for the cancellation of any registration and licences registered pursuant to this Agreement and according to law; (d) (e) (f) Within [ *** ] after the date of expiration or termination, the Company shall return to Kite, or at Kite s request, destroy, at no cost to Kite all the Confidential Information or any other information (whether or not technical) of a confidential nature communicated to it by Kite. The Company shall not retain copies of any such information required to be handed back to Kite or destroyed. The Company shall furnish to Kite satisfactory evidence of such destruction; The Company shall provide Kite with copies of all Company Improvements and, at Kite s cost, such further information as is reasonably requested by Kite; and The Company shall stop using in any manner the names for the Licensed Product as provided under this Agreement or pursuant to the Trademark and Name License Agreement to be concluded between the Kite and the Company. For the avoidance of doubt, Article 17.1(e) shall not apply in case of termination by the Company due to material breach of Kite The expiry or termination of this Agreement, for any reason, shall not affect any provision of this Agreement which is expressed to survive or operate in the event of expiry or termination, and shall be without prejudice to any rights of either Party which may have accrued to the date of such expiry or termination.

185 18. Force Majeure Neither Party shall be in breach of this Agreement nor liable for delay in performing, or failure to perform, any of its obligations under this Agreement if such delay or failure result from Force Majeure. In such circumstances the affected Party shall be entitled to a reasonable extension of the time for performing such obligations. If the period of delay or non-performance continues for [ *** ], the Party not affected by such event may terminate this Agreement by giving a [ *** ] written notice to the affected Party. 19. Liability, Indemnity and Insurance 19.1 The Company shall indemnify Kite against any and all liabilities, costs, expenses, damages or losses (including any direct or indirect consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by Kite arising out of any breach by the Company of the terms of this Agreement Kite shall indemnify the Company against any and all liabilities, costs, expenses, damages or losses (including any direct or indirect consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by the Company arising out of any breach by Kite of the terms of this Agreement. Notwithstanding anything to the contrary herein, other than for indemnification obligations relating to third party claims, breaches of confidentiality, intentional torts, intentional violations of law, gross negligence or intentional misconduct, Kite shall not be liable to the Company for any indirect, special, incidental, punitive, exemplary, lost profit, cover, or consequential damages arising out of or resulting from this Agreement, even if aware of the possibility of such damages The Company shall, at its expense, carry product liability and comprehensive general liability insurance coverage of an amount adequate to support its liabilities under this Agreement. The Company shall ensure that such insurance policy names Kite and Fosun as co-insured with the Company and remains in effect throughout the duration of this Agreement and for a period of [ *** ] after termination or expiry of the Agreement, and shall supply Kite with a copy of such policy on request Nothing in this Agreement shall have the effect of excluding or limiting any liability for death or personal injury caused by any Party s gross negligence, fraud or breach of criminal laws Without prejudice to any other rights or remedies that any Party may have, each Party acknowledges and agrees that damages alone may not be an adequate remedy for any breach of the terms of this Agreement by itself. Accordingly, each Party shall be entitled to the remedies of injunction, specific performance or other discretionary relief for any threatened or actual breach of the terms of this Agreement. 20. Governing law and dispute resolution 20.1 The formation, validity, performance and interpretation of this Agreement shall be governed by and construed in accordance with the law of the People s Republic of China In the event of any dispute arises between the Parties out of or in relation to this Agreement, including any dispute regarding its existence, validity, interpretation, performance, breach or termination, the Parties shall attempt in the first instance to resolve such dispute through amicable means If the dispute has not been resolved by such amicable means within [ *** ] after either Party has given written notice to the other Party requesting the commencement of such consultation, then the dispute shall be submitted to the discussion between CEOs of both shareholders of the Company, in line with Article 33.2 of the Company s JV Contract If the dispute is still not resolved within [ *** ] upon the CEOs discussion in above 20.3, then either Party may submit the dispute to the Hong Kong International Arbitration Center ( HKIAC ) for arbitration in accordance with its then applicable arbitration rules. The arbitration shall be conducted by three (3) arbitrators appointed in accordance with the said arbitration rules and in accordance with the following directions: (a) The arbitration proceedings shall be conducted in English and the arbitration tribunal shall refer to the English version of this Agreement only;

186 (b) (c) (d) all arbitrators shall be fluent in English; the arbitration proceedings shall be administered by HKIAC in Hong Kong and the seat of arbitration as well as the place of hearings and other procedural steps shall be Hong Kong; The losing Party shall bear, in proportion to the percentage it has lost the case, the arbitration costs and other Party s reasonable attorney fees The Parties hereby agree that any arbitration award rendered in accordance with the provisions of this Article 20 shall be final and binding upon the Parties, and the Parties further agree that such award may be enforced by any court having jurisdiction over any Party against which the award has been rendered, or where the assets of such Party is located In any arbitration proceedings, any legal proceedings to enforce the arbitration award, or any other legal proceedings between the Parties pursuant to or relating to this Agreement, each Party expressly waives the defence of sovereign immunity and any other defence based on the fact or allegation that it is an agency or instrumentality of a sovereign state or is otherwise entitled to immunity Upon submission of any dispute to arbitration, the Parties shall continue to exercise their remaining respective rights, and fulfil their remaining respective obligations under this Agreement, except for any matters related to the dispute in arbitration. 21. Miscellaneous 21.1 Waiver To the extent permitted by PRC law, the failure or delay on the part of a Party to exercise a right, power or privilege under this Agreement shall not operate as a waiver thereof, nor shall any single or partial exercise of a right, power or privilege preclude any other future exercise thereof, unless explicitly otherwise regulated herein Binding Effect and Amendments This Agreement is made for the benefit of the Parties and their respective lawful successors and assignees. No amendment or other modification of this Agreement shall in any event be effective unless the same is made in writing and signed by an authorized representative of each Party. To the extent required by law, the effectively amended Agreement shall be submitted to the relevant Governmental Authorities for filing and/or registration Severability If any part of this Agreement shall become or be declared void or invalid by virtue of law or government order or court decision, the remaining parts shall remain valid and this Agreement shall be fulfilled by the Parties in accordance with its general principles, and the void or invalid provision(s) shall be replaced by such valid provision(s) agreed to by the Parties as closest reflecting the economic intentions of the Parties at the time of signing this Agreement Language This Agreement is executed in the English language in four (4) originals each (at least one (1) for Kite and one (1) for the Company and the remaining two (2) originals for submission to the Governmental Authorities. Where necessary Chinese translation shall be prepared for this Agreement Entire Agreement This Agreement and the Appendices attached hereto together constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and they together supersede all prior discussions, negotiation and agreements between the Parties No Partnership or Agency Nothing in this Agreement is intended to, or shall be deemed to, establish any partnership or joint venture between any of the Parties, constitute either Party the agent of the other Party, or authorise either Party to make or enter into any commitments for or on behalf of the other Party Notices

187 Any notice or written communication provided for in this Agreement by each Party to the other shall be made in English by courier service delivered letter, and s, promptly transmitted or addressed to the appropriate Party. The date of receipt of a notice or communication hereunder shall be deemed to be [ *** ] after the letter is given to the courier service in the case of a courier service delivered letter. All notices and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party. (a) Kite KP EU C.V. 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands legal@kitepharma.com (b) The Company Fosun Pharma Kite Biotechnology Co., Ltd. 2/F, Pilot Building, No.222 Kangnan Road, China (Shanghai) Pilot Free Trade Zone, Shanghai , PRC qiyy@fosunpharma.com This Agreement has been duly signed by the Parties as follows: KP EU C. V. By: Intertrust Directors (Cayman) Ltd. Name: Title: Padraig Hoare Authorized Signatory Signature: /s/ Padraig Hoare and Name: Title: Signature: Julie Hughes Authorized Signatory /s/ Julie Hughes Fosun Kite Biotechnology Co, Ltd. (Chop) By Name: Richard Liqun Wang

188 Title: Signature: Legal Representative /s/ Richard Liqun Wang Schedule 1 List of KTE-C19 Licensed Patents STATUS IDENTIFIER SERIAL NO. SUBJECT MATTER Published KN /935,833 Kite Manufacturing Closed System Published KN /614,400 Published KN SKGF PCT/US2015/ Kite Manufacturing Closed System 62/167,750 Pre-conditioning Regimen (Cytoxan + Fludarabine) Published Published Published KN SKGF KN SKGF KN SKGF /262,143 Pre-conditioning Regimen (Cytoxan + Fludarabine) 15/167,977 PCT/US2016/ Pre-conditioning Regimen (Cytoxan + Fludarabine) 62/167,738 Biomarkers for Preconditioning Treatment Published KN /262,111 Biomarkers for Preconditioning Treatment Published KN PCT/US2016/ Biomarkers for Preconditioning Treatment [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] [ *** ] Schedule 2 List of KTE-C1 9 Licensed Data [ *** ] Schedule 3 NIH Agreement Appendix 3 Key Terms of Technical Service Agreement 1. Kite shall provide on-site and off-site technical services for the clinical activities and manufacturing activities to the company. Kite shall provide the Services in accordance with Technical Service Agreement in all material respects. 2. Kite shall appoint an on-site representative on technical operations side and a representative on clinical side for the Services (collectively, the Kite Representatives ). The Kite Representatives shall serve as Kite s primary contacts with respect to this Agreement and shall have the authority to contractually bind Kite on matters relating to the Services (including signing off the Change Order and/or Project Plan). The Company shall be entitled to ask for replacement for any of Kite Representatives by giving [ *** ] prior written notice to Kite with a list of reasonable grounds and Kite shall in good faith take into consideration such grounds but shall have the sole discretion and right to replace

189 such Kite Representative. For clarity, the Kite Representatives may be based in the PRC or travel from the USA to deliver the Services. 3. Kite shall designate experts and employees sufficient to perform the Services, (collectively with the Kite Representatives, the Kite Personnel ). Kite may replace the Kite Personnel from time to time where reasonably necessary in the interest of the Services. The Company shall be entitled to ask for replacement for any of Kite Personnel by giving [ *** ] prior written notice to Kite with a list of reasonable grounds and Kite shall in good faith take into consideration such grounds but shall have the sole discretion and right to replace such Kite Personnel 4. Kite and the Company shall discuss and formulate a project plan for technology transfer and clinical support, setting out the specifications of the services, including a description of what work is to be done, an estimated timetable and a detailed schedule of the process. Such project plan shall be later on part of the Technical Service Agreement as a schedule and based on the following: [ *** ] 5. The Company shall pay to Kite a fee for the services in relation to the time spent with the Company and in travelling to and from the Company at a USD [ *** ], which shall be [ *** ]. The Parties shall agree in good faith on the [ *** ] based on [ *** ]. The Parties agree that the to be agreed upon [ *** ] will apply through [ *** ] and will increase by [ *** ]% on an [ *** ] basis for each [ *** ] thereafter. 6. The Company shall reimburse Kite for all reasonable expenses incurred in connection with the performance of the Services, including but not limited to the [ *** ]. The reimbursable expenses shall be payable [ *** ]. Fosun Pharma Kite Biotechnology Co., Ltd. Preliminary Business Plan January 4, 2017

190 Table of Contents 1. Executive Summary 2. Key Functional Assumptions a) R&D b) Tech Ops c) Commercial d) G&A 3. Detailed Financials and Headcount 1

191 Executive Summary