Astellas Pharma Inc. is licensing KaliVir Immunotherapeutics LLC's VET2-L2 oncolytic virus, used for killing cancer cells, for $56 million up front.

VET2-L2, which is administered intravenously, is a virus that can be used as an immunotherapy for infecting and destroying cancer cells. It activates anti-cancer immunity through expression of therapeutic transgenes.

As part of the global exclusive licensing deal, the companies will also collaborate on research to generate a second product: a follow-on virus.

In addition to the $56 million, which will consist of an upfront payment and other payments to support research and preclinical activities related to the two products, Pittsburgh, Penn.-based KaliVir could receive up to $307 million and up to $271 million for development, regulatory progress and commercialization of VET2-L2 and the second product, respectively. Tokyo-based Astellas could also pay royalties on net sales of each licensed product.

Naoki Okamura, Astellas' CFO and chief strategy officer, said the agreement is anticipated to advance the company's pipeline and further expand its cancer treatment options.