Atara Biotherapeutics and German pharmaceutical giant Bayer have entered into a strategic collaboration to develop therapies for solid tumors, the companies said over the weekend.

According to collaboration terms, Atara will receive an upfront payment of $60 million from Bayer for the development of ATA3271 and ATA2271, both CAR-T therapies targeting mesothelioma and lung cancer. Atara will be eligible for more payments once certain development milestones are met, totaling $610 million, the companies said in a statement.


The company, which is headquartered in South San Francisco but has its operations in Thousand Oaks and Westlake Village, is also entitled to royalties “up to low double-digit percentage of net sales,” Atara said.


In exchange, Bayer will enter the CAR-T cell therapy space for the first time, while expanding its oncology development pipeline.


Atara develops T-cell immunotherapies for cancer, autoimmune and viral diseases.


“Bayer’s proven track record in oncology global development and commercialization, and growing presence in cell and gene therapy, enhances Atara’s capabilities and complements our leading allogeneic T-cell platform,” Pascal Touchon, chief executive of Atara, said in a statement.


“CAR-T” stands for chimeric antigen receptor T-cells. Atara extracts these cells from the body and modifies them to recognize and destroy cancer cells.


Allogeneic T-cell therapies use a single source of cells to treat many patients, while with autologous T-cell therapies, the donor and recipient are one in the same. ATA2271 is autologous; ATA3271 is allogeneic.


Atara on Monday began a secondary offering of its common stock equal to $150 million; underwriters have the option of purchasing an additional $22.5 million of shares for 30 days, Atara said.


After the companies announced their collaboration Sunday evening, shares of Atara Biotherapeutics (ATRA) rose 6.7 percent on Monday. On Tuesday, shares closed down 41 cents, or 1.6 percent, to $25.82 on the Nasdaq.