Agios and Celgene: Anatomy of an Ultra-Valuable Biotech Marriage
It wouldn’t be much of an over-statement to say Cambridge, MA-based Agios’ $150 million cancer-drug development deal with biotech giant Celgene is unprecedented. At least not in the view of Kevin Starr, a partner at Third Rock Ventures, which helped found Agios in 2008, providing part of its $33 million Series A funding. In April 2010, Summit, NJ-based Celgene (NASDAQ: CELG) poured its first $130 million into Agios, and on Oct. 5, it extended the deal to four years from three, for another $20 million. “From a size standpoint, this is the largest partnership we have among any of our portfolio companies by a wide margin,” Starr says.
Agios and Celgene are working on a new class of drugs designed to starve cancer cells of key enzymes. Celgene had the option to extend the deal under the original agreement, but virtually no one expected the company to exercise that right so soon. Although Agios has identified several lead clinical candidates, it could be as long as two years before any of them are ready for human trials, says Agios CEO David Schenkein. “What’s most important to us is not the dollars” involved in the Celgene deal, Schenkein says, “but the statement Celgene is making. It shows they’re confident in Agios as a partner.” Celgene has the right to extend the deal again, as well as an exclusive option to license any of the drugs for an undisclosed period of time.
Cancer metabolism is the study of enzymes that alter the metabolism of cancer cells by feeding them nutrients they need to grow. Depriving tumors of such mutated enzymes could be an efficient method for starving the cancer to death. The field is so promising that drug giants ranging from AstraZeneca (NYSE: AZN) to GlaxoSmithKline (NYSE: GSK) have embarked on their own internal efforts to find drug targets based on the rapidly expanding understanding of how cancer metabolism works. Thomas Daniel, Celgene’s president of research, believes Agios is emerging as a clear leader. “The earlier-than-planned trigger on the investment shows our enthusiasm for Agios, the collaboration, and the progress being made,” he says.
The story behind the Agios-Celgene alliance could serve as a blueprint for other biotech startups that want to gain an early foothold—both scientific and financial—in a hot emerging field. Starr, who served as the company’s founding CEO, describes the company’s first nine or so months as a carefully calculated effort of integrating diverse scientific disciplines, translating a broad idea into solid intellectual property, and ultimately finding a partner with deep pockets and a common vision.
Agios’s scientific co-founders were three of the most renowned pioneers of cancer metabolism: Lewis Cantley of Harvard Medical School, Tak Mak of the University of Toronto, and Craig Thompson from the University of Pennsylvania, who is now CEO of Memorial Sloan-Kettering Cancer Center in New York. “They had a collective ‘ah-hah’ moment,” Starr says. “They discovered that targeting certain metabolic enzymes could fundamentally alter cancer pathways.” In order to turn that discovery into a company that could be “a prolific discoverer of new products,” says Starr, … Next Page »