Forma Strikes $200M Deal With Celgene to Discover Cancer Drugs
Forma Therapeutics has never had trouble finding partners who want access to its early-stage drug discovery team, when most companies are cutting back there. But the Watertown, MA-based company is entering into a different kind of deal with Celgene that could turn Forma into a bigger enterprise that discovers, develops, to someday markets its own drugs.
The deal being announced today provides Summit, NJ-based Celgene (NASDAQ: CELG) exclusive commercial access outside the U.S. to compounds that Forma’s drug discovery team comes up with in the emerging field of protein homeostasis.
While this deal has its share of “biobucks”—large, success-based milestone payments that are likely to never materialize—it’s also unusually lucrative for the small company. Celgene has committed $200 million to Forma in a combination of upfront and early R&D payments.
Although Forma isn’t disclosing the size of the upfront check it’s getting from Celgene, the five-year-old drug discovery company expects to have booked an aggregate of $165 million in revenue from its combined partnerships by the end of this year, and $315 million in combined partnership revenue by the end of 2017, according to Forma CEO Steven Tregay. Forma currently has 105 employees, and expects to grow to 125-130 people by the end of this year, he says.
In case you read that last paragraph fast, here’s one point that shouldn’t be overlooked. The Celgene deal allows Forma to retain the commercial rights to protein homeostasis-based drugs in the U.S.—still the world’s largest pharmaceutical market. That means Forma didn’t have to give away the farm to get that $200 million base of R&D support, so if it uses the money wisely, it could maneuver into a position of someday selling its own products, and generating its own cash flow, rather than just always licensing out compounds that other companies profit from.
“The largest deal we’ve done, by quite a bit,” Tregay says of today’s news. “There’s a commitment of $200 million to really win in this area if we’re successful, and to allow Forma to grow up as a company. It’s an amazing deal, and an amazing area of science.”
Celgene, as avid readers of Xconomy probably know already, has formed a wide variety of partnerships with some of the most innovative biotech startups of the past five years. It has struck deals with Cambridge, MA-based Agios Pharmaceuticals, Cambridge-based Epizyme, Seattle-based VentiRx Pharmaceuticals, and San Francisco-based Quanticel Pharmaceuticals, among others. Those companies represent edgy plays in the fields of cancer metabolism, epigenetics, cancer immunotherapy, and cancer genomics, respectively.
By cozying up with Forma, Celgene is getting access to one of the most prolific small-molecule drug discovery teams in the industry, even when including Big Pharma giants with deep pockets. Forma has struck previous partnerships with Genentech, Boehringer Ingelheim, Johnson & Johnson, and Eisai Pharmaceuticals to provide those organizations with different drug candidates designed to interact with a variety of new drug targets, most of which aren’t being disclosed for competitive reasons.
Protein homeostasis is an emerging area of biology that Forma only sought to pursue about six months ago, Tregay says. This field is concerned with how complex networks of proteins get perturbed, and lead to errors in protein folding, transport, or the way they get disposed of in the usual cellular machinery. Cancer and neurodegenerative diseases like Parkinson’s are a couple areas that biologists think might be treatable through drugs that seek to restore protein homeostasis. A few other companies have been zeroed in on this field for years, including Cambridge, MA-based Proteostasis Therapeutics, Burlingame, CA-based Cleave Biosciences, FoldRx Pharmaceuticals (now part of Pfizer), and Millennium: The Takeda Oncology Company.
What Forma thinks it can add to the mix is an ace medicinal chemistry team that can make lots of drug candidates that can bind with some of the emerging targets in protein homeostasis biology, and tweak them any which way is needed to make them optimal as drug candidates.
If Forma is successful in this endeavor, it will be richly rewarded under the deal with Celgene. Forma will get the full $200 million if it can advance “multiple drug candidates” through the first phase of clinical trials, which normally assess safety and tolerability of drug candidates in a variety of doses. Forma will do this work in collaboration with TGen Drug Development (TD2) in Scottsdale, AZ, the clinical trial group led by Daniel Von Hoff, a respected physician-scientist who has been involved in dozens of successful cancer drug trials. Once a drug passes Phase I trials, it becomes Celgene’s job to run the middle and late-stage trials necessary for regulatory approvals.
Now here’s where the imaginary “biobucks” enter the picture. If drug candidates from Forma hit all their clinical trial, regulatory and sales goals—an unlikely possibility—then Forma could collect up to $315 million in payments on the first drug licensed by Celgene, plus royalties. Each set of “biobuck” incentives gets larger for the next drug candidates to pop out of Forma’s discovery engine, until reaching a maximum of $430 million in milestone payments per drug program.
The structure of the deal doesn’t follow a lot of typical templates between small biotechs and big companies, but the unorthodox nature of the partnership is in keeping with Celgene’s style of crafting different deals for different situations—like with some of the other biotech partners listed above.
“We are enthusiastic about the very innovative scientific and business structure approach this collaboration represents. Forma’s unique drug discovery platform and disruptive approach to discovery of high impact therapies offers a valuable complement to our overall strategy,” said Tom Daniel, the president of global research and early development at Celgene, in a statement.
It’s still too early to say when the Forma discovery team might be able to put some of its drug candidates into clinical trials, much less whether any of them will ever help patients or make a dime of revenue. But Tregay says his team is gaining speed and efficiency as it scales up, and he’s betting that he can produce high-quality candidates for clinical trials in half the usual time. If Tregay and his team can hit those goals, he says, he’s confident in the folks who will take the handoff for the less risky, but more expensive phases of middle and late-stage clinical development.
“Celgene really truly treats partnerships as an essential part of building their pipeline,” Tregay says. “They have an amazing clinical success rate, and success with growing the assets they have. But they truly appreciate that these partnerships with small companies aren’t just an add-on. That’s why they are such a good partner. They need this partnership to work as part of their growth plan. They aren’t looking at this as an afterthought, or something that fills in the missing piece in their pipeline. They view it as a strategic activity.”