Celgene is best known for taking a notoriously dangerous compound, thalidomide, and turning a derivative into a hugely successful cancer drug. But what fewer people may realize is that it is fast building the biotech industry’s best network of partnerships with innovators.
This feels odd to say, even though Celgene (NASDAQ: CELG) has been a big success for a long time, and now has a market valuation of more than $60 billion. Celgene has just never been considered a hothouse of innovation, like Genentech or Genzyme. It doesn’t do much to blow its own horn. If you look at its quarterly reports, they’re boring. Celgene spent $1.8 billion on share buybacks in just the first half of this year—normally a sign of a company that has money to burn, and doesn’t have enough good R&D projects to invest in.
But appearances can be deceiving. While most major biotech and pharma companies have been sitting around in committees, debating what R&D projects to cut and which little companies to partner with, Celgene has been on its toes, stringing together deals with some of the most innovative small biotechs out there. And these strategic deals go way beyond its acquisitions of Pharmion, Abraxis Bioscience, Gloucester Pharmaceuticals, and Avila Therapeutics.
Take a look at some of the biggest biotech IPOs that have surfaced this year. They have Celgene’s fingerprints all over them. Epizyme (NASDAQ: EPZM), Agios Pharmaceuticals (NASDAQ: AGIO), and Bluebird Bio (NASDAQ: BLUE) are a few of its partners that have gone public this year after they struck deals with the big cancer drugmaker in Summit, NJ.
Most of those Celgene deals, and more, were inked when the smaller company in question had technology still in preclinical testing (see chart below). That’s where the risk is high, but the prices tend to be low for a company like Celgene. Dig deeper, and you’ll see that for these modestly priced deals, Celgene has gotten its hooks into some of the best venture-backed companies in the hottest areas of biomedicine. These young companies are leaders in epigenetic-based drug development, cancer metabolism, antibody drugs, gene therapy, immunotherapy, and regenerative medicine. If even one-fourth or one-fifth of these companies do what they say they are aspiring to do, Celgene will win big.
|Company||Location||Date of deal||Scientific niche||Size of Upfront Payment|
|GlobeImmune||Louisville, CO||May, 2009||Cancer immunotherapy||$40m|
|Agios Pharmaceuticals||Cambridge, MA||April, 2010||Cancer metabolism||$130m|
|Foundation Medicine||Cambridge, MA||May, 2011||Cancer diagnostics, patient stratification||undisclosed|
|Acceleron Pharma||Cambridge, MA||Aug., 2011||Anemia drug development||$25m|
|Quanticel Pharmaceuticals||San Francisco||Nov., 2011||Identifies biomarkers for drug discovery||$45m over three years|
|Epizyme||Cambridge, MA||April, 2012||Epigenetics||$90m|
|AnaptysBio||San Diego||April, 2012||Antibodies for cancer & inflammation||undisclosed|
|Inhibrx||San Diego||June, 2012||Undisclosed antibody drug candidate||undisclosed|
|VentiRx Pharmaceuticals||Seattle||Oct., 2012||Immunotherapy||$35m|
|PharmAria||San Diego||Oct., 2012||Small molecules for cancer, fibrotic disease||undisclosed|
|Sutro Biopharma||South San Francisco||Dec., 2012||Antibody-drug conjugates, bispecific antibodies||undisclosed|
|Bluebird Bio||Cambridge, MA||Mar., 2013||Gene Therapy||$75m|
|Presage Biosciences||Seattle||Mar., 2013||Cancer drug discovery technology||$13m|
|Forma Therapeutics||Watertown, MA||April, 2013||Small-molecule drug discovery||$200m (includes research payments)|
|Concert Pharmaceuticals||Lexington, MA||May, 2013||Deuterium-modified drug candidates||undisclosed|
|Morphosys||Germany||June, 2013||Antibodies for myeloma, leukemia||$92m|
|Tengion||Winston-Salem, NC||July, 2013||Regenerative medicine for kidney disease||$15m equity investment|
|Acetylon Pharmaceuticals||Boston||July, 2013||Histone deacetylase inhibitors||$100m|
|Array Biopharma||Boulder, CO||July, 2013||Inflammation drug discovery||$11m|
|–Company reports, Celgene regulatory filings|
There are a few reasons why Celgene has been able to string together such an impressive run in business development. It makes billions of dollars off lenalidomide (Revlimid), for multiple myeloma, which makes it easy to write big upfront checks that little cash-starved companies crave. Celgene also has a clinical development team that’s proven it knows how to run late-stage clinical trials that can satisfy the FDA. But that’s nothing special—most every Big Pharma can brag about its prowess in those areas.
More than that, the entrepreneurs and venture investors I’ve spoken to over the past year say it’s about … Next Page »
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