Trusting Your Partners: A Chat With Celgene’s George Golumbeski
It’s no secret that biotech IPOs, for the first time in at least 10 years, are suddenly white hot. Companies with sparse evidence from clinical trials, or those with drugs that have failed such trials, are finding success raising cash from public investors.
But take a look at some of the best performing biotech IPOs of late, as well as some of the most anticipated coming ones, and you’ll find a common theme. Many of them struck partnerships in their earliest days with Summit, NJ-based Celgene (NASDAQ: CELG), the big cancer drugmaker.
Bluebird bio (NASDAQ: BLUE), the developer of gene therapies, has a $75 million up front, $225 million per-product deal with Celgene. The Cambridge, MA-based company priced its IPO at $17 per share last month, and now trades at close to $30. Now consider Epizyme (NASDAQ: EPZM). Before going public, that company struck a $250 million strategic deal with Celgene to develop targeted cancer drugs based on Epizyme’s work in epigenetics. Many expect the run of Celgene-validated startups to continue when cancer metabolism specialist Agios Pharmaceuticals, prices its IPO.
Those companies represent a few examples in the dealmaking strategy Celgene is using to shape its future pipeline. Over the past few years, Celgene has signed early-stage deals with a variety of innovative biotechs that tend to be customized for each company, rather than following a standard template.
Some of Celgene’s deals use a build-to-buy approach, like its arrangements with South San Francisco, CA-based Quanticel Pharmaceuticals and Seattle-based VentiRx Pharmaceuticals, through which Celgene paid upfront to collaborate on certain programs and got the exclusive option to buy the company down the road. Others, like its pact with Lexington, MA-based Concert Pharmaceuticals, include large per-drug checks tied to various milestones. And then there’s the Agios approach, in which Celgene laid out $130 million for an extendable three-year option to license and develop any of the company’s cancer drugs.
While Celgene is obviously not the only big drugmaker in the world that’s active in striking deals with startups, a few things make it stand out. For one, it has a hands-off approach, allowing its partners to steer the ship. For another, it molds a specific deal, in a specific way, for a specific company. This structural flexibility engenders a lot of goodwill among Celgene’s partners, according to Steven Tregay, the CEO of Watertown, MA-based Forma Therapeutics.
“Celgene stands out in my mind as being very willing to say ‘Ok, how do you approach drug discovery? Ok, we buy into that. We do it a little bit differently, but let’s let you try your approach,” Tregay says. Forma, of course, signed a $200 million upfront partnership with Celgene in April to discover cancer drugs via its work in protein homeostasis.
Celgene also has a habit of picking edgy, high-risk/high-reward fields of biology for its partnerships: epigenetics, cancer metabolism, protein homeostasis, gene therapy, and others. These aren’t low-risk/low-reward plays. Celgene’s going for home runs. Not singles and doubles.
“We tend to be looking a little more for things that could be transformative, truly step-ahead therapies, not just incremental gains,” says George Golumbeski, a molecular biologist by training, and Celgene’s senior vice president of business development since 2009.
And while the numbers in biotech tell you that most of these are likely to fail, it’ll be interesting to see just where Celgene stands about five years from now, when many of the early-stage deals it has made will either result in drugs with promising clinical results that it is hyping at industry conferences, or dollars that are written off.
I spoke with Golumbeski, a former Novartis and Elan executive, at length about Celgene’s partnering strategy, the constantly evolving landscape of biotech collaboration deal structures, and the importance of his close collaboration with Celgene R&D chief Tom Daniel.
Xconomy: How would you describe your early-stage dealmaking strategy?
George Golumbeski: It’s a long-term view. We’ve thought very deliberately and deeply about what Celgene might look like then, and what our growth needs might be—we need a healthy, big pipeline to fuel us at that time. We are really looking for absolutely the highest science, novelty, and the word that comes up frequently in our quest for the appropriate target is ‘disruptive.’ And we do think the Agios cancer cell metabolism play, Quanticel’s ability to disrupt tumors down to single cells, can spawn a lot of biomarkers, a lot of new drugs. So when we talk about early stage things, we’re really looking for transformative deals, transformative technologies.”
X: How has that strategy evolved over the years?
GG: I think that the evolution probably pertains more to the deal structures. We, I think, do a really good job of listening to our partners, and trying to accommodate what they want while accommodating our needs. This is what has driven us to do some of the options to acquire, a build-to-buy in the case of Quanticel, and very broad, long-lived collaborations with the likes of Agios and Epizyme. And I think that we’ve probably evolved our thinking over the years from more standard-type collaboration structures to Agios, to Quanticel. And I think we will continue to evolve, because we want to work closely with small, innovative companies and enable them to bring their novel science and their step-ahead—not incrementally better—medications to patients. But, where possible, we would like to bring the fruits of those collaborations to Celgene. So a long-term, close relationship that leads to an M&A, [or] a long-term relationship that doesn’t but [lets us] secure first-class, highly novel and beneficial therapeutics, we’re always challenging ourselves to find better ways to accomplish that structurally.
X: What makes Celgene’s business development style differentiated from its Big Pharma and Big Biotech peers?
GG: Celgene is the only company I think I’ve ever been in where … Next Page »