Celgene Puts $35M into VentiRx, Gets Option to Buy Cancer Drugmaker

10/3/12Follow @xconomy

Celgene became one of the world’s biggest biotech companies because of its drug for blood cancers that scientists say works at least partly by stimulating an immune reaction against cancer cells. Now it’s putting some big money into a partnership with Seattle-based VentiRx Pharmaceuticals that aims to go a step further in developing cancer immunotherapies.

Summit, NJ-based Celgene (NASDAQ: CELG) is announcing today it has agreed to pay $35 million upfront to VentiRx as part of an exclusive, worldwide collaboration to develop a drug that stimulates the immune system to fight cancer cells. Full terms of the deal aren’t being disclosed, but Celgene is getting an option to make a future equity investment in VentiRx and an exclusive option to acquire the company at a pre-determined price if clinical trials are positive.

Through this alliance, VentiRx will be able to charge ahead with a pair of large, well-controlled clinical trials that would otherwise be too expensive and difficult for a little company with 10 employees and about $53.9 million in total venture backing. The deal also enables VentiRx’s investors—Arch Venture Partners, Frazier Healthcare Ventures, Domain Associates, and MedImmune Ventures—to count on a predictable return if the drug pans out. And for Celgene, the deal offers a way to invest in an edgy new immunotherapy at a time when other companies such as Bristol-Myers Squibb have shown this approach can work with drugs like ipilimumab (Yervoy) and an experimental PD-1 antibody.

“We talked to a number of different groups, but Celgene really jumped out at us,” says Rob Hershberg, VentiRx’s CEO. “They’ve demonstrated they can do very creative deals that are well-financed, and they’ve shown they are an excellent partner. They are a company that knows the oncology space, and they have a strong and growing interest in immunotherapy.”

VentiRx CEO Rob Hershberg

Celgene did a similar deal last year with San Francisco-based Quanticel Pharmaceuticals, in which it agreed to provide the small company with a $45 million upfront fee in exchange for an option to acquire the company at a later date, says spokesman Greg Geissman. In the case of VentiRx, Celgene sees the potential for combining the new immune-booster with other drugs. One such combination the company is looking at closely involves its own lenalidomide (Revlimid) in combination with Genentech’s rituximab (Rituxan). “As we look at a number of collaborations, our main goal is to identify promising technologies that have potential to really make an impact on treatment in cancer and other diseases,” Geissman says.

The companies aren’t saying how long Celgene’s option to acquire VentiRx lasts, but Hershberg says the partnership provides support for the development of VentiRx’s VTX-2337 over the next three to four years.

The scientific concept at VentiRx is to create conventional small molecule drugs that stimulate Toll-like receptors (TLRs), specifically one called TLR8. The family of TLRs are key components of the body’s innate immune system—the first-line defense that recognizes foreign invaders at their point of entry under the skin, in the mucus linings of the nose, and in the gut. VentiRx’s lead drug candidate, VTX-2337, is designed to be given in a once-weekly injection just under the skin, by a medical professional. It is meant to stimulate TLR8, Hershberg says.

VentiRx has been seeking to show how … Next Page »

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