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With $20B to Spend, Sanofi, Celgene Bet Big on Hemophilia, CAR-T

Xconomy National — 

Two top drugmakers, Sanofi and Celgene, agreed on Monday morning to shell out more than $20 billion combined, cinching deals for hemophilia drug maker Bioverativ and cell therapy developer Juno Therapeutics. Each agreement represents an expensive, risky bet on a crowded, rapidly changing field.

In one acquisition, Sanofi is buying Waltham, MA-based Bioverativ (NASDAQ: BIVV), the one-time hemophilia business of Biogen (NASDAQ: BIIB), for $105 per share. The price represents a 64 percent premium on Bioverativ’s $62.75 per share closing price on Friday. Bioverativ generated about $847 million in sales in 2016, largely from two marketed blood-clotting drugs, Eloctate and Alprolix. Sanofi is gambling that these drugs will continue to generate sales even in the face of emerging, cutting-edge competition.

In the second deal, Celgene (NASDAQ: CELGwill pay $87 per share, or about $9 billion, to buy the roughly 90 percent of Seattle-based Juno (NASDAQ: JUNO) that it doesn’t already own. The agreement gives Celgene a technology platform to develop so-called CAR-T cancer immunotherapies, which have just made their way to market in the past year. The Wall Street Journal first reported rumors of a Celgene/Juno deal last week. Juno shares closed at $71.37 apiece on Friday.

Sanofi is buying Bioverativ at a time when innovation for hemophilia is advancing rapidly. Gene therapies for hemophilia are working their way through clinical testing and, while questions remain, they offer at least the potential for long-lasting, if not permanent, treatment. There are also a slew of competing clotting factor replacement therapies from Shire, Bayer, Novo Nordisk, and others on the market. And Roche/Genentech late last year began marketing emicizumab (Hemlibra), an antibody drug that could soon be approved for the entire hemophilia A population.

“The biggest challenge for Sanofi management will be convincing investors that… the current hemophilia market will not be disrupted by new technologies (gene therapy) and product launches,” wrote Leerink analyst Seamus Fernandez, in a note Monday morning.

Still, Sanofi has clearly made hemophilia a priority—even without a gene therapy in its portfolio. Sanofi in January acquired full rights to fitusiran, an RNA interference treatment from Alnylam Pharmaceuticals (NASDAQ: ALNY) in late-stage testing, and is now adding Bioverativ’s hemophilia drugs to boot. Sanofi is also interested in rare blood diseases, and a move Bioverativ had made to help protect itself from the competition in hemophilia—buying True North Therapeutics for $400 million up front—helped increase its interest in the Waltham drugmaker. The True North deal gave Bioverativ TNT009, for the rare cold agglutinin disease. That drug is now in Phase 3 testing.

The deal is a major victory for the shareholders of Bioverativ. The company spun out of Biogen in February 2017 and debuted at $40 per share. Biogen completely cut ties with the company upon completing the spinout, part of a plan to focus exclusively on tough neurological diseases like Alzheimer’s, Parkinson’s, and ALS. (Biogen shareholders did get one Bioverativ share for every two Biogen shares they owned.)

Celgene’s Juno buyout, meanwhile, marks the second acquisition in less than a year of a major developer of CAR-T therapies—and a risky investment in a fast-moving field whose commercial prospects remain unclear. The FDA approved the first two CAR-T therapies, from Novartis and Gilead Sciences (NASDAQ: GILD), in 2017.

A couple years ago, the field of CAR-T—living T cells, transformed into ruthless cancer killers by genetic engineering then reintroduced back into patients—seemed poised to become the domain of a new group of standalone biotech companies. But the bespoke, “autologous” version that requires using a patient’s own cells is proving complicated and expensive, especially in the manufacturing phase. The therapies reportedly have been struggling commercially at the outset.

Resources matter, and with Celgene’s purchase of Juno, two well-funded CAR-T companies are now the property of one of the world’s largest drug makers. Gilead emphatically entered the CAR-T business with its $11.9 billion acquisition of Juno’s rival Kite Pharma in 2017.

When the Gilead deal was sealed, Kite was nearing FDA approval of axi-cel (Yescarta) to treat adults with non-Hodgkin lymphoma (NHL). Juno is farther away. Its most advanced experimental product, known as liso-cel or JCAR017, is also for adults with NHL. It is in the midst of a trial that Celgene said in a statement Monday morning should be enough to win FDA approval in 2019 if all goes well. Celgene expects JCAR017 to generate up to $3 billion in yearly sales.

Juno has been touting interim data from the study (which, rather bluntly, it has dubbed TRANSCEND), that suggests a relatively clean safety profile and notable efficacy among a small group of patients. But that won’t be known until the full results, from a total of 75 patients measured six months after receiving treatment, are revealed.

If positive, the data would give momentum to Juno’s claims that the technology underpinning JCAR017 could serve other types of blood-borne cancers, as well, including acute lymphoblastic leukemia (ALL). Whether JCAR017 can leapfrog two competitors is Celgene’s biggest gamble.

Celgene and Juno were already tied at the hip. Celgene bought 10 percent of the Seattle firm in June 2015 at $93 a share, which gave Celgene partial rights a variety of Juno’s potential products. In addition to JCAR017, Celgene also gains rights to Juno’s T cell therapy programs for solid tumors and the blood cancer multiple myeloma, which is shaping up to be another competitive race. In fact, Celgene already co-owns rights to the most advanced multiple myeloma cell therapy, which the company is being developed by Bluebird Bio (NASDAQ: BLUE).

Leerink analyst Geoffrey Porges noted that the acquisition will raise questions about how Celgene will handle the two rival multiple myeloma programs. But he nonetheless supports the deal, “even at this price,” since it “consolidates and streamlines Celgene’s investments in CAR-T, and deploys its capital in an area it already knows well, and has made significant capital, technical, scientific and human investments.”

Here’s more on hemophilia, CAR-T, and the issues developers of these therapies face as they progress forward.

Alex Lash contributed to this report.