Agios Pharmaceuticals rode a wide-ranging partnership with Celgene to a big IPO a few years ago. Today the two companies are partnering once again in a deal that will see Agios try its hand at the increasingly competitive field of cancer immunotherapy.
Specifically, Cambridge, MA-based Agios (NASDAQ: AGIO) is getting $200 million up front from Summit, NJ-based Celgene (NASDAQ: CELG) in a new four-year deal focused on developing drugs that impact cellular metabolism—Agios’s forte—to help drive the immune system to fight cancer.
Immuno-oncology, as its known, is as hot a field as there is in biotech. Companies are trying a variety of approaches, and mixing and matching different drugs, to try to expand the reach of immuno-oncology—which despite all the hype, is still only effective in a fraction of cancer patients. Celgene, which is best known for its myeloma drugs, has been working its way into immuno-oncology over the past few years through dealmaking. It’s formed partnerships with Bluebird Bio (NASDASQ: BLUE) and Juno Therapeutics (NASDAQ: JUNO) on a cellular immunotherapy method known as “CAR-T,” and is co-developing an experimental “checkpoint inhibitor” cancer drug with AstraZeneca.
Agios has been looking at ways of tweaking the metabolic pathways of immune cells to drive a tumor-fighting response. Some of this work was published in a paper in the journal Immunity in 2015. Citing the intense competition in immuno-oncology, Agios CEO David Schenkein wouldn’t say exactly what molecular targets the company is looking into, or how far these programs are from clinical testing—just that they’ll be differentiated.
“Everything we’ve worked on has been novel, first in class molecules and targets, and that will continue,” he says.
Agios will do the early work on these immuno-oncology drug prospects and Celgene will get the chance to grab rights to them—each for a $30 million fee—up until the end of early-stage clinical trials. If Celgene opts in on a particular drug, the two companies will split the associated development costs and profits 50/50, and Agios stands to receive $169 million in downstream payments if the drug hits a variety of clinical and regulatory targets. Celgene can opt for a 65/35 split on one program, in which case Agios would get $209 million in milestone payments. Celgene can also extend the deal by two years, though the two companies aren’t disclosing the fee it’d have to pay. If the two develop any drugs for inflammatory or autoimmune diseases, Celgene can grab full rights in return for $386 million in total milestone payments.
Additionally, Celgene has also returned non-U.S. rights to an experimental cancer drug called AG-120 back to Agios. Deserved or not, there is always a stigma attached to a drug that a large company sends back to a partner. AG-120 is on the verge of a Phase 3 trial for a subset of patients with the blood cancer acute myeloid leukemia, and is being tested in other cancers as well.
Schenkein, however, says the move is more about “simplifying the relationship” between Agios and Celgene, which already share rights to a few other drugs. Agios and Celgene have been working with one another since 2010, when Celgene poured $130 million into Agios to get in on the company’s cancer metabolism work. That partnership was a key validating step for Agios while it was still a privately held startup. It remains the company’s only industry alliance.
Schenkein says that Agios is a different company now than it was in 2010. It has five drugs in clinical testing, and thus has more leverage to retain more rights to its drugs in a partnership. In the original deal, for instance, Agios gave Celgene worldwide rights to a drug, AG-221, now in late-stage clinical trials.
“We’ve always said that if we were going to do a research partnership now, it would be focused on an area of research where we felt someone else’s capabilities would allow us to really jumpstart into a new field,” he says.
Schenkein says Agios “spoke to all of the [immuno-oncology] players and could have done a deal with a different company, but went with Celgene because of the progress the two have been able to make together.
“When partnerships really go well, then 1 and 1 become 3,” he says. “And when they don’t go well, you can do the math.”