[Updated 12:35pm ET with comments from Michael Gilman, Obsidian CEO, see below.] Bristol-Myers Squibb’s huge proposed buyout of Celgene earlier this month has left many in biotech circles concerned that the Summit, NJ, drugmaker’s days of creative, aggressive dealmaking with smaller companies might be over. So far, however, that isn’t the case.
Two Boston-area biotechs, Kyn Therapeutics and Obsidian Therapeutics, announced deals this morning with Celgene (NASDAQ: CELG). Both partnerships bring Celgene options to emerging experimental cancer immunotherapies.
And yet both deals come with some uncertainty: Kyn and Obsidian will now join the long line of biotechs wondering what the future might hold for their partnerships if the $74 billion mega-merger goes through. When two large companies combine, the new entity can have different priorities and either end existing alliances or stall drug development collaborations that were underway.
Kyn CEO Mark Manfredi says Kyn’s deal was being negotiated in December through the end of the year, and that at the time, he didn’t know about the Bristol acquisition, which was announced on Jan. 3. “BMS wasn’t part of our discussion,” says Manfredi, who wouldn’t say when his deal was finalized and signed.
Michael Gilman, Obsidian’s CEO, says his deal was in the works “for a long time”, with negotiations largely completed over the holidays and in early January, and then signed yesterday. The BMS news, he says, was a surprise.
Boston-based Kyn says it’s receiving $80 million cash up front, along with an equity investment, from Celgene, giving Celgene the exclusive option to license two programs in return.
Kyn was founded in 2016 to develop drugs that dial up immune responses against tumors. The drugs block biochemical pathways cancer cells use to suppress immune cell activity. Kyn aims for the drugs to be used either on their own or in conjunction with other immunotherapies in cancer patients.
Kyn’s drugs—the ones covered by the Celgene agreement—target the same pathway as the one targeted by IDO inhibitors. One of those inhibitors, epacadostat, from Incyte (NASDAQ: INCY), flopped last year in a closely watched Phase 3 trial that tested the drug in combination with Merck’s pembrolizumab (Keytruda) in melanoma. But Kyn’s drugs are aimed at a different part of the pathway, with the hope that they will be more effective than IDO inhibitors.
Of the two drugs that Celgene has its eye on, one is an enzyme that breaks down an immune-suppressing molecule called kynurenine, which is made by IDO. The other is a small molecule that blocks a receptor called AHR that kynurenine and other molecules bind to.
Kyn will take the two programs through phase 1b clinical trials, after which Celgene can then opt in, take the lead going forward, and gain worldwide rights. Kyn could receive milestone payments and royalties from sales, if the drugs get that far.
When asked about the future of this partnership, Manfredi said he isn’t concerned. “We’re excited to get things going and just go from there,” he says. He added that he isn’t aware of any overlaps with Kyn’s pipeline and Bristol’s.
Obsidian’s deal, its first with a large drugmaker, is similar: Celgene will pay an undisclosed amount up front and also make an equity investment in Obsidian to get exclusive options to license Obsidian’s experimental cell therapies for cancer. Obsidian could get downstream payments and royalties in the future.
Obsidian CEO Michael Gilman had this to say on Twitter this morning:
Plus a few moments of panic on our end.
— Michael Gilman (@michael_gilman) January 18, 2019
Gilman later told Xconomy: “The Celgene team is clearly committed to incorporating Obsidian technology into several internal programs and has assured us that BMS values the cell therapy effort as well, despite (or perhaps because of) no competing internal activity.” He added: “Ultimately, of course, it will be BMS, not Celgene, that will decide whether to option the programs we develop—I would acknowledge that as an uncertainty, as are most things in our business!”
Obsidian is working on cell therapies that can be tuned to produce key immune-modulating factors. The goal is to expand the use of CAR-T—a cutting edge form of cell therapy that has, so far, only worked for a small set of blood cancers—while reducing its serious side effects. Celgene bet big on CAR-T through its acquisition of Juno Therapeutics and its alliance with Bluebird Bio (NASDAQ: BLUE), and that gamble will fall to Bristol once the Celgene buyout closes.