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Celgene Emerges as Biotech’s Shrewdest, Nimblest Dealmaker

Xconomy National — 

Celgene is best known for taking a notoriously dangerous compound, thalidomide, and turning a derivative into a hugely successful cancer drug. But what fewer people may realize is that it is fast building the biotech industry’s best network of partnerships with innovators.

This feels odd to say, even though Celgene (NASDAQ: CELG) has been a big success for a long time, and now has a market valuation of more than $60 billion. Celgene has just never been considered a hothouse of innovation, like Genentech or Genzyme. It doesn’t do much to blow its own horn. If you look at its quarterly reports, they’re boring. Celgene spent $1.8 billion on share buybacks in just the first half of this year—normally a sign of a company that has money to burn, and doesn’t have enough good R&D projects to invest in.

But appearances can be deceiving. While most major biotech and pharma companies have been sitting around in committees, debating what R&D projects to cut and which little companies to partner with, Celgene has been on its toes, stringing together deals with some of the most innovative small biotechs out there. And these strategic deals go way beyond its acquisitions of Pharmion, Abraxis Bioscience, Gloucester Pharmaceuticals, and Avila Therapeutics.

Take a look at some of the biggest biotech IPOs that have surfaced this year. They have Celgene’s fingerprints all over them. Epizyme (NASDAQ: EPZM), Agios Pharmaceuticals (NASDAQ: AGIO), and Bluebird Bio (NASDAQ: BLUE) are a few of its partners that have gone public this year after they struck deals with the big cancer drugmaker in Summit, NJ.

Most of those Celgene deals, and more, were inked when the smaller company in question had technology still in preclinical testing (see chart below). That’s where the risk is high, but the prices tend to be low for a company like Celgene. Dig deeper, and you’ll see that for these modestly priced deals, Celgene has gotten its hooks into some of the best venture-backed companies in the hottest areas of biomedicine. These young companies are leaders in epigenetic-based drug development, cancer metabolism, antibody drugs, gene therapy, immunotherapy, and regenerative medicine. If even one-fourth or one-fifth of these companies do what they say they are aspiring to do, Celgene will win big.

CompanyLocationDate of dealScientific nicheSize of Upfront Payment
GlobeImmuneLouisville, COMay, 2009Cancer immunotherapy$40m
Agios PharmaceuticalsCambridge, MAApril, 2010Cancer metabolism$130m
Foundation MedicineCambridge, MAMay, 2011Cancer diagnostics, patient stratificationundisclosed
Acceleron PharmaCambridge, MAAug., 2011Anemia drug development$25m
Quanticel PharmaceuticalsSan FranciscoNov., 2011Identifies biomarkers for drug discovery$45m over three years
EpizymeCambridge, MAApril, 2012Epigenetics$90m
AnaptysBioSan DiegoApril, 2012Antibodies for cancer & inflammationundisclosed
InhibrxSan DiegoJune, 2012Undisclosed antibody drug candidateundisclosed
VentiRx PharmaceuticalsSeattleOct., 2012Immunotherapy$35m
PharmAriaSan DiegoOct., 2012Small molecules for cancer, fibrotic diseaseundisclosed
Sutro BiopharmaSouth San FranciscoDec., 2012Antibody-drug conjugates, bispecific antibodiesundisclosed
Bluebird BioCambridge, MAMar., 2013Gene Therapy$75m
Presage BiosciencesSeattleMar., 2013Cancer drug discovery technology$13m
Forma TherapeuticsWatertown, MAApril, 2013Small-molecule drug discovery$200m (includes research payments)
Concert PharmaceuticalsLexington, MAMay, 2013Deuterium-modified drug candidatesundisclosed
MorphosysGermanyJune, 2013Antibodies for myeloma, leukemia$92m
TengionWinston-Salem, NCJuly, 2013Regenerative medicine for kidney disease$15m equity investment
Acetylon PharmaceuticalsBostonJuly, 2013Histone deacetylase inhibitors$100m
Array BiopharmaBoulder, COJuly, 2013Inflammation drug discovery$11m
–Company reports, Celgene regulatory filings

 

There are a few reasons why Celgene has been able to string together such an impressive run in business development. It makes billions of dollars off lenalidomide (Revlimid), for multiple myeloma, which makes it easy to write big upfront checks that little cash-starved companies crave. Celgene also has a clinical development team that’s proven it knows how to run late-stage clinical trials that can satisfy the FDA. But that’s nothing special—most every Big Pharma can brag about its prowess in those areas.

More than that, the entrepreneurs and venture investors I’ve spoken to over the past year say it’s about … Next Page »

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One response to “Celgene Emerges as Biotech’s Shrewdest, Nimblest Dealmaker”

  1. Humility is an important asset in any organisation, and it’s nice to see Celgene has it. It is always tempting use any power that one has, especially if one labours under the impression that one somehow has a special expertise due to past success. Any constraint that funders apply to small biotechs will probably hinder their performance, and so is self-defeating ultimately.