All it takes to become an acquisition target in biotech is some promising data. Take Ewing, NJ, and Vancouver-based Celator Pharmaceuticals, which Jazz Pharmaceuticals just agreed to buy this morning for $1.5 billion.
Celator (NASDAQ: CPXX) was formed in 1999 by a team led by Lawrence Mayer and Marcel Bally, both veterans of the British Columbia Cancer Agency. The company went public in 2013, and its shares subsequently hovered between $1 and $5 apiece for more than two years. Then in this March, Celator’s CPX-351—a reformulation of the chemotherapy combination of cytarabine and daunorubicin, which is often used to treat acute myeloid leukemia—helped extend patients’ lives in a Phase 3 trial. Shares zoomed from $1.53 apiece to $8.70 in a day, then a record high, and have kept climbing. Now Jazz will pay $30.25 a share in cash, or $1.5 billion, for Celator and its AML drug.
Celator was to file for approval of CPX-351, known as Vyxeos, in the U.S. and Europe later this year. But developing a drug is completely different from successfully launching and selling it, and the latter is often best suited for companies with those capabilities already in place. Enter Jazz (NASDAQ: JAZZ). The Dublin-based firm is best known for the narcolepsy drug sodium oxybate (Xyrem), but has a presence in cancer, with the leukemia drug asparaginase Erwinia chrysanthemi (Erwinase), and hematology, with defibrotide sodium (Defitelio). Jazz will use its existing sales force to help carry CPX-351 to the finish line.
“We believe that Jazz Pharmaceuticals’ clinical and commercial expertise in hematology/oncology and existing international infrastructure will help realize the value of [CPX-351] as a treatment to patients with AML,” said Celator CEO Scott Jackson, in a statement. “After thoroughly evaluating our strategic options, our board of directors has unanimously determined that this all-cash transaction is in the best interest of our stockholders.”
Jazz expects to close the deal during the third quarter, though a majority of Celator shareholders have to tender their shares first. Shareholders owning about 18.4 percent of Celator have already agreed to do so.
Celator, meanwhile, has also been applying its technology—a method of designing combination drug formulations—to other mainstay cancer chemotherapies. Its CPX-1, for instance, is a combination of irinotecan and floxuridine that Celator has tested in colorectal cancer. Jazz didn’t say what its plans are for that drug or Celator’s other asset, a nanoparticle formulation of docetaxel.
Jazz will hold a conference call later this morning to discuss the deal.
Celator will present more data from its Phase 3 trial of CPX-351 at two medical meetings next month.