Here's Why Amgen, Celgene, and Gilead Like These Small Biotechs

Published: Dec 19, 2016

Here's Why Amgen, Celgene, and Gilead Like these Small Biotechs December 19, 2016
By Alex Keown, Breaking News Staff

Large pharmaceutical companies often buy small biotech companies, or partner with them, as a way of buying innovation. For the smaller companies, it’s a way of gaining financing, experience in clinical development, and potentially commercial expertise. Keith Speights, writing for The Motley Fool, takes a look at three small-biotech-big-pharma partnerships.

1. Amgen and Cytokinetics

These two companies have had a long relationship that goes back to at least 2006. On September 1, 2016, they announced they had advanced omecamtiv mecarbil to Phase III clinical trials with a cardiovascular outcomes trial expected to start in the last quarter of this year.

Amgen acquired a $33 million stake in Cytokinetics in 2006 and another $10 million in stock in 2013. Speights writes, “Amgen’s initial investment in Cytokinetics hasn’t exactly paid off yet. Shares of the small biotech have fallen more than 70 percent over the past 10 years. However, Amgen’s subsequent investment in 2013 hasn’t done too badly. Cytokinetics’ stock is up nearly 40 percent since the second purchase by Amgen.”

Amgen is currently trading for $149.95.

Cytokinetics is currently trading for $12.48.

2. Celgene and bluebird bio

The two companies formed a joint development deal in 2013 to identify and create cancer treatments using gene therapy and chimeric antigen receptor T cells (CAR-T). Celgene (CELG) coughed up $75 million up front. Then they modified the deal in 2015 to focus exclusively on anti-B-cell maturation antigens (BCMA). Celgene paid another $25 million for the opportunity. And earlier this year, Celgene exercised the option to license bb2121, which showed promising Phase I results in multiple myeloma.

Speights writes, “Unlike some of its deals with smaller biotechs, Celgene didn’t buy a stake in Bluebird. That’s probably a good thing, though. Bluebird bio ’s stock has dropped over 60 percent since the companies first forged their partnership. However, things appear to be looking up now for Bluebird. It has two late-stage candidates, LentiGlobin and Lenti-D, as well as its CAR-T program.”

Celgene is currently trading for $117.42.

Bluebird bio is currently trading for $69.66.

3. Gilead Sciences and Galapagos

Gilead Sciences paid $300 million up front to Gilead Sciences last year to jointly develop JAK1-selective inhibitor filgotinib for inflammatory diseases. In addition, Gilead acquired a $425 million stake in the company. In August 2016, they started a Phase III trial for filgotinib in rheumatoid arthritis.

There’s a competition ongoing between Gilead and Galapagos against AbbVie . AbbVie originally developed filgotinib, but abandoned it, and is working on its own JAK1 inhibitor, ABT-494. At this stage of the game, five of AbbVie’s Phase III trials for ABT-494 are ongoing, ahead of Gilead and Galapagos.

Speights notes that there are rumors Gilead might acquire Galapagos, although the two companies’ agreement prevents that from happening over a specific time. He writes, “So far, Gilead’s initial investment hasn’t generated a positive return. Galapagos’ stock is down a little since the beginning of 2016. However, the small biotech has still outperformed Gilead: The big biotech’s stock has plunged over 25 percent year to date.”

Gilead is currently trading for $75.18.

Galapagos is currently trading for $60.50.

AbbVie is currently trading for $63.16.

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