July 14, 2015
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Celgene Corporation is blazing a trail in developing strategic partnerships with other pharmaceutical companies, rather than relying on the more traditional method of mergers and acquisitions. The $1 billion 10-year partnership the New Jersey-based company struck with Seattle-based Juno Therapeutics last month could become a new model for the pharmaceutical and biotech industries, some analysts told Forbes earlier this week.
A strategic partnership is less complicated and less costly than the traditional acquisition and also avoids some of the regulatory issues that a buyout entails. As new discoveries are made by smaller drug companies specializing in serious or rare diseases, larger companies may seek to partner with those companies to develop the drugs and share in the profits. Celgene, worth about $96 billion, could have acquired Juno, which is valued at less than $5 billion, but it was more practical for the company to form its partnership, Forbes said. In June, Celgene acquired a $1 billion stake in Juno as the two companies entered into a 10 year collaborative agreement to leverage combined immunology and oncology expertise to develop treatments for cancer and autoimmune diseases. The collaboration will have with an initial focus on Chimeric Antigen Receptor Technology (CAR-T) and T Cell Receptor (TCR) technologies.
Over the past few years, larger pharmaceutical companies have reduced the amount of money budgeted for research and development, while many smaller and startup biotech companies use the bulk of their budgets for R&D. As an example, Juno recently increased its R&D spending nearly 1,900 percent, the Puget Sound Business Journal reported. Steve Gillis, managing director of Seattle’s Arch Venture Partner, told the Journal that large pharmaceutical companies have “woken up to the premise that they’re not very good with innovation,” which makes partnerships with smaller companies more attractive.
Striking a collaborative partnership deal not only allows the two companies to collaboratively leverage their capabilities, but also allows both companies to remain independent to work on other projects that arise.
Additionally, striking a collaborative deal is advantageous in case the smaller biotech company’s research and development does not pan out. The Motley Fool noted that a partnership means a company like Celgene only needs to “hit a home run every now and then for its aggressive deal-making to pay off in the long run.”
Celgene is becoming something of a trailblazer in developing collaborative partnerships with other pharmaceutical companies. In April, Celgene Corporation struck two deals with other pharmaceutical companies with a combined value of $110 million to advance its oncology platform, continuing the cancer drugmaking company’s deal making trend to advance its oncology pipeline. Celgene entered into an $80 million agreement with Agios Pharmaceuticals to develop AG-881, a small molecule that has shown in preclinical studies to fully penetrate the blood brain barrier and inhibit isocitrate dehydrogenase-1 (IDH1) and IDH2 mutant cancer models. Celgene also announced today it struck a $30 million agreement with one-year-old Canada-based Northern Biologics to advance that company’s work in oncology and fibrosis therapeutics.
Also in April, Celgene entered into a collaborative agreement with AstraZeneca PLC that will allow the U.S.-based drug firm to develop MEDI4736, AstraZeneca’s immunotherapy treatment for blood cancer.
In 2014, Celgene entered into 10 deals, shelling out an average of $222 million in upfront payments to its partners. Juno is developing cell-based cancer immunotherapies based on chimeric antigen receptor and high-affinity T cell receptor technologies to genetically engineer T cells to recognize and kill cancer. JCAR015 is Juno’s chimeric antigen receptor product candidate indicated for the treatment of relapsed or refractory B-cell acute lymphoblastic leukemia. JCAR015 is currently the subject of a Phase I trial, which is designed to determine the safety and appropriate dose of modified T cells in patients. Chimeric antigen receptor technology employs the body’s immune system to attack cancer cells. JCAR014, JCAR016 and JCAR017 are also Juno CAR-T cell product candidates in current levels of testing.
