Smaller groups await Bristol-Myers Squelgene fallout

Celgene had many fingers in many pies – so what will happen now to its smaller collaborators?

As the dust settles on Bristol-Myers Squibb’s takeout of Celgene it is not just big pharma that is left wondering where it now stands. A slew of smaller companies that had tie-ups with Celgene also face a nervous wait to find out if Bristol sees promise in their projects or whether they are surplus to requirements.

So far, much of the attention has focused on the Chinese player Beigene, which is – for now – developing its PD-1 inhibitor tislelizumab alongside Celgene. But an analysis by Vantage reveals that dozens of other groups could also be affected by the formation of Bristol-Myers Squelgene, including Forma, Evotec, Agios and Jounce.

Celgene was notoriously prolific in its deal making. A previous analysis by Vantage showed that the company’s biz dev team had splashed out substantially more than any other big drug developer, spending over $3.5bn on up-front payments in licensing deals from 2010 to 2016 (Buyers of cancer assets fan the licensing deal market, September 7, 2017).

The table below lays out some notable deals struck over the last five years that, as far as Vantage can ascertain, remain active.

For brevity, Vantage chose to focus on deals for which terms were disclosed; a full list of collaborations and partnerships would be substantially longer, so this analysis understates the impact that this mega-merger could have on smaller entities.

An uncertain future: selected Celgene deals
Deal partner Projects (stage at time of signing) Topline terms 
2018
Vividion Therapeutics Oncology, inflammatory & neurodegenerative research projects  $101m up front, incl equity investment
Evotec Oncology research deal (also 2018 protein degredation deal and 2016 neurodegenerative research deal) $65m; $45m up front under 2016 deal
Prothena Tau, TDP-43 and one undisclosed neurodegenerative target (preclinical) $100m up front and $50m equity investment
Skyhawk Therapeutics Research deal in ALS, Huntington's and other neurological conditions $60m up front
2017
Anokion Autoimmune research programme, incl option to buy company $45m up front
Dragonfly Therapeutics Haematological cancer research collaboration $33m up front
Beigene Tislelizumab (phase II anti-PD-1 antibody) $263m up front and $150m equity investment 
2016
Agios Pharmaceuticals Metabolic immuno-oncology collaboration (followed 2010 cancer metabolism deal) $200m up front
Jounce Therapeutics JTX-2011 (preclinical) and four other early-stage IO projects $225m up front and $36m equity investment
Evotec Neurodegenerative research programme $45m up front
2015
Lycera LYC-30937 (phase I ATPase modulator; option to buy Lycera presumably lapsed) $82.5 up front
Northern Biologics Oncology and fibrosis antibody research programme  $30m up front
Epizyme Extension of previous research collaboration, covering HMT inhibitors $10m up front
Nurix Ubiquitin proteasome system research project $150m up front and $17m equity investment
Recombinant Antibody Network Oncology antibody research project $25m up front
2014
Forma Therapeutics  Broader research collaboration (followed 2013 protein homeostatsis deal) $225m up front; $200m R&D funding under 2010 deal
Source: EvaluatePharma.

Notably, the vast majority of these deals involved Celgene securing options over projects rather than explicit licences. The big biotech always boasted of its open-armed and collaborative approach to deal making, and this frequently won praise from smaller partners.

However, these same executives could now be wondering whether a harder bargain might have been a better approach. Presumably in many cases these collaborations can be left to lapse, or funding for research project deprioritised; backing out of full licensing deals would be more complicated and expensive.

Still, as so many of Celgene’s tie-ups involved very early projects, perhaps licensing agreements were not on the table at the time. And many of the smaller groups received substantial up-front payments to bolster their R&D activities, which might be some consolation if Bristol decides to deprioritise their projects.

Big bucks

Among these, Jounce, Agios, Evotec and Forma have been some of the biggest beneficiaries of Celgene’s largesse.

Forma forged two collaborations with the big biotech, the most recent of which involved a chunky $225m up-front payment and a potential future option to buy the company. Going by press releases that option has not yet been triggered, but work seemed to be progressing in that direction.

Meanwhile, Evotec has three research deals running with several options pending over various projects, and Agios has two expansive oncology deals, which have already yielded one marketed product in Idhifa and a full licensing deal over AG-881.

The prospects for Jounce’s JTX-2011’s look less rosy after disappointing data last year, but according to the group’s JP Morgan presentation last week Celgene still has an option over this and the anti-PD-1 asset JTX-4014.

And Beigene has $263m to cushion the blow of losing its partner, which now looks inevitable – with Bristol already well established in the PD-1 space, neither tislelizumab nor JTX-4014 is likely to find a home at Celgene’s new owner.

Yet another Celgene partner, Acceleron, was not so fortunate in up-front terms, but is now approaching the market with its haematology project luspatercept. Investors piled out of the group after the Bristol-Celgene acquisition news hit, presumably concluding that a full takeout of the smaller group was now less likely. Still, this was probably not on the cards anyway, and at least Acceleron is set to receive hefty royalties (Ash 2018 – Luspatercept win puts Celgene’s deal making in a better light, December 1, 2018).

Perhaps Celgene's partners should be thankful they struck these deals when they did. The big biotech's loss from the deal ecosystem will be felt by early-stage groups looking for a willing and generous patron.

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