Celgene is putting its impressive cash pile to work once again, making a bet on the trendy ROR target that has drawn interest from big pharmas including Pfizer and Johnson & Johnson.
The private Michigan-based group Lycera could be acquired if its pipeline of immunomodulating oncology and inflammatory disease projects meets clinical objectives. The $83m deal shows how this space is being filled by big pharma players, with just a couple of unpartnered ROR-focused companies remaining.
The takeout option would include Lycera’s lead candidate, a non-ROR agent called LYC-30937 that is in phase I trials for inflammatory bowel disease. This could fit in with Celgene’s offerings just as well as the preclinical cancer projects, since the New Jersey-based group’s second biggest growth driver is the rheumatoid arthritis drug Otezla.
The work in developing agonists of ROR gamma – for retinoic acid receptor orphan receptor gamma – was the highest emphasis in the companies’ announcement of the deal, however, suggesting that Celgene was more interested in projects that have yet to enter the clinic. Merck & Co already has dibs on one of Lycera’s two disclosed ROR projects under a 2011 partnership, so Celgene was in the mood to lock up what remained.
The $82.5m up-front fee gives Celgene option to license emerging ROR projects, with Lycera eligible for up to $22.5m in milestones; a full acquisition is also possible at the end of an undisclosed option period or upon achievement of unspecified milestones. Lycera remains responsible for clinical development.
Drug developers are looking at ROR-gamma as an oncology target because of its role as a “master switch” in activating helper T cells and downregulating immunosuppressive activity. On the flip side, it could be used to suppress inflammatory response in autoimmune disease without making patients vulnerable to opportunistic infections.
Indeed, most of the agents poised to advance through the clinic are in immunological disease, and this has gained the most interest from big pharma (Therapeutic focus – Astra goes ROR fishing and hooks Orca, February 25, 2016). The Celgene-Lycera deal becomes the sixth active tie-up between a big-cap pharma and a ROR developer, and the first to explore oncology with this target.
Shopping for values
Celgene has become a significant revenue-generating entity, and as such has amassed an impressive $7.3m in cash at March 31. That will need to be put to good use, but with biotech valuations stretched the smart purchases are more likely to be found in preclinical assets like Lycera’s.
Celgene has been active in business development, striking a preclinical immuno-oncology deal with AstraZeneca and focusing its CAR-T collaboration with Bluebird Bio on a B-cell maturation antigen candidate. In 2014 it paid about $1bn up front to license in 10 new projects, eight of which were preclinical.
With just $82m risked so far in this ROR agreement, Celgene is confirming its role as an early-stage, value-shopping dealmaker.