(Adds more details and context throughout.)
By Ben Fox Rubin and Joseph Walker
Celgene Corp. (CELG) and OncoMed Pharmaceuticals Inc. (OMED)
agreed to work together to develop up to six of OncoMed's potential
anticancer stem cell treatments, providing OncoMed with an infusion
of cash and granting Celgene another set of drug candidates for its
growing pipeline.
Shares of OncoMed, a small development-stage biopharmaceutical
firm, more than doubled Tuesday to $29.69, well above the initial
public offering price of $17 a share. The stock had languished
since going public in July and closed Monday at $14.
"We have three distinct partnerships now, and have multiple
shots on goal to get those drugs to market," OncoMed Chief
Executive Paul Hastings said in an interview, referring to the
company's partnerships with Bayer AG (BAYRY) and GlaxoSmithKline
PLC (GSK) for other drug candidates.
OncoMed will receive $177.25 million upfront from Celgene, a
much larger biopharmaceutical firm focused on cancer treatments. As
part of the payment, Celgene agreed to buy newly issued OncoMed
shares for the now cheap price of $15.13 each, for a total of
$22.25 million. Additionally, Celgene committed more than $3
billion in potential milestone and other payments to OncoMed as
part of the alliance.
Celgene has pursued an aggressive growth strategy, spending
heavily to purchase and develop new drugs, often partnering with
emerging companies to bolster its pipeline. The company has posted
stronger quarterly revenue, which have boosted its stock price, as
it has benefited from a string of positive regulatory decisions
over the past year and gained from sales of its recently launched
blood-cancer drug Pomalyst as well as another cancer treatment,
Abraxane.
Last month, Celgene reached a licensing deal with Alliqua Inc.
(ALQAD) to develop wound care products, and in April it signed a
collaboration deal with Forma Therapeutics Holdings LLC to jointly
develop drugs to regulate protein homeostasis targets.
The alliance with OncoMed will involve the development of
demcizumab, one of OncoMed's most advanced clinical candidates, as
well as a bispecific antibody and up to four additional biologics
programs.
OncoMed's antibody drugs are designed to be administered with
chemotherapy to make cancer stem cells more susceptible to
chemotherapy or to attack them directly, Mr. Hastings said. The
company is currently evaluating demcizumab for several tumor types,
including pancreatic cancer and lung cancer, in early and mid-stage
studies.
If successful, the companies will co-market demcizumab in the
U.S., and split profits evenly. Celgene would lead
commercialization and development outside the U.S., and pay OncoMed
royalties.
Payments for demcizumab development could total up to about $790
million, while payments for the bispecific antibody could total up
to $505 million. For the other four biologics, each program is
eligible for about $440 million of option exercise, development,
regulatory and commercial payments.
OncoMed will control and conduct initial clinical studies, at
which point Celgene has an option to license worldwide rights to
the potential treatments. OncoMed retains global co-development and
U.S. co-commercialization rights for five of the six anti-CSC
product candidates.
Celgene obtains an exclusive option on demcizumab during or
after the completion of certain future planned Phase 2 clinical
trials to be conducted by OncoMed. Demcizumab is currently in three
Phase 1b trials. Subsequent to option exercise, the parties will
co-develop demcizumab, sharing global development costs on a 1/3
OncoMed and 2/3 Celgene basis.
Celgene shares were down 1.4% at $160.90 but have more than
doubled since the start of the year.
Write to Ben Fox Rubin at ben.rubin@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires