CELG Celgene Corporation

Bristol-Myers Squibb Co. said Wednesday that it would acquire privately-held Padlock Therapeutics Inc., the latest attempt by a large pharmaceutical company to grab a chunk of the growing autoimmune disease market.

Terms of the deal weren't disclosed, and a spokesman didn't immediately return a request for comment.

Cambridge, Mass.-based Padlock focuses on developing treatments for autoimmune diseases, and Bristol-Myers said the acquisition will give it full rights to Padlock's program for "potentially transformational" treatments for patients with rheumatoid arthritis. The company said the program may extend to treating systemic lupus erythematosus and other autoimmune diseases.

Specifically, Padlock is working on an inhibitor called protein/peptidyl arginine deiminase—or PAD—a family of enzymes that produce autoantigens that play a part in the development and progression of certain diseases. Inhibiting PADs offers the potential to prevent progression of autoimmune diseases early in their evolution, Bristol-Myers said.

According to the Center for Disease Control, rheumatoid arthritis afflicts roughly 1% of the world's population, with prevalence among women.

For Padlock, the transaction includes upfront and contingent milestone payments of up to $225 million, plus additional consideration of up to $375 million, contingent on the clearance of certain regulatory hurdles. The companies expect to close the deal in the second quarter.

Drugs for autoimmune diseases, including rheumatoid arthritis, ulcerative colitis and psoriasis, offer one of the pharmaceutical industry's biggest markets.

The world's top-selling prescription drug, AbbVie Inc.'s Humira, treats rheumatoid arthritis and psoriasis. Cancer-drug company Celgene Corp. last year struck a $7.2 billion deal to buy Receptos in its bid to bolster its autoimmune portfolio, at the time pegging the market's sales potential at $93 billion in sales in 2020, up from $67 billion in 2015.

Companies including Gilead Sciences Inc. and Eli Lilly & Co. have collaborated with smaller biotechs to develop autoimmune treatments. Lilly, for its part, said this week that the U.S. Food & Drug Administration approved its Taltz injection to treat plaque psoriasis. The company is also working on an RA medication with Incyte Corp.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

March 23, 2016 09:05 ET (13:05 GMT)

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