Celgene's (NASDAQ:CELG) stated goal is to double its sales by 2017 and in order to achieve that, it pursues a three-way strategy: expand Revlimid, its core product, into new indications; develop new blockbusters and build its early stage pipeline through active dealmaking.
Celgene has one of the busiest partnering teams in biotechnology.
Following is a summary of acquisitions and partnering deals from the past few years. Notice that many of the commitments were made at a very early stage of the developmental work.
Agios Pharmaceuticals: In 2010, Celgene poured its first $130 million into Agios, and later it extended the deal to four years from three, for another $20 million. Celgene has the right to extend the deal again, with options to license any of the drugs developed.
Agios is working on a new class of drugs designed to starve cancer cells of key enzymes. Mutated enzymes help cancer cells by feeding them nutrients they need to grow. Depriving tumors of such mutated enzymes could be an efficient method for starving the cancer to death.
Agios targets metabolic enzymes from the IDH1 (mutated isocitrate dehydrogenase 1) and IDH2 genes, which are corrupted in a variety of blood and solid tumors and produce metabolites that drive cancer growth. The mutations are found in about a quarter of adult cases of acute leukemia, more than 70 percent of patients with brain cancer known as glioma and about one in 5 cases of bile duct cancer.
The metabolite produced by IDH1 may influence epigenetics: the molecular changes in cells that turn genes on or off without affecting the underlying DNA.
Celgene is one of the leading makers of epigenetic drugs for cancer, with two such products on the market, Vidaza and Istodax. Celgene is already thinking about how drugs that target cancer metabolism might be useful in combination with its existing products.
Avila Therapeutics: Celgene acquired this early-stage Btk inhibitor in a buyout in January 2012 that could reach $925 million in future milestone payments.
Inhibrx: Celgene bought a pre-clinical antibody in June 2012 by acquiring this little known biotech based in La Jolla, California. Celgene promised up to $500 million in milestones as well as an unspecified royalty stream on a successful outcome.
Sutro Biopharma: To the promising next generation antibody-drug conjugates (NYSE:ADC) developer in December 2012 Celgene offered a package of more than $500 million in upfront fees, an equity stake, research support and milestones.
The ADC field is largely dominated by two companies, Seattle Genetics (NASDAQ:SGEN) and ImmunoGen (NASDAQ:IMGN). Sutro goes a step further: it can incorporate non-natural amino acids ((nnAA)) at any site in an antibody structure, thereby allowing ADCs to be site-specific in relation to the conjugation linker and warhead.
Presage Biosciences: In February 2013 Celgene committed to pay $5 million upfront and taking an $8 million equity stake in Seattle-based Presage.
This technology is a measuring method that will show doctors in 3D which cancer drug works better for a particular patient.
The array works by transporting small doses of each compound through the skin and into directly a tumor, where the doses are analyzed three-dimensionally as to their effect on cancer cells. The end result is a personalized treatment that applies to the specific character of a tumor.
"Drug development is currently challenged by heavy reliance on in vitro test systems and animal xenografts of little relevance to individual patients," Thomas Daniel, Celgene's president of research and early development, said in a statement. "The Presage platform addresses this challenge, permitting rapid assessment of drug candidates and combinations in relevant models, with potential to base critical drug development decisions on in vivo response data."
Bluebird Bio: in March 2013 Celgene forked over an undisclosed upfront sum and agreed to pay up to $225 million in milestones to Cambridge, MA based Bluebird for each therapy that results from the research.
CAR (chimeric antigen receptor) T-cell therapy represents a promising new approach to treating cancer. Blood is withdrawn from a patient and the T-cells (the fighter white blood cells of the immune system) are then extracted from a patient's blood. The T-cells are genetically modified to recognize and attack cancer cells and then re-introduced into the patient's blood. The patient's genetically modified cells are intended to bind to and kill the target cancer cells.
Forma Therapeutics: In April 2013, Celgene agreed to hand Forma an undisclosed upfront payment and early development milestones of $200 million. Under the deal, Watertown, MA-based Forma will use an internal drug-discovery platform to hunt for compounds against protein homeostasis targets.
Protein homeostasis has been an area of intense interest among biopharma companies for years, and the field has already yielded treatments such as Takeda (OTCPK:TKPHF) and Johnson & Johnson's (NYSE:JNJ) blood cancer therapy Velcade, a drug in a class known as proteasome inhibitors.
Forma is responsible for developing drugs discovered in the partnership through Phase 1 studies. Celgene has agreed to pay milestones of up to $315 million for the first potential license and $430 million in milestones for subsequent licenses.
Concert Pharma: In May 2013, Celgene made a $300 million pact with the Lexington, MA based company to tweak cancer and anti-inflammatory drugs using Concert's deuterium-stabilizing technology.
Deuterium is a widely used, safe and stable relative of hydrogen.
Deuterium's size and shape are essentially identical to hydrogen, and substituting hydrogen with deuterium does not really alter the way a drug "looks" to the body. But it has one compelling advantage: it forms a strong chemical bond with carbon relative to the carbon-hydrogen bond. A C-D bond is typically about six to nine times more stable than the C-H bond. Deuterium substitution at specific molecular positions can improve metabolic stability, reduce formation of toxic metabolites, or increase the formation of desired active metabolites.
Celgene currently has 19 programs in development and it runs over a hundred Celgene sponsored clinical trials with 28,000 enrolled patients in 50 different indications all over the world.
IMiDs are small molecule, orally available drugs that modulate the immune system.
Celgene has four IMiDs, two on the market, Revlimid and Pomalyst, a third, CC-11006 is in clinical trials and the fourth, CC-10015 is being prepared for clinical trials.
Revlimid has just been approved by the FDA for patients with mantle cell lymphoma who relapse or progress on standard therapy.
These are small molecule pills that inhibit the production of multiple proinflammatory mediators including interleukin-2, IL-12, interferon-gamma, TNF-alpha, leukotrienes, and nitric oxide synthase.
The leading investigational drug, apremilast, is an oral compound that is being currently tested in six Phase 3 clinical trials for the treatment of psoriasis, psoriatic arthritis and other chronic inflammatory diseases.
AVL-292 is a novel, orally available, covalent drug that targets Bruton's tyrosine kinase ((Btk)).
Btk plays a critical role in the development and activation of B cells, and its inhibition will be significant in the treatment of both B cell-related blood cancers like non-Hodgkin lymphoma and autoimmune diseases like rheumatoid arthritis.
Celgene's covalent approach is not simply to inhibit disease-causing proteins, but to "silence" them completely. Covalent drugs do not merely "bind" to a protein, but form a durable "bond," which shuts down the protein's activity throughout the life of the protein, which is usually from a few hours to a few days.
This unique covalent bonding mechanism leads to two primary benefits:
Selectivity: each targeted covalent drug is highly selective as it is designed to form bonds only with the site found on the disease-causing protein at which it is directed.
Lasting efficacy against mutations: Conventional drugs have decreased ability to bind effectively to mutated proteins as the binding site changes size and shape with each mutation. Since covalent drugs are able to form a resilient, enduring bond, they will not readily disengage from a mutated protein, and thus, can retain efficacy.
In the first quarter of 2013 Celgene's sales were $1.4 billion, a 15 percent increase from the same period in 2012.
The leading drug was Revlimid, up 16 percent to $1 billion. It was driven by market share gains and extended duration of the therapy. Abraxane sales for the quarter were $123 million, up 18 percent. U.S. sales were favorably impacted by the fourth quarter approval for non-small cell lung cancer and by higher sales in Japan and Europe.
Vidaza's first quarter sales increased 10 percent to $204 million. Pomalyst's sales were $29 million following the approval on February 8. Thalomid sales were $57 million, down 26 percent year-over-year.
Operating cash flow was $367 million in the quarter.
Under its authorized stock repurchase program, Celgene has now an accelerated share repurchase agreement with an investment bank to repurchase a total of $600 million of the company's common stock. Celgene purchased 4.2 million shares during the first quarter of 2013 at a total cost of $403 million.
Celgene ended the quarter with $3.5 billion in cash and marketable securities.
For 2013, sales are expected to increase approximately 11 percent year-over-year to $6 billion.
Revlimid sales are projected to increase approximately 10 percent to a range of $4.1 to $4.2 billion.
Earnings per share guidance is raised to a range of $5.55 to $5.65, an increase of approximately 14% over 2012.
Considering the expanding pipeline and the steadily growing sales, it appears that Celgene is well on its way to achieving its stated corporate goals by 2017.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.