Celgene Ups Its Stake In Acetylon With $100 Million Deal

| About: Celgene Corporation (CELG)

Already the market leader in multiple myeloma, Celgene's (NASDAQ:CELG) dominance has recently been underlined by recent trial success for its best-selling Revlimid. Nonetheless, the company seems keen to dig in even deeper, spending $100 million on a three-product collaboration with Acetylon Pharmaceuticals, whose only clinical-stage compound is intended for the same disease. The deal also grants Celgene an exclusive option to buy Acetylon, and should the New Jersey group pull the trigger, Acetylon shareholders could collectively find themselves an additional $1.6 billion better off. But the mechanism of Acetylon's lead candidate, ACY-1215, is still unproven, and Celgene is unlikely to leap without looking closely at data from the ongoing Phase I/II trial.

Acetylon will cost Celgene a minimum of $500 million at closing if it decides to go ahead, and the smaller firm will be eligible for $850 million if sales milestones are hit and $250 million for regulatory targets. Celgene already had a stake in Acetylon, having made a $15 million strategic equity investment in February 2012, but only now has it obtained rights to products. In addition to ACY-1215 -- a first-in-class selective histone deacetylase (HDAC) 6 inhibitor -- the deal covers ACY-738, an HDAC1/2 inhibitor for neurological diseases, and an unnamed product under development for cancer and non-oncology indications.


HDAC inhibitors as a general class are relatively well-characterized -- Merck & Co.'s (NYSE:MRK) Zolinza (vorinostat) was approved for advanced cutaneous T-cell lymphoma in 2006 and remains the best seller in this class (see "Therapeutic focus -- HDAC inhibitors gathering evidence of broader utility," Sept. 11, 2009). Selective inhibitors of HDAC6, though, are less familiar. Aside from '738, all of Acetylon's development programs are HDAC6 inhibitors, with indications spanning cardiac and autoimmune diseases and even malaria. According to EvaluatePharma, no other company is investigating this class, giving ACY-1215 (also called rocilinostat) the first-in-class position.

Consequently Celgene's decision on whether to purchase the company is likely to hinge on the outcome of the current Phase I/II study. The Phase I part is assessing the side effects of '1215 and determining the best dose of the oral drug as monotherapy, as well as in combination with bortezomib and dexamethasone in patients with relapsed/relapsed or refractory multiple myeloma. The Phase II part of the trial will report the objective response rate of oral '1215 in combination with bortezomib and dexamethasone in patients with relapsed or relapsed/refractory multiple myeloma. Initial results ought to be available in the first half of next year.

This month, trial data showed that Revlimid in combination with dexamethasone increased progression free survival compared with chemotherapy in multiple myeloma (see "Revlimid gets first-line myeloma win but devil still in the details," July 12, 2013). It is possible that '1215 could be added to Celgene's older drug in future trials. In the meantime, Acetylon can get on with advancing its other HDAC6 inhibitors; with $100 million in the bank, it should be able to shift at least a couple into the clinic. And if the candidates succeed in their smorgasbord of indications, Celgene could find that it has bagged quite a bargain.