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The Pulse of the Pharmaceutical Industry

Celgene Strikes Again, Extends Epizyme Pact By Three Years in Deal Worth $620 Million

Written by: | | Dated: Thursday, July 9th, 2015

Cambridge, Mass.-based Epizyme, Inc. (EPZM), announced today that it amended its agreement with Celgene Corporation for at least three more years.

The original agreement, signed three years ago, was for EPZ-6438 (tazemetostat) for the treatment of non-Hodgkin lymphoma patients and patients with INI1-deficient solid tumors, and EPZ-5676 (pinometostat), an inhibitor of DOT1L for the treatment of patients with acute leukemia with a chromosome rearrangement in the MLL gene. There are three predefined targets for the two compounds.

As part of the revised agreement, Epizyme will receive a $10 million extension fee in exchange for an option to individually license global rights to the two drugs, and worldwide rights except U.S. for a third target. Epizyme will handle development and funding through Phase I trials. After that, if it wants to, Celgene can continue to license for a specific target for additional fees that have already been agreed upon.

All told, Epizyme could earn up to $620 million for all three targets. The breakdown is $10 million upfront, $75 million in developmental milestones and license fees, $365 million in regulatory milestones, and another $170 million in sales milestones. There is also the possibility of double-digit royalties for Epizyme.

“We believe that the extension of our agreement with Celgene will accelerate our goal of developing new therapies that have the potential to help many patients with epigenetically driven cancers,” said Roberg Gould, president and chief executive officer of Epizyme in a statement. “Celgene is a leading company in oncology development and commercialization and we are pleased to continue our partnership on pinometostat and these three exciting novel targets.”

Celgene (CELG), headquartered in Summit, N.J., recently signed a global collaboration agreement with Seattle-based Juno Therapeutics, Inc. That deal runs for ten years and involved an upfront payment to Juno of about $150 million. Celgene bought 9,137,672 shares of Juno’s common stock for $93 per share, or about $850 million.

Under the agreement, Celgene has the chance to partner with Juno’s oncology and cell therapy auto-immune product candidates, which includes CD19 and CD22 directed CAR-T product candidates. A B-cell Maturation Antigen (BCMA) is not included in the deal. Juno will be responsible for North American research and development efforts and will hold commercialization rights in that territory. Celgene will handle development and commercialization for the rest of the world and pay royalties on any sales to Juno.

That figure, $93 per share, seems pretty high when Juno’s stock is currently trading for $49.10 per share. But that figure gives Celgene access to Juno’s pipeline along with almost $1 billion in working capital. Juno gets a 30 percent stake in some of Celgene’s compounds.

Brian Orelli, writing in The Motley Fool, says the $93 figure is “meaningless.” The key, according to Orelli, is that Celgene gained 10 percent of Juno and “If Juno’s CAR-T technology works, $460 million will look like a steal.” The $460 million figure is based on calculations related to the current share prices and the company’s market cap of about $5.4 billion.

He compared it to a recent deal between Eli Lilly and BioNTech. That deal started with a $30 million signing fee, then Lilly invested another $30 million equity investment in Cell & Gene Therapies GmbH, a subsidiary of BioNTech, which is headquartered in Mainz, Germany. The focus of that deal is also CAR T-cell immunotherapy, which is believed to have great potential for treating B cell cancers, or lymphomas.

In addition to announcing the deal with Celgene, Epizyme gave a financial update, indicating it has enough cash to fund itself through at least the end of the second quarter of 2017. The company will push its development of tazemetostat, but reprioritize its pipeline development and cut operating cuts. In an email to FierceBiotech, Epizyme’s Andrew Singer, the chief financial officer, said, “No layoffs have been included or are contemplated.”


July 9, 2015
By Mark Terry, Breaking News Staff

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