By all accounts, the bidding war for Receptos ($RCPT) was intense. But for Celgene ($CELG) CEO Bob Hugin and his go-to deals chief George Golumbeski, strategically this was exactly the right time to clinch a $7.2 billion buyout deal for the biotech and its lead drug ozanimod. And after they add this latest late-stage program to the pipeline, there are still more deals to be done.
"We have followed this asset for several years' time," says Hugin in an interview with FierceBiotech. First, he added, it was important for the drug to cross some thresholds in the clinic. But with Otezla being launched and GED-301 coming along in late-stage development in the inflammation/immunology pipeline, he adds, "now is the time that we have such an incredible opportunity."
Given the development timelines and patents around the drug, Celgene has a chance to capitalize on what Hugin and his team see as a blockbuster opportunity worth $4 billion to $6 billion in peak sales, with the revenue stream starting in 2018 and running out to a distant 2032. And in trademark fashion, Hugin upped the ante by boosting the company's 2020 revenue projections based on today's buyout.Celgene's George Golumbeski
Up to now, Celgene's relied primarily on partnerships to expand its R&D arm, making the big buyout a change-up in strategy. In a call with analysts, company execs made it clear that they may now do a partnership of their own on ozanimod, a drug with multiple market opportunities. Celgene will divulge details about the negotiations in upcoming regulatory filings, but Hugin and Golumbeski weren't under any illusions that they could snap this one up cheap.
"This is not a hidden asset," says the CEO. "People do recognize the value of it."
So do investors, evidently. Celgene's shares surged close to 6% in after-market trading Tuesday.
Celgene has some work cut out in absorbing its third blockbuster deal in recent months. Two earlier major deals were struck with AstraZeneca ($AZN)--for rights to the PD-L1 player MEDI4736--and CAR-T pioneer Juno Therapeutics ($JUNO) to bulk up Celgene's immuno-oncology pipeline. But even as it works to get its hands around this new program, the company hasn't lost its appetite for more--provided other assets come along that look just as "disruptive and transformative" as this one.
"If we see them," says Hugin, "we're going to go after them at the right time."
"What we've seen this year," says Golumbeski, "is a cluster of assets that made sense for us." Sometimes there are big deals to get, other times there aren't. "But I would say we won't pause." And while you don't get a shot at companies like Receptos every day, there are still plenty of early-stage pacts to work on.
In the meantime, Hugin says he's come to terms with the values that biotech assets fetch these days.
"I think you've seen valuations increase," he notes. "The science is really producing incredible opportunities. A lot of these things will be binary, incredibly expensive if they fail and if they succeed very, very cheap today."
But that's a bet he's willing to make--more than once.
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