Celgene commits $3.3B in whopper cancer stem cell deal with OncoMed

Celgene helped seal its reputation as one of the boldest dealmakers in biotech today, putting up $177.25 million in an upfront fee and equity stake while committing to more than $3 billion in milestones to partner on a slate of cancer stem cell programs in development at OncoMed.

The news immediately triggered a major revival for OncoMed ($OMED) shares, which had swooned after the biotech pulled off one of the hottest IPOs of the year. Its shares soared 65% on the news.

Celgene ($CELG) is paying $155 million in a hefty upfront for the deal, adding $22.5 million for an equity stake in OncoMed and promising more than $3 billion in milestones in exchange for co-marketing rights in the U.S.--and the lead commercialization role outside the U.S.--for 6 of the biotech's cancer stem cell programs. The deal involves OncoMed's lead drug, demcizumab, along with 5 preclinical candidates, including an anti-DLL4/VEGF bispecific antibody.

OncoMed CEO Paul Hastings

Celgene will get to buy Redwood City, CA-based OncoMed stock at the now sweetheart rate of $15.13 a share, while OncoMed can also look forward to up to $790 million in milestones for its lead drug, $505 million in milestones for the anti-DLL4/VEGF bispecific antibody and up to $440 million for each of the other programs. Another undisclosed small-molecule program could deliver an additional $100 million.

The deal gives OncoMed a big boost after watching its shares flag after a hot IPO. And it gives Celgene bragging rights to one of the biggest deals of the year.

Cancer stem cell therapies have been a hot topic over the past two years. OncoMed's lead program for demcizumab is in a Phase Ib/II study looking at the impact it has on cancer by blocking Delta-like ligand 4, which activates the Notch signaling pathway.

"Through this major alliance with Celgene, we gain substantial resources that will enable us to continue to discover and develop new therapeutics independently while positioning OncoMed for substantial potential downstream value and profits. Importantly, by retaining co-development and co-commercialization rights to up to five biologic product candidates in our pipeline, we expect to add commercial capabilities to our core research and development competencies as we continue to build a premier oncology biotherapeutics company," said OncoMed CEO Paul Hastings.

- here's the press release

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