2 Surging Biotechs with Links to Celgene

Celgene (NASDAQ: CELG  ) is sharing its experience and opening its wallet to a slate of fledgling biotech companies in a bid to lock-up the next generation of game-changing therapies.

Agios (NASDAQ: AGIO  ) and bluebird bio (NASDAQ: BLUE  ) are two of those companies and each reported news over the weekend that has sent their shares surging.

AGIO Chart

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Celgene exercises its option
Plenty of things can go wrong during clinical trials and investors should always take a cautious approach to early stage data, but results released in March from Agios phase 1 trial of AG-221 were nothing short of impressive.

Source: Agios Pharmaceuticals

Agios reported that six of seven patients treated with AG-221 had a complete or partial response in that trial, which was designed to test for safety rather than efficacy.

Agios provided an update on AG-221 at the 19th Congress of the European Hematology Association conference this past weekend showing that 14 of 25 patients responded to the drug and that an additional five people treated with AG-221 had stable disease. Importantly, none of the patients treated with AG-221 discontinued participation in the trial, suggesting a favorable safety profile.

Those results were good enough that Celgene announced that it is exercising its option on the drug. As a result, Celgene gains worldwide rights to market AG-221 in exchange for picking up the tab on any future development costs. Celgene also agreed to pay Agios up to $120 million in potential milestones and future royalties (if the drug ever nets regulatory approval).

The FDA gave Agios and Celgene additional good news on Monday, announcing that AG-221 has been awarded orphan drug status as a treatment for Acute Myelogenous Leukemia, or AML, a blood and bone marrow cancer affecting between 115,000 and 160,000 patients globally. That designation could hasten the drug's pace of development and provide the companies with tax credits and additional patent protection.

Treating rare disease
Bluebird's LentiGlobin is a gene therapy treatment for beta-thalassemia and sickle cell disease. LentiGlobin works by inserting a fully functioning human beta-globin gene into patient's own stem cells, which allows patients to avoid the dangerous rejection risks tied to stem cell transplants.

Source: Bluebird Bio

Bluebird treated its first patient with LentiGlobin in 2010 and started a phase 1-2 study in the U.S. in March. Over the weekend, bluebird announced that the first two LentiGlobin patients treated as part of that study became transfusion independent within two weeks of receiving the therapy.

That's important news given that beta-thalassemia major is a rare hereditary blood disorder caused by a genetic abnormality of the beta globin gene that affects roughly 15,000 people in the U.S. and Europe. If left untreated, the inability to create normal red blood cells caused by the disease results in life-threatening liver and heart disease that causes most patients to pass away before age 20.

As a result, current treatment is focused on transplants, but finding ideal transplant donors is difficult and transplantation can cause a variety of complications, including graft versus host disease. If bluebird's treatment succeeds, it could significant reduce or eliminate those transplant risks.

LentiGlobin's success adds some potential validity to bluebird's approach and ostensibly lends support to bluebird's collaboration with Celgene on immune system gene therapy approaches. As part of their collaboration, Celgene paid bluebird $75 million up front and agreed to pay bluebird up to $225 million in milestones. Now, it is important to note that Celgene and bluebird are not collaborating on LentiGlobin, but rather on some preclinical assets in oncology, but it's still nice to see a stock Celgene is partnered with showing some signs of life.

Fool-worthy final thoughts
Few drugmakers have been as aggressive in embracing collaborations as Celgene. The company has a wide portfolio of deals that could help boost Celgene's dominance in cancer treatment over the next decade. In the case of these two companies, both trials are early stage suggesting any number of challenges could still derail them. But the results so far are undoubtedly encouraging and may suggest that both companies should remain on investors' radars.

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