Celgene To Pump $45M into Quanticel to Discover Cancer Drugs, Gets Option To Acquire

Celgene and a San Francisco-based cancer drug startup called Quanticel Pharmaceuticals have struck an unusual agreement in which the big company is getting the inside track on a new cancer drug discovery platform, and the little company is arranging upfront for a way to get its venture investors some returns.

Summit, NJ-based Celgene (NASDAQ: CELG) said today it has formed an exclusive, strategic collaboration with Quanticel and its primary investor, Versant Ventures. Celgene is agreeing to pump in $45 million over three and a half years to support discovery of novel cancer drugs at Quanticel, with an option to extend the deal. Celgene is getting an equity stake in the smaller company, and is getting an exclusive option to acquire Quanticel at a later date, the companies said. The size of Celgene’s equity stake wasn’t disclosed in today’s statement.

Quanticel was co-founded by Stanford professors Steve Quake and Michael Clarke, and is being led by CEO Steve Kaldor, who ran San Diego-based Ambrx until 2010. The new venture is analyzing the genomes of single cells from patients with cancer, to identify markers that might indicate whether an individual patient will respond to its own internal drug candidates, and those from Celgene’s pipeline.

It’s unusual for a biotech startup to provide a potential acquirer with an exclusive option to buy so early on, but a reflection of how tough it is for startups to achieve returns in an anemic environment for IPOs and for acquisitions by Big Pharma companies. If Quanticel had gone a more traditional route and tried to raise round after round of outside venture capital, it may have slowed down the progress of its technology.

“Celgene’s global research and development capabilities plus the long-term financial commitment to Quanticel enable us to rapidly build the research and development applications of our platform, and to accelerate the potential growth of our pipeline,” Kaldor said in a statement.

Tom Daniel, Celgene’s president of global research and early development, added in the statement that, “Quanticel’s platform approach provides a unique advantage for defining mechanisms of sensitivity and resistance, and for validating and pursuing novel targets for difficult-to-treat cancers. We view this scientific collaboration and this business model as an innovative approach with high potential to advance the delivery of impactful cancer drugs to patients in need.”

Celgene did another unusual deal in the past year with an early-stage biotech startup, Cambridge, MA-based Agios Pharmaceuticals. Celgene committed the large sum of $130 million upfront to help accelerate discovery of drugs that work to starve tumors through targeting cancer metabolism pathways. The Agios deal was recently extended, as Celgene agreed to put another $20 million into Agios.