Celgene (NASDAQ:CELG), the biotech giant best known for its $4 billion a year myeloma drug Revlimid, has been among the most active in making deals with young biotech companies. In January, Celgene (NASDAQ:CELG) made its latest deal, handing over $50 million to cozy up to San-Diego based Abide.
The Abide deal continues Celgene's (NASDAQ:CELG) land grab for enzyme targeting therapies. But Celgene (NASDAQ:CELG) isn't the only one excited about enzyme and epigenetics research. Investors are increasingly intrigued by their potential, and that has Celgene (NASDAQ:CELG) sitting on handsome gains.
Boosting its CNS pipeline
Celgene (NASDAQ:CELG) isn't the first to ink an agreement with Abide. Last May, Merck agreed to an arrangement that could be worth as much as $430 million to Abide if Abide's technology for targeting the serine hydrolases family of enzymes succeeds. That serine hydrolases family of enzymes is already the target of Merck's blockbuster DPP-4 diabetes drug Januvia.
While Merck is working with Abide on metabolics, Celgene (NASDAQ:CELG) has linked up with them on inflammation and immunology targets. Celgene (NASDAQ:CELG) is particularly interested in this area given its extensive investment in apremilast, a promising arthritis compound that may win FDA approval this year.
The most advanced compound in Abide's pipeline covered by Celgene's (NASDAQ:CELG) partnership is AB101131, a pre-clinical compound that the companies hope will enter human trials next year. In addition to taking a small equity stake, Celgene (NASDAQ:CELG) also retained an option to eventually buy Abide.
Irons in the fire
The Abide partnership builds on a string of deals Celgene (NASDAQ:CELG) has made over the past couple years, including a December investment in cancer focused stem cell researcher OncoMed Pharmaceuticals (NASDAQ:OMED).
Celgene (NASDAQ:CELG) agreed to pay OncoMed (NASDAQ:OMED) up to $3.15 billion in milestone payments if OncoMed (NASDAQ:OMED) can successfully bring compounds like demcizumab to market. Demcizumab is in phase 2 trials as a treatment for ovarian cancer, and is being studied in pancreatic, colorectal, and non-small cell lung cancer too.
Celgene (NASDAQ:CELG) paid Agios (NASDAQ:AGIO) $130 million in 2010 to partner on therapies that starve cancer of specific enzymes. Celgene (NASDAQ:CELG) handed over another $20 million in December to extend its arrangement with the epigentics cancer play for another year.
In addition to those deals, Celgene (NASDAQ:CELG) has teamed up with Epizyme(NASDAQ:EPZM)to develop an epigenetics treatment for mixed lineage leukemia, Blubird bio, and the privately held Acetylon. Blubird is working on gene-altering cancer therapies that reprogram T-cells to destroy cancer cells, while Acetylon is developing a myeloma compound.
Celgene (NASDAQ:CELG) is also working with Acceleron (NASDAQ:XLRN) on sotatercept, an anemia treating compound for rare diseases that the two companies have been developing since 2008. In 2011, Celgene (NASDAQ:CELG) expanded its relationship with Acceleron (NASDAQ:XLRN) to include another anemia drug, ACE-536.
Profiting in more ways than one
The following chart shows that shares in some of Celgene's (NASDAQ:CELG) partners have made a significant move since last fall. The gains make these partnerships even more intriguing given Celgene (NASDAQ:CELG) owns equity stakes in each of them.
Celgene's (NASDAQ:CELG) $22 million investment in OncoMed (NASDAQ:OMED) shares at $15.13 per share has doubled. Celgene (NASDAQ:CELG) also owns 12.5% of Epizyme (NASDAQ:EPZM), or 3.3 million shares. That position is paying off handsomely since December thanks to positive pipeline news lifting shares from $20 to $30.
Celgene (NASDAQ:CELG) also owns 666,667 shares of Acceleron (NASDAQ:XLRN) at roughly $15 per share. With shares trading near $50, that investment has more than tripled. And Agios (NASDAQ:AGIO) sold 708,333 shares to Celgene (NASDAQ:CELG) for $12.75 million or $18 per share last July, which means Celgene is up 67% on that position.
Fool-worthy final thoughts
All of these companies are working on pre-clinical or early to mid stage products, and none have any revenue outside of collaboration agreements. That means they're all highly speculative.
As a result, Celgene's (NASDAQ:CELG) recent hot streak could as easily sour as soar. But for now Celgene's investment team is riding high and that's likely to keep Celgene (NASDAQ:CELG) making more deals this year.