Celgene has agreed a $1bn research partnership with Sutro Biopharma that includes an option to acquire the US biotech firm.
The collaboration expands an existing $500m deal between the two companies to develop antibody-drug conjugates (ADCs) in cancer.
The expanded deal will accelerate the development of these ADCs, which are part of the rapidly growing field of immuno-oncology treatments that treat cancer by encouraging a person’s immune system to attack tumour cells.
Drug targets named by the partners include the much-hyped PD1 and PDL1 categories. Several pharma companies, including Merck & Co, Merck Serono, Bristol-Myers Squibb and AstraZeneca, are developing drugs in this field, and expectations are high for their potential to treat different types of cancer.
As for financial terms of the deal Celgene will provide Sutro with an upfront payment of $95m with the potential for an additional $90m in milestones during the initial research term.
The price increases dramatically should their drug development succeed, however, with Sutro eligible to receive more than $1bn upon the achievement of certain milestones – and the deal also includes an exclusive option for Celgene to take full ownership of the Sutro and its programmes.
In the shorter term Sutro holds responsibility for the discovery and pre-clinical development of antibodies and ADCs, as well as the manufacturing of pre-clinical product candidates.
If Celgene chooses not to acquire San Francisco-based Sutro but treatments developed as part of the collaboration are successfully launched, Celgene will hold worldwide rights to all products bar a few specific exceptions where Sutro retains US rights.
Both partners have been building their interests in cancer immunotherapies in recent years.
Celgene’s existing work in the area includes a partnership with BMS to investigate a combination of BMS’ anti-PD1 drug Opdivo (nivolumab) and Celgene’s cancer drug Abraxane (paclitaxel).
Meanwhile, Sutro has several agreements with major pharma companies including a deal agreed last month with Merck KGaA to license its antibody drug conjugate (ADC) technology.