Deals

Celgene goes all-out on neurodegeneration and Alzheimer’s, triggering blockbuster deal with $150M in cash for Prothena

After quietly building up an experienced team of investigators to tackle neurodegeneration, Celgene has begun to aggressively in-license new drugs that can go after Alzheimer’s and other key diseases in the field.

Just days after Celgene fronted $50 million for a discovery deal with Vividion Therapeutics that includes neurodegeneration, the big biotech has now lined up options on three preclinical neurodegeneration drug projects partnered with Prothena. At the head of the list is a tau program, one of the key culprits that scientists believe is closely linked with the development of Alzheimer’s.

Gene Kinney

Getting its business development team focused on neurodegeneration, Celgene is paying Prothena $100 million in cash plus another $50 million for stock $PRTA, with a premium price of $42.57 baked in. In addition, Prothena CEO Gene Kinney tells me that there’s a bit more than $2 billion in milestones on the table. And $405 million of that is tied to options on their drugs, when Celgene decides whether it will take over at the end of Phase I.

The deal terms were spelled out in an 8-K.

Investors welcomed the news, driving up Prothena’s shares by about 20%. The biotech’s shares have been languishing in the wake of a short attack by Kerrisdale Capital on their lead drug, with the damage extending to Neil Woodford’s investment fund.

Prothena will now be responsible for advancing new therapies for tau in Alzheimer’s, ALS and one other disease they’re not disclosing for now into the clinic.

Richard Hargreaves

Biogen veteran Richard Hargreaves jumped to Celgene to lead the neurosciences team. In a statement, he noted how Celgene is building on its considerable expertise in protein research.

Our collaboration leverages each company’s core expertise in protein homeostasis and protein clearance to target proteins that are the underlying cause of many neurodegenerative and orphan diseases. The programs we have chosen to collaborate on have the potential to provide foundational assets from which we can build new therapeutic approaches to these currently untreatable neurological disorders.

“The team he’s building brings a lot of value to us,” says Kinney. So does their money.

Kinney adds: “This is the right way to start investing in the future of the company.”

Merck’s recent decisive failure for a BACE approach to clearing amyloid beta has been shifting considerable attention in the field to tau, the other toxic protein at play. And there’s a growing belief that it will take a combination approach to defeat the disease, which has defied every pivotal try in more than a decade.

“We believe tau and amyloid beta are implicated in Alzheimer’s disease,” says Prothena CSO Wagner Zago. And Prothena believes it has some insights on tau that could help Celgene lay the foundation for a successful program, among all the tau strategies out there now.

“We found some hot spots in the protein which, targeted properly, could affect cell to cell transmission,” Zago noted in an interview.

The other known target is the TDP-43 protein. Prothena has been picking out its top candidates for inhibiting toxicity and cell-to-cell transmission of misfolded TDP-43 species, which could play a key role in amytrophic lateral sclerosis.

A little more than two years ago, then Celgene CEO Bob Hugin signaled his interest in the field. At a meeting with a group of reporters at JPMorgan, which included me, he said that any company that expects to have a major position in the industry a decade later will almost have to play a big role in developing therapies for neurodegeneration.

Celgene, under Hugin’s successor Mark Alles, is working to make that happen. And the timeline is getting shorter.


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