Deals, IPOs

Eyeing an IPO, Sutro retools its $1B I/O deal with Celgene but stays focused on BCMA

Bill Newell

In the three years that Sutro and Celgene have been working under the umbrella of a billion-dollar deal, Sutro CEO Bill Newell expects his research crew has explored 15 different targets, including the immuno-oncology stand-outs PD-1 and PD-L1. And the biotech has grown with Celgene’s help, moving from about 90 staffers to 130 as the biotech pushed its own lead programs toward the clinic.

Now, they’re retooling their pact. Celgene is adding an option to acquire worldwide rights on a second program, one of four that the South San Francisco-based biotech will spotlight in the revised collaboration. Only one of those – an antibody drug conjugate targeting B-Cell maturation antigen (BCMA) – is in public view as the partners stay under cover on the rest.

Celgene’s deal with Sutro on BCMA represents a key part of the big biotech’s high-stakes plan to surround the multiple myeloma market, complementary to the brilliant results they’ve been seeing at bluebird bio with new CAR-T data from bb2121 as well as their $625 million buyout (the full deal package weighed in at more than $3 billion) of EngMab, a story we broke back in September, which centers on a T-cell bispecific program for BCMA.

By using three different therapeutic strategies, Celgene hopes to continue to dominate multiple myeloma, where its blockbuster treatment Revlimid continues to overshadow the market.

“We are excited about that target for myeloma,” Newell tells me. “Three different modalities gives them different patients for whom different therapies might be appropriate. CAR-T is exciting, but not all patients will be eligible for CAR-T. They want to focus on different modalities.”

As part of the recalibration with Sutro, which narrows the focus of the partnership, Celgene is giving up its option to buy the company, a favorite tool of Celgene dealmaker George Golumbeski, leaving Newell free to go on an independent path that he says may well lead to an IPO sometime next year – depending on how the public markets are lining up.

There aren’t any big numbers to report today. Yes, Celgene is paying an unspecified upfront, with more cash due to acquire the worldwide rights once they hit an IND for the second program. But the specifics are staying under wraps – at least until the S-1. Celgene has rights to buy stock in the company, whether it stays private or when it goes public. And Sutro will keep US commercial rights to the third and fourth programs in the deal, leaving Celgene with ex-US rights to any product that comes out of it.

“The capital available in private and public markets we think is pretty attractive,” says Newell. “We raised over $100 million in venture capital, $200 million in non-dilutive capital.”

An IPO is one way for the company to continue to move ahead on its own, with Celgene as a big partner. And that’s the way Newell believes may be best for Sutro.


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RAPS Regulatory Convergence 2017