Cambridge, MA-based Epizyme said today that it has formed a strategic partnership with an international subsidiary of Summit, NJ-based Celgene (NASDAQ: [[ticker:CELG]]). The two companies will work together to develop targeted cancer therapies based on Epizyme’s work in epigenetics, an emerging field that involves turning genes on and off without altering the underlying DNA.
The deal is worth $90 million up front, plus the potential for $160 million in milestone payments for Epizyme. In return, Celgene will receive an exclusive license outside the U.S. to some of Epizyme’s programs for three years. Epizyme is retaining all U.S. rights to the drugs the two companies develop together.
This is the third major development deal Epizyme has scored in its four-year history. Last year, the company formed a $6 million deal with Japan-based Eisai Pharmaceuticals and a $20 million deal with Britain’s GlaxoSmithKline. Those partnerships could bring an additional $200 million and $630 million to Epizyme in milestone payments respectively. Jason Rhodes, Epizyme’s chief business officer (pictured at left above) says the company views the Celgene deal as “transformative, because it’s a very broad partnership, but it allows us to retain independence and control over our future.”
The Celgene partnership will focus specifically on a class of drugs being developed to treat mixed lineage leukemia (MLL), a blood cancer that occurs in both children and adults. In particular, Epizyme’s program centers on an aberrant gene called DOT1L that drives the growth of leukemia cells. “The prognosis is grim, but we can target the specific genetic change that drives the cancer,” says Robert Gould, Epizyme’s CEO (pictured at right above). Epizyme has developed DOT1L inhibitors that kill MLL cells while sparing normal tissue. The company has also developed diagnostic tools that can quickly identify the patients with genetic abnormalities that make them most likely to respond.
Gould says that Celgene is an ideal partner because of the company’s already strong presence in epigenetics and oncology. Celgene markets two leading cancer drugs that hit epigenetic targets: azacitidine (Vidaza) and romidepsin (Istodax). The company has formed other development partnerships related to epigenetics, including a $15 million investment in Boston-based Acetylon in February. And Celgene has a $150 million deal with Agios, a Cambridge, MA-based company working on drugs that deprive cancer cells of key enzymes, and in the process seem to influence epigenetic changes in cancer. “Celgene has made a commitment in oncology through partnerships with companies like Agios,” Gould says. “They’ve really taken a strong stand on looking at new therapeutic paradigms.”
Thomas Daniel, Celgene’s president of research, says the deal with Epizyme offers synergies in epigenetics expertise, as well as clarity around what targets are worth pursuing. Although MLL is rare, for example, both companies recognize it’s a strategically valuable target, Daniel says. “It’s an exceptional unmet need,” he says. “And DOT1L also gives us a very clear population on which to test our ideas about the utility and value of genetic markers.” Under the deal, Celgene will also have the option to license ex-U.S. rights to other Epizyme molecules over the next three years. It can also extend the deal for a year for an additional payment.
Rhodes says the Celegene deal is the latest step in what had been a carefully planned partnering strategy. “Often people partner to raise capital,” he says. But Epizyme raised $54 million in venture capital—more than enough to keep the company afloat for some time. Epizyme wanted its partnerships to bring not just additional funding, but also expertise that would allow it to move its programs forward quickly, without forcing the company to give up control. “Some partnerships are so broad they end up being de facto sales of the companies. We very much didn’t want to sell Epizyme,” Rhodes says. So in its first deal, Epizyme gave GSK rights to several undisclosed targets, but retained the rights to its two lead programs: DOT1L and EZH2, which it is examining for the treatment of certain non-Hodgkin’s lymphomas and breast cancer types.
Then Epizyme formed the second deal, in which Eisai agreed to fund research of EZH2 in return for half the profits and co-promotion rights in the U.S. “We got joint governance and half of the U.S.,” Rhodes says. At that point, he says, the company’s executives figured their next ideal partner would be a company that would allow them to retain all of the U.S. rights to the programs they would develop together. Celgene fit the bill perfectly. “This gives us the ability to broaden our efforts,” Rhodes says.
Rhodes and Gould say they’re not quite ready to estimate when Epizyme will start human testing of its first drug candidates. But Gould says the three lucrative partnerships will help Epizyme move towards that goal much more quickly than the company could have on its own. “We’re optimistic we’ll be testing drugs from our lead programs in people fairly soon,” he says.
And Epizyme has already earned milestone payments from its earlier deals, Rhodes adds. “We are very well capitalized for a long time,” he says.
