Celgene Strikes Strategic Partnership With Evotec

U.S. biotechnology company Celgene Corp. (CELG) has entered into a long-term strategic drug discovery and development partnership with Hamburg, Germany-based Evotec AG.

The two companies will work together to identify new therapies in oncology — the study and treatment of tumors. In a brief statement, Evotec said it will receive an upfront payment of $65 million for its role in the partnership, as well as the potential to earn “significant milestone payments” and “tiered royalties” on each licensed program. Biopharmaceutical website Endpoints News expects these “significant” payments to be worth hundreds of millions of dollars.

In exchange, Celgene is due to receive exclusive opt-in rights to license all programs developed within its collaboration with Evotec across the world. 

Celgene and Evotec have already partnered up before. In December 2016, the two companies signed a five-year contract to collaborate on neurodegeneration work. (See also: Biotech Stocks Set to Breakout.)

"We are extremely pleased and encouraged about the opportunity to enter into a second major alliance with our colleagues at Celgene,” said Dr. Cord Dohrmann, Evotec’s chief scientific officer. “Our first alliance in neurodegenerative diseases has already proven that both companies and teams are united by the same spirit and objectives bringing new and better treatment to patients."

Celgene shares pared some of yesterday's losses in pre-market trading. On Monday, the stock fell 4.70% following a report that business development head George Golumbeski left the firm in April.

The Post-Revlimid Strategy

Cancer research and development is a core focal point for Celgene. The Summit, New Jersey-based company has spent big money expanding its product pipeline in this area for years in a bid to reduce its dependence on Revlimid, its best-selling blood cancer drug.

More than 60% of Celgene revenues come from Revlimid. In previous years, the drug has proved to be very profitable, thanks to its popularity and the fact that it is cheap to produce. However, recent developments have weighed on its future growth potential.

Revlimid is set to open to generic competition in the U.S. by 2022. Celgene has attempted to delay this process, while significantly hiking the price of its cancer drug. President Donald Trump’s administration, which has made a big deal about driving down drug prices, isn’t best pleased with this approach.

Last week, the Food and Drug Administration released a database of drugs that generic drugmakers have had difficulty getting samples of as they try to develop cheaper copies. Celgene was labeled as the most frequent offender and Revlimid the second most cited drug. (See also: Celgene Sinks After FDA Calls Drug Application 'Insufficient'.)