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August 10, 2017

Celgene Ends Option to Buy Sutro, Gains Rights to I/O Candidates in Revised Collaboration

  • Celgene has ended its option to acquire Sutro Biopharma in return for gaining full global rights to a second Sutro preclinical program, and outside-U.S. rights to two others in a reworking of the companies’ immuno-oncology collaboration, whose value was not disclosed.

    A revised agreement allows Celgene to acquire worldwide rights to the second Sutro preclinical program to reach investigational new drug (IND) status in return for unspecified payments to Sutro—while retaining such rights to the first preclinical program that advances to an IND, as called for under a 2014 expansion of the collaboration.

    That first preclinical program is an antibody drug conjugate (ADC) program designed to fight multiple myeloma by targeting B-cell maturation antigen (BCMA), a program disclosed earlier by Celgene. The other three preclinical programs are intended to develop immuno-oncology bispecific monoclonal antibodies against undisclosed targets.

    Celgene also secured ex-U.S. rights to the next two programs to reach IND status, while Sutro will retain U.S. development and commercialization rights.

    Under the revised agreement, Celgene agreed to pay Sutro an undisclosed sum upfront, plus development and regulatory milestone payments and royalties, all undisclosed.

    The companies launched their collaboration in 2012 to discover and develop multispecific antibodies and ADCs against cancer, then expanded their partnership in 2014 to immuno-oncology products. In announcing the expansion, Sutro disclosed that the partners would focus on established immuno-oncology targets such as programmed cell death protein 1 (PD-1) and programmed death-ligand 1 (PD-L1), as well as new undisclosed targets, using Sutro’s Xpress CF™ and Xpress CF+™ cell-free biologics development platforms.

    In its Form 10-K for 2016, Celgene disclosed that under the 2012 agreement, Sutro received $35 million from Celgene, including an equity investment and other rights. That deal also included up to $204 million tied to achieving development and regulatory milestones for a selected ADC if approved in multiple indications, and up to $279 million in milestone payments for a selected bispecific antibody construct if approved in multiple indications, as well as tiered royalties based on annual net sales of licensed products.

  • Billion-Dollar Expansion

    Under the 2014 expansion, Celgene agreed to double the maximum that Sutro stood to generate to more than $1 billion—including up to $75 million tied to achieving research and manufacturing milestones, and up to $275 million tied to meeting clinical development and regulatory approval milestones for each compound selected under the collaboration if approved in multiple indications, plus tiered royalties based on annual net sales of licensed products.

    Sutro received payments totaling $95 million, Celgene disclosed, including an equity investment that increased its ownership to approximately 15%, rights to manufacturing and supply of BAC and ADC development candidates, and an option to acquire all of the outstanding equity of Sutro starting in September 2016.

    In return for terminating its option to buy Sutro, Celgene gained rights to buy Sutro shares during a future private financing, as well as in a private placement envisioned as taking place at the same time as an initial public offering by Sutro.

    Celgene also agreed to lift restrictions on Sutro entering into additional collaborations or accessing public financial markets. Sutro is working to advance six ADC programs against multiple undisclosed targets under a 2014 collaboration with Merck KGaA. The Merck programs are in preclinical or discovery phases.

    The Merck and Celgene collaborations are in addition to Sutro’s own pipeline, led by two preclinical candidates for which the company expects to file INDs in 2018. One is STRO-001, an ADC targeting CD74, a cell-surface protein associated with B-cell malignancies, including non-Hodgkin lymphoma and multiple myeloma. The other is STR0-002, an ADC that targets folate receptor alpha, which is overexpressed in platinum-resistant ovarian cancer and other solid tumors.

    “With this revised agreement, Celgene continues to support Sutro's development, while we can move rapidly into development of multiple product candidates and evaluate new opportunities for partnerships and funding,” Sutro CEO Bill Newell said in a statement. “Our goal is to continue to build momentum for promising antibody drug conjugates and bispecific antibodies for immuno-oncology therapeutics developed with Sutro's cell-free protein synthesis platform.”

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