Acquisition is expected to add about $1 billion in revenue in 2015.
Celgene is acquiring Abraxis BioScience in a cash plus stock deal worth $2.9 billion. The deal pads Celgene’s focus on oncology, adding Abraxane for Injectable Suspension to the company’s existing portfolio of cancer products.
The drug was developed on the company’s nanoparticle albumin bound (nab) technology, which leverages albumin nanoparticles for the active and targeted delivery of chemotherapeutics to the tumor. Abraxane combines paclitaxel with albumin.
In 2009, Abraxane sales grew $15.3 million, or 5.1%, to $314.5 million from $299.3 million in 2008. Celgene expects the transaction to be modestly dilutive to non-GAAP earnings in 2011 and accretive in 2012 and beyond. The firm anticipates that it will gain $1 billion in revenues in 2015 through this takeover.
Under the terms of the merger agreement, each Abraxis share of common stock will be converted into the right to receive an up-front fee of $58 in cash and 0.2617 shares of Celgene common stock.
Each share will also receive one tradeable contingent value right, which entitles its holder to receive a pro rata share of the following payments: $250 million with FDA sanction of Abraxane for non-small cell lung cancer (NSCLC) with progression-free survival claim in U.S. label; $300 million upon FDA approval for pancreatic cancer with overall survival claim in U.S. label.; $100 million with FDA approval for pancreatic cancer by April 1, 2013; and royalties.
The nab-driven chemotherapy platform provides a new paradigm for penetrating the blood-stroma barrier to reach the tumor cell, according to Abraxis. The mechanism of delivery of such nab-driven chemotherapies is thought to be by targeting a previously unrecognized tumor-activated, albumin-specific biologic pathway with a nanoshell of the human blood protein albumin. This nano-shuttle system is believed to activate an albumin-specific (Gp60) receptor-mediated transcytosis path through the cell wall of proliferating tumor cells, using caveolin-1 activated caveolar transport.
Once in the stromal micro-environment, the albumin-bound drug may be preferentially localized by a second albumin-specific binding protein, SPARC, a protein secreted into the stroma by tumor cells. The resulting collapse of stroma surrounding the tumor cell may thus enhance the delivery of the nab-chemotherapeutic to the intracellular core of the tumor cell itself.
Abraxane was approved in January 2005 by the FDA for breast cancer patients who have failed to respond to combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Abraxane was approved by the EMEA in January 2008 for a similar indication. Additionally, Abraxane has received orphan drug designation for stage IIb–IV melanoma and pancreatic cancer.
“The acquisition of Abraxis BioScience is an exceptional strategic fit that will accelerate our strategy of becoming a global leader in oncology,” remarks Bob Hugin, CEO of Celgene. “We are excited by the opportunity to leverage our clinical, regulatory, and commercial capabilities to provide metastatic breast cancer patients with an innovative treatment in Abraxane. We are also excited by the potential of Abraxane to treat additional solid tumor malignancies such as non-small-cell lung and pancreatic cancers.
“Finally, the potential of nab-based therapeutics developed by Abraxis coupled with Celgene’s innovative science offers the potential to deliver long-term value to patients, doctors, and all of our stakeholders.”
At this year’s ASCO meeting, Abraxis reported that a Phase III trial evaluating Abraxane plus carboplatin as a first-line treatment for NSCLC patients met its primary endpoint. The study demonstrated a statistically significant 31% improvement in overall response rate (ORR) when compared with paclitaxel plus carboplatin. In addition, a retrospective analysis of the highly difficult-to-treat subset of squamous cell carcinoma showed a 67% improvement in ORR.
Data was also presented at ASCO from a Phase II study assessing Abraxane in advanced pancreatic cancer patients who have progressed on gemcitabine-based therapy. Treatment resulted in 58% of patients achieving six-month overall survival, with a median survival of 7.3 months and a median progression-free survival of 1.6 months. Five patients remain alive at a median follow-up of 12.7 months, including one patient with stable disease on cycle 15 of therapy.
Celgene has four cancer therapeutics on the market: Istodax (cutaneous T-cell lymphoma), Revlimid (multiple myeloma and deletion 5q myelodysplastic syndromes, or MDS), Thalomid (multiple myeloma), and Vidaza (French-American-British subtypes of MDS). The firm is further studying these treatments in various oncology studies. Celgene also has three other anticancer agents that are being evaluated in Phase I and II trials.