Farmas USA

CELG

Posible BO.

Barclays:  $CELG WSJ Reports Celgene likely to acquire Impact Biomedicines for $7bn

Only late-stage asset is fedratinib in phase 3 trials for myelofibrosis. This afternoon, the WSJ (link) reported that Celgene could buy Impact Biomedicines (private) for nearly $7bn in a three-stage deal, with $1bn upfront and the rest dependent on FDA approval and successful commercialization. Fedratinib is an oral JAK2 inhibitor, currently in phase 3 development for myelofibrosis (off of a clinical hold in October 2017). As Celgene has not formally announced a transaction, we have little other details regarding the likely deal structure. From the WSJ report, we are encouraged with the potential structuring, with payments tied to milestones - essentially de-risking both FDA approval and commercialization.

We note that the myelofibrosis space is not without competition, as Incyte (along with partner Novartis) has successfully commercialized Jakafi with >$1bn in US sales expected in 2017. Even if approved in 2019 (best case given currently available data), fedratinib would have to compete against a drug with a similar mechanism and already successfully commercialized. We note that this drug could be used in patients resistant or intolerant to Jakafi. Given today’s news, Celgene could update its 2020 guidance during tomorrow’s presentation in San Francisco to include potential revenues from fedratinib. We would have preferred to see business development with a commercial-ready asset in a space with a higher-unmet need or novel MOA. Reiterate EW and $105 PT.

Development of fedratinib has not been smooth with a clinical hold in 2013. Only recently (October 2017) has the development of the drug resumed following the 2013 clinical hold (and development discontinuation by Sanofi) due to reports of Wernicke’s encephalopathy (WE). We have few details of the result of the FDA Type-A meeting by Impact. Given the history, it is possible that Impact and Celgene could have additional clinical work beyond the ongoing phase 3. We would expect more details following a formal announcement by Celgene, if the WSJ report is accurate.