BioPharma M&A: 2009-2014

Business Development: Celgene/Agios Case Study

SUMMIT, N.J. & CAMBRIDGE, Mass. – April 15, 2010 – Celgene Corporation (NASDAQ: CELG) and Agios Pharmaceuticals Inc., a privately-held biotechnology company, today announced the formation of a global strategic collaboration focused on targeting cancer metabolism. The goal of the collaboration is to discover, develop, and deliver novel disease-altering therapies in oncology based on the transformational science of Agios’ innovative cancer metabolism research platform. This platform is based on the concept that targeting key metabolic enzymes unique to rapidly proliferating cancer cells can “starve” the cancer.


Terms of the Agreement

  • Under the terms of the agreement, Agios will receive a $130 million upfront payment, including an equity investment
  • In return, Celgene receives an initial period of exclusivity during which it has the option to develop any drugs resulting from the Agios cancer metabolism research platform , in addition, Celgene may extend this exclusivity period through additional funding
  • If successful, Agios would receive substantial regulatory, clinical and commercial milestones
  • Agios will lead discovery and early translational development for all cancer metabolism programs
  • Celgene has an exclusive option to license any resulting clinical candidates at the end of Phase I, and will lead and fund global development and commercialization of licensed programs
  • On each program, Agios may receive up to $120 million in milestones as well as royalties on sales, and may also participate in the development and commercialization of certain products in the US


  • “Celgene’s $120M into Agios’ discovery stage story was a surprise then, but looks pretty smart now. It’s equity ownership alone nearly paying for the deal, not to mention product rights.
  • A big part of how Agios have done this is via creative business development; their landmark deal with Celgene allowed them to scale with non-dilutive funding during a critical time for the company, which opened up multiple options (and new disease areas to the startup)
  • If well structured, less dilutive financing mechanisms via creative collaborations can catalyze significant value creation and optionality for young companies”

“Biopharma M&A: Capital Efficiency Drives Returns,” Bruce Booth, Forbes, 5/15/15

Agios – Model of Capital Efficiency

  • Initially raised a $33M Series A Round (~Third Rock Ventures) at $2.73/share
  • Created enough scientific progress to partner with Celgene bringing $120M in largely non-dilutive funding (and some Series B equity)
  • Celgene deal drove the momentum to raise $75M+ Series C at $13.50/share
  • Public, raising $106M at $18/share
  • Agios (AGIO) now trading at $118/share


– “Framing Up Capital Efficiency in Early Stage Biotech,” Bruce Booth, Forbes, 7/17/2014

fAgios: Capital Efficiency

“A very clear inverse correlation exits between investor returns and equity capital deployed….M&A values don’t move up proportionally with invested capital. Returns from acquisition-based exits frequently go down with increasing amount of funding,” – Bruce Booth “BioPharma M&A: Capital Efficiency Drives Returns,” Forbes 5/15/15

BioPharma M&A: 2009-2014