On December 15, 2016, Celgene (CELG) entered into a collaboration with Evotec AG for the discovery and development of drugs targeted at various neurodegenerative diseases such as Parkinson’s disease, Alzheimer’s disease, and Amyotrophic lateral sclerosis.
This collaboration aims to improve the productivity of research and development (or R&D) programs by using patient-centric approaches in the drug discovery process.
Evotec has developed a unique drug discovery platform based on a patient-derived disease model, and it employs pluripotent stem cell technology. This platform is expected to enable Celgene and Evotec to effectively identify the drugs that are the best suited to particular subsegments of the patient population.
If Celgene is successful in effectively deploying this new drug discovery platform, its share price could see a boost, along with the share price of the iShares Russell 1000 Growth ETF (IWF). Celgene makes up ~0.85% of IWF’s total portfolio holdings.
The above diagram shows the market opportunity available in the neurodegenerative segment. Since many patients die prematurely due to these diseases, the actual opportunity could become larger if their treatment regimens are successful in slowing down or stopping their progressions. Celgene’s peers Biogen (BIIB), AbbVie (ABBV), and Eli Lilly (LLY) are also researching innovative drugs to target the unmet demand in the neurodegenerative space.
In addition to the prevalence and incidence of neurodegenerative diseases, they also impose high burdens on patients and the overall healthcare system. Celgene and Evotec plan to develop therapies based on Evotec’s patient-derived drug screening platform.
Based on the companies’ collaboration agreement, Celgene will make an up-front payment of $45 million to Evotec, following which it will make milestone payments up to $200 million. The initial tenure of the collaboration is five years.