T-cell therapy company Neogene Therapeutics is being purchased by multinational pharma giant AstraZeneca in a deal potentially worth as much as $320 million that could greatly strengthen the regional biotech cluster and spark future business opportunities.
The proposed acquisition comes a little more than four years after Neogene was first established. AstraZeneca would acquire all outstanding equity of Neogene in a deal that includes an initial payment of $200 million on closing and as much as $120 million in considerations.
T cells are an important part of the body’s natural immune system, and some companies have worked to alter them to attack cancer cells. Neogene discovers, engineers and manufactures T-cell therapies that are geared toward solid tumors and tailored for individual patients’ varying forms of cancer. This individualized form of engineered T-cell therapies is what AstraZeneca sees value in as it prepares to bolster its oncology portfolio.
“This acquisition represents a unique opportunity to bring innovative science and leading experts in T-cell receptor biology and cell therapy manufacturing together with our internal oncology cell therapy team, unlocking new ways to target cancer,” Susan Galbraith, executive vice president of oncology research and development at AstraZeneca, said in a statement.
Dr. Arie Belldegrun, a founding investor of Neogene, sees the potential acquisition of Neogene as a massive benchmark for the life sciences industry in Los Angeles.
“I’m excited about the deal, not because I’m selling the company, but because (of the) hundreds of millions they have committed to invest in research in L.A. in the next two years,” Belldegrun said, adding that a completed deal would incentivize employees to stay in the city instead of leaving to other biotech hubs such as San Francisco and San Diego.
With Gilead, AstraZeneca and UCLA, where Belldegrun is a professor of urology, the seasoned oncologist envisions a comprehensive life science presence here akin to the power of the Broad Institute of MIT and Harvard — one that would be made up of biotech companies and research entities affiliated with UCLA and other universities. The overall organization would then be able to tackle other medical matters including dermatology, immunology or anything to do with the immune system, said Belldegrun.
“I’m excited because after 30 years, 26 years, suddenly, the vision is coming together,” Belldegrun said. “Right now, I’m looking at it as Cellicon Beach.”
Other cell-therapy players in the Los Angeles area include companies such as Atara Biotherapeutics, based in Thousand Oaks, and clinical-stage company Immpact Bio. The West Hills-based Immpact Bio announced a $111 million series B funding round, as well as a new president and chief executive, Dr. Sumant Ramachandra, in January.
Hot area
Ahmed Enany, chief executive of the Los Angeles-based Southern California Biomedical Council, said that there are about 30 companies in Los Angeles, Orange and Ventura counties that are taking immunotherapy approaches to treating different conditions.
“This is a hot area from the perspective of established (biotech) companies. Everybody wants to have access to a CAR-T for solid tumors, and that’s because the market is stiff,” Enany said. “Even investors, if they don’t have a company in their portfolio in immunotherapy and (companies that) target solid tumors, they will be scouting for one.”
CAR-T cell therapy is a type of cancer immunotherapy that uses genetically altered T cells to locate and destroy cancer cells.
Neogene Chief Operating Officer Brent Pfeiffenberger said a successfully closed acquisition deal would mean that the company could not only capitalize on, but also accelerate, the preclinical work it has been doing.
Once the acquisition is completed, Neogene will become a wholly owned subsidiary of AstraZeneca, continuing its operations in Santa Monica and in Amsterdam, where its European headquarters is located. Pfeiffenberger said retaining employees was an important element of the proposed acquisition and that both companies are committed to ensuring the right teams are in place for business.
The deal is expected to close in the first quarter of next year.
Tight team
Much of Neogene’s success as a 4-year-old company is derived from its leadership.
The firm was founded by cell-therapy veterans Dr. Carsten Linnemann and Dr. Ton Schumacher in partnership with Belldegrun and his venture capital firm Two Rivers. Linneman is the chief executive of Neogene, Schumacher the chairman of Neogene’s scientific advisory board, and Belldegrun is the founder of L.A.-based Kite Pharma.
Before Neogene, Linnemann served as the managing director of Kite Pharma EU. He has also co-founded several biotech companies.
In addition to his post at Neogene, Schumacher is the principal investigator at the Oncode Institute within the Netherlands Cancer Institute.
Belldegrun is an Israeli-born physician who also co-founded and chairs Bellco Capital, a direct investment firm used to establish biotech companies Belldegrun founded or co-founded, including Allogene Therapeutics, Agensys and Cougar Biotechnology. He is also a longtime mentor to Linneman.
Belldegrun’s business intentions have historically been to strengthen the biotech industry’s presence in Los Angeles. In the same way Kite’s acquisition was appealing for bringing a massive company to town, so, too, was Neogene’s potential of bringing AstraZeneca.
He called AstraZeneca’s proposed acquisition of Neogene an offer he “couldn’t refuse,” largely in part because it would establish a presence for the large, $210 billion company in the region, strengthening Greater Los Angeles’ biotech hub and creating a more active market for companies and research to succeed in.
