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U.S. drug giant Celgene Corp. has agreed to pay as much as US$1-billion to bring an early-stage blood-cancer treatment developed by publicly funded Ontario researchers to market and give leukemia patients in the province first access to the experimental drug.

Under the deal, Celgene will pay US$40-million up-front to Triphase Accelerator, a private firm owned by the provincially funded Fight Against Cancer Innovation Trust, MaRS Innovation and MaRS Discovery District, and which is mandated to commercialize Ontario drug research. That will fund the first human trials of a drug called TRPH-395, which researchers believe will be able to zero in on the DNA of blood-cancer cells and destroy them, having a much less damaging effect on patients than chemotherapy and radiation. Facit Inc., a subsidiary of the trust that carries out its commercial activities, has spent about C$3.2-million to date on pre-clinical work and is about two years away from launching “proof of concept” clinical trials involving up to 40 patients in the province.

If TRPH-395, a “first-in-class” drug in a group of treatments known as epigenetics, proves to be both safe and effective in humans, Celgene has an option to acquire the drug outright from Triphase for a further US$940-million. If the product makes it to market, Triphase will receive further royalties.

“We don’t have a good idea just yet how big a market this may be,” said Dr. David O’Neill, president of FACIT, which is mandated to commercialize breakthrough research from the publicly funded Ontario Institute for Cancer Research (OICR). He said early results suggest the drug could work on some forms of lymphomas and solid tumors as well – a capability Celgene will own if it exercises its option.

It’s the latest deal in a seven-year-old strategic partnership between Triphase and Celgene – which agreed this month to a US$74-billion takeover offer from Bristol-Myers Squibb – that gave Celgene right of first refusal on oncology products Triphase advanced to clinical stages. In fall 2016, Celgene acquired an experimental brain cancer drug from Triphase called marizomib; it has since provided US$35-million in milestone payments to the seller.

“Triphase is a great local partner that continues to identify and develop innovative oncology assets,” said Kevin Leshuk, vice-president and general manager of Celgene’s Canadian operation.

That in turn is part of a broader effort by OICR to discover cancer drugs in Ontario that “target entirely new pathways that offer powerful new ways of treating cancer” and then advance them toward commercialization through FACIT, said OICR president and scientific director Dr. Laszlo Radvanyi. The effort is also meant to address a lack of drug-development activity in Ontario, despite the existence of globally renowned researchers and the province’s legacy as the birthplace of insulin a century ago. There are no Canadian drug giants, with the exception of Laval, Que.-based Bausch Health Cos. Inc. (formerly Valeant Pharmaceuticals), which was built up in a debt-fueled mergers-and-acquisitions spree and is now in the process of shedding assets.

“It’s too bad that we don’t have a homegrown Canadian global pharmaceutical company,” said Ilse Treurnicht, executive chair of Triphase and former head of MaRS Discovery District. “That’s what we’re trying to work toward, but one of the gaps is to actually have the right capabilities to do this clinical scaling work, which is what we’ve lacked,” and which is being addressed through deals Triphase is engineering.

Triphase has not only established the Celgene partnership but has also incubated and funded standalone drug-development startups. That includes FACIT-incubated Turnstone Biologics, which raised US$41-million in venture capital in 2016 and is working with drug giant AbbVie to develop viruses that can fight cancer. That deal is one of several investments into a rejuvenated biotech market in Canada that has been accompanied by record levels of venture capital financing for Canadian-based firms.

Rather than build another startup around TRPH-395, Dr. O’Neill said “we thought the strategic partnership with Celgene was the best way to finance the development and maximize the impact on Ontario … We could have raised a lot of money through the venture capital route and that would have been a very reasonable option. It’s not as easy to build out the infrastructure to execute on that plan in Ontario, so we’re making strategic tradeoffs in the interests of trying to build out more than just financings."

Dr. Radvanyi said that “as time goes by,” conditions in Ontario may be better for companies to develop and grow into market giants. “But at the same time, we don’t want to bite off more than we can chew” before the market is mature.

Follow Sean Silcoff on Twitter: @SeanSilcoffOpens in a new window

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