Cephalon to buy cancer drug developer

Cephalon has entered into an agreement to acquire the privately held cancer drug development company Gemin X Pharmaceuticals in a deal that could be worth up to $525m.

The deal calls for Cephalon to pay $225m upfront plus up to $300m in potential payments tied to regulatory and sales milestones. However, Cephalon is not obligated to pay royalties on products that eventually make it to market.

Gemin X, which is based in Pennsylvania and has research operations in Montreal, Canada, was founded in 1998 as a spin-out of Canada's McGill University. The company is focused on developing cancer therapies that re-initiate programmed forms of cell death, including apoptotic and autophagic cell death, and inhibit metabolism in cancerous cells.

Gemin X's lead product is a phase IIb small cell lung cancer drug known as obatoclax, which the company hopes will win approval as a first-line treatment in combination with chemotherapy. Enrollment in the phase IIb trial was completed in November 2009, and the company plans to present the full data from the study at upcoming scientific meetings. The drug has also shown pre-clinical and clinical activity as a single agent and in combination with standard therapies for a number of other types of cancer, the company said.

The acquisition deal is expected to close in the second quarter of 2011, after which Gemin X will operate as a wholly-owned subsidiary of Cephalon.

The deal comes on the heels of two other recent acquisitions of drug development companies by Cephalon intended to diversify its offerings. Last year, the company bought Ception after the privately held company announced positive phase II results for a humanised monoclonal antibody intended to treat asthma. In 2009, Cephalon acquired Arana Therapeutics, an Australian company with a protein engineering technology platform for turning proteins, including antibodies, into drug candidates.