Privately held biotech Acetylon Pharmaceuticals Inc. continued its string of successful private investments with a $15 million equity stake by Celgene Corp.

The giant biotech made the investment, through the purchase of Series B-2 preferred stock, without obtaining any rights or options to Acetylon's drug candidates or technology, although Mark Alles, Celgene's chief commercial officer, becomes a nonvoting observer on Acetylon's board.

Celgene's move seems to validate Acetylon's approach to developing next-generation, isoform-selective histone deacetylase (HDAC) inhibitors. Acetylon's lead candidate, ACY-1215, is an oral, selective HDAC6 inhibitor in an ongoing Phase I/IIa trial in relapsed and relapsed/refractory multiple myeloma.

The investment – Acetylon's first by a major biotech or pharma – also validates the smaller biopharma's contrarian approach to fundraising. Acetylon has raised about $40 million since inception, largely from individual investors, but also from the Kraft Group, the company that owns the New England Patriots football team.

The Celgene stake is a follow-on from Acetylon's $27 million Series B last year, which encompassed a large contingent of private individuals. (See BioWorld Today, June 29, 2011.)

The Boston-based company used a similar strategy with its $7.25 million Series A round in 2009. (See BioWorld Today, Aug. 10, 2009.)

All of Acetylon's Series A investors participated in the Series B round, with an average investment of $1 million. Acetylon and its board members networked to attract the considerable number of new investors. It didn't hurt that the company's technology was developed by high-profile researchers and scientific founders Stuart Schreiber of Harvard University and Kenneth Anderson of Dana-Farber Cancer Institute.

The involvement of those researchers also accounted for the initial connection between Celgene and Acetylon. Anderson has a long history of working with Celgene's class-leading drugs in multiple myeloma at Dana-Farber, both in preclinical and clinical studies, explained Walter C. Ogier, Acetylon's president and CEO.

"We, obviously, had interest in Celgene, first and foremost because they are the leading pharmaceutical company with drugs being used in multiple myeloma," Ogier told BioWorld Today. "They've also been doing a lot of creative deals and partnering with companies. They've been pretty aggressive about expanding their presence in cancer, both in hematologic malignancies as well as solid tumors."

Indeed, at this month's Biocom Global Life Science Partnering Conference in San Diego, George Golumbeski, senior vice president of business development for Summit, N.J.-based Celgene, said the company decided not to follow in the footsteps of other big biotechs and pharmas that established venture capital funds. Instead, Celgene has opted to make direct investments in companies of interest.

In 2010, Celgene and privately held Agios Pharmaceuticals Inc. inked a preclinical collaboration in cancer metabolism, bringing $130 million up front for Agios, including an equity investment. In return, Celgene took an exclusive option to license clinical candidates resulting from the Agios cancer metabolism research platform at the end of Phase I. (See BioWorld Today, Apr. 16, 2010.)

Similarly, last fall Celgene and California venture capital firm Versant Ventures agreed to a 3.5-year, $45 million "build to buy" cancer drug collaboration with Quanticel Pharmaceuticals Inc., a privately held San Francisco biotech. (See BioWorld Today, Nov. 7, 2011.)

And last month Celgene scooped up privately held Avila Therapeutics Inc., of Bedford, Mass., in a deal potentially valued at $935 million. Avila is developing targeted covalent drugs that treat diseases through protein silencing. (See BioWorld Today, Jan. 27, 2012.)

But the Acetylon deal breaks new ground, since it comes with no strings attached.

"It starts a dialogue between us and Celgene, and they will get a chance to know the company better," Ogier said. "It opens the door a little further to some possible arrangement in the future, but we don't know what that might look like."

Celgene's investment will allow Acetylon to go deeper, rather than further, in developing its pipeline, he added, noting that the company already was funded sufficiently to complete its Phase I/IIa trial in ACY-1215 in multiple myeloma.

The economics of the deal also made more sense to Acetylon, which isn't looking to partner its HDAC inhibitors at this stage of development.

"Early stage deals can take a lot of the value of the programs away from small companies," Ogier said.

He acknowledged that a potential pairing of Celgene's myeloma drug Revlimid (lenalidomide) with ACY-1215 in clinical trials could offer exciting potential synergies for patients with progressive disease. Nevertheless, Acetylon wanted to keep its options open going forward, given that the standard approach to multiple myeloma therapy is rapidly moving toward combination drug treatments.

"Clearly, Celgene will be close enough to the company to be at the table if and when we get to the point of licensing our cancer program, and they have interest in other programs at the company as well," Ogier said. "But we have no impediments to doing future deals like this one with other parties and/or having more conventional collaborative strategic partnerships."

In December 2011, Acetylon presented data at the American Society of Hematology meeting in San Diego showing favorable pharmacokinetic and pharmacodynamic properties that confirmed the HDAC6 selectivity and anticancer activity for ACY-1215 when administered as a single agent or in combination with proteasome inhibitor Velcade (bortezomib, Millennium/Takeda).

Ogier said the company expects to move the compound into a Phase Ib trial later this year.