Dive Brief:

• Cell therapy developer Celularity is raising a total of $372 million, announcing Friday a merger with a blank-check acquisition company and a separate financing from selling shares to institutional investors. The merger with GX Acquisition is the latest in a series of biotech deals with SPACs, or “special purpose acquisition companies,” which provide a streamlined route to public equity markets.
• Celularity spun out from Celgene in 2017 to develop off-the-shelf therapies derived from cells in human placental tissue. The company is planning on initiating trials in 2021 of three experimental treatments for solid and blood cancers.
• The deal continues a trend of SPAC acquisitions that kicked off 2020. Nuvation Bio, Cerevel Therapeutics and Immatics all went public through these transactions, which surged 250% in the biotech sector in 2020, according to analysis firm Global Data

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Dive Insight:

The biotech ecosystem has typically consisted of new scientific discoveries nurtured by small privately held companies that, as they grow, are either are acquired by big pharma or go public via an initial public offering. The past year, however, has seen SPACs become a more common route to raising money and getting that public listing.

Celularity has its roots in a company called Athrogeneisis, which Celgene acquired in 2002. The founder of Athrogenesis, Robert Hariri, worked to develop the technology within Celgene before leading the spinout in 2017. The company landed a $250 million funding round in 2018 supported by Celgene, Sorrento Therapeutics, United Therapeutics and others.

Hariri and the Celularity management team will remain at the company’s helm as it merges with GX Acquisition.

As part of the deal, GX will make a $292 million payment, and separately $80 million worth of shares will be purchased by a collection of private investors that includes existing Celularity shareholders along with unaffiliated institutional investors. The company will be valued at $1.7 billion.

The transaction affirms continued investor interest in developing better cell therapies to treat cancer. The first generation of such therapies, such as Novartis’ Kymriah and Gilead’s Yescarta, have stimulated deep and lasting responses in patients with leukemia and lymphoma.

However, they require weeks to manufacture from patients’ own immune cells, and the procedure itself is burdensome, requiring pre-treatment chemotherapy and post-infusion monitoring to help control a common immune-related side effect.

Off-the-shelf, or “allogeneic,” approaches have been advanced by several companies — and German big pharma Bayer, in particular, has been investing heavily in this approach.

Celularity is preparing to advance into the clinic this year two experimental therapies derived from modified “natural killer” cells, and a third one that, like Kymriah and Yescarta, engineers T cells to bind to and destroy diseased cells in blood cancer patients.