Celgene Corp. has inked a deal to scoop up Impact Biomedicines, a small biotech company based in San Diego. The initial payout will be $1.1 billion but could rise to $7 billion if sales are high enough for the company’s blood cancer drug febratinib.
Impact gained development of the drug after it was dropped by Sanofi when clinical trials showed that it could be connected with a neurological disease called Wernicke’s encephalopathy. Impact was able to demonstrate to the U.S. Food and Drug Administration however that the prevalence of the disease was not greater than it is in the general population.
If febratinib gains approval to treat certain conditions including myelofibrosis, a type of bone marrow cancer, and reaches global sales topping $5 billion, Celgene will increase its payment to Impact to reach $7 billion. A deal of that size would make it the biggest acquisition in Celgene’s history.