Blueprint Medicines Corp. is teaming up with Roche AG to develop as many as five cancer drugs, a partnership that could bring the five-year-old Cambridge company more than $1 billion.
The deal calls for Roche, a global drug giant based in Switzerland, to make a $45 million upfront cash payment to Blueprint and provide as much as $965 million in option fees and milestone payouts if Roche eventually licenses the drugs and they meet scientific and regulatory goals. Blueprint would also get royalties on Roche’s sales of the drugs.
The collaboration, which the companies unveiled Tuesday, is a vote of confidence in Blueprint’s approach to developing targeted therapies known as kinase inhibitors to treat patients with specific genetic mutations. Blueprint, founded in 2011, went public last April in a $147 million initial public offering that was one of the year’s largest.
“For us, this is really a transformative deal,” Blueprint chief executive Jeff Albers said in an interview. “Roche is well established in the area of cancer therapies, and they view our approach as complementary to the programs they have ongoing. And this gives us the financial ability to focus on our wholly-owned programs.”
The upfront payment will boost Blueprint’s cash on hand to almost $200 million.
Albers said the company will hold onto full commercial rights for its three lead drug programs, which target solid tumors and blood cancers. Last year it struck a separate alliance with New Haven-based Alexion Pharmaceuticals Inc. to jointly develop a kinase drug to treat an unspecified rare genetic disease. Under that deal, Alexion paid $15 million upfront to Blueprint and agreed to up to $250 million in milestone payments, plus royalties if the drug is approved.
The much larger collaboration with Roche will use Blueprint’s kinase medicines — either as single-agent drugs or as part of drug combinations — in cancer immunotherapies, which stimulate the immune system to fight tumors. Roche is already a major cancer drug maker through its 2009 acquisition of biotech pioneer Genentech Inc. But the drug candidates used in its Blueprint alliance would act through a different mechanism than Roche’s existing treatments.
Most of today’s cancer immunotherapies — such as Merck & Co.’s melanoma drug Keytruda and Bristol-Myers Squibb Co.’s lung cancer drug Opdivo — are injectables. Blueprint’s kinase inhibitors will be pills that work to enhance immune responses in patients with certain tumors. Albers said two of the drug candidates have already been selected while the three others will be chosen in the future, but he declined to disclose which cancers the drugs will target.
In two of the programs, Blueprint will retain the rights to sell the drugs in the United States while giving Roche the rights to market the drugs in other countries. In the remaining three programs, Roche will get worldwide marketing rights if the drugs are approved.
Securities analysts applauded the partnership, but Blueprint shares slipped 76 cents Tuesday to $17.04, a decline of 4.3 percent on the Nasdaq stock market.
“We view the deal with Roche, a leader in immune oncology, as providing validation for Blueprint’s efforts in this arena and further validation of its kinase inhibitor drug discovery platform,” biotech analyst Eric Schmidt at investment bank Cowen & Co. wrote in a note to investors. “Additionally, we view the substantial economics for what is essentially an early stage discovery deal as quite lucrative, and capable of advancing these targets forward at a rate Blueprint Medicines was unlikely to be able to support on its own.”
Blueprint plans to build its own sales force for its wholly-owned drugs as well as some of those stemming from the Roche alliance. Blueprint now has about 80 employees in Cambridge. Albers said it plans to increase its workforce this year, but would not specify how many new employees will be hired.