Dive Brief:

• Celgene Corp. will bolster its neuroscience pipeline through a preclinical-stage deal with Prothena Corp. plc, potentially picking up three compounds.
• Per the deal, the big biotech will pay $100 million upfront and invest $50 million in equity in Prothena, buying approximately 1.2 million of the smaller company's ordinary shares at $42.57 apiece.
• Prothena will also be eligible for development and commercial milestones worth about $563 million per target, and stands to receive royalties on any future sales.

Dive Insight:

The deal with Prothena is Celgene's latest move into the neuroscience space. The biotech inked an early research collaboration with Vividion Therapeutics Inc. at the beginning of the month to develop small molecule drugs for oncology, inflammatory and neurodegenerative diseases.

Celgene followed its usual dealmaking formula in its agreement with Prothena: paying a small upfront fee and heavily backloading the deal with milestone and royalty payments. Celgene has taken a similar approach in oncology, aiming to pad its pipeline with cheaper, but riskier, early-stage assets.

The hookup with Prothena will focus on three preclinical targets, including tau, TDP-43 and an undisclosed target. Celgene has the option to license the U.S. rights at the Investigational New Drug phase, and would have the option to expand those rights globally after Phase 1 studies. After opting in, Celgene is responsible for funding all global clinical activity.

The tau protein is most well-known for its potential in Alzheimer's disease, but is also implicated in other illnesses including progressive supranuclear palsy, frontotemporal dementia and chronic traumatic encephalopathy.

TDP-43 also holds relevance in Alzheimer's disease, as well as amytrophic lateral sclerosis.

While many companies have pulled out of Alzheimer's due to high-profile clinical setbacks, several are still actively investigating ant-tau antibodies. Currently AbbVie Inc., Biogen Inc., Roche AG and AC Immune SA all have compounds progressing through early- to mid-stage development.

Roughly 85% of Celgene's revenues come from three drugs: Revlimid (lenalidomide), Pomalyst (pomalidomide) and Otezla (apremilast). The company has hit some setbacks in its efforts to diversify, most notably a Refusal to File letter for its multiple sclerosis drug ozanimod.

With a similar aim, Celgene has also been active on the M&A front, shelling out $9 billion earlier this year to buy Juno Therapeutics and $1.1 billion to acquire Impact Biomedicines Inc. Even so, investors remain eager for the biotech to continue hunting for larger deals.