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.