Celgene to invest $1 billion in Juno to partner in cancer therapies

[June 30, 2015]  By Rosmi Shaji and Bill Berkrot

(Reuters) - Celgene Corp on Monday launched a 10-year partnership with Juno Therapeutics, announcing a $1 billion investment aimed at bringing to market Juno technologies that harness the immune system to treat cancer and autoimmune diseases.

The biotech companies, in a conference call to discuss the multi-faceted deal, said they anticipate potential product approvals in 2020.

The huge vote of confidence propelled Juno's shares more than 40 percent higher to $65.75 in heavy extended trading.

Celgene will pay Juno about $150 million upfront and buy about 9.1 million newly issued Juno shares at $93 each, double Juno's closing price on Monday. Juno had about 90.4 million shares outstanding as of May 4, according to a regulatory filing.

At the heart of the deal are new treatments that use Chimeric Antigen Receptor Technology (CAR-T) and T Cell Receptor (TCR) technologies, red-hot areas of immunotherapy that have driven up the share prices of several small companies, such as Juno, Kite Pharma Inc and Bluebird Bio Inc.

"Juno has the best-in-class CAR-T and T cell receptors," Celgene Chief Executive Bob Hugin said.

Celgene, which said it does not expect deal costs to affect near-term profit and loss, will have the option to buy up to 30 percent of Juno's common stock between the ninth and 10th year of the collaboration, provided it exercises an option to raise its stake to 19.9 percent between years four and five.

"Celgene is making a big commitment to CAR-T as we think this will be an important hematological platform," RBC Capital Partners analyst Michael Yee wrote in a note.

Each company will also have options to partner on certain drugs in the other's pipeline, with the upfront costs dependent upon how far along those assets are in development.

The harnessing of T cells and other components of the immune system to attack tumors can have dramatic, long-lasting effects on advanced cancers, potentially transforming the $100 billion global oncology drug market.

T-cell receptors (TCRs) are a class of compounds that make it easier for the immune cells to identify and destroy cancer cells. CAR-T cells actually take the immune cells and modify them into more potent cancer killers.

Kite and Bluebird said this month that they would partner to develop and market a new class of T-cell therapies for HPV-associated cancers.

Kite shares rose more than 8 percent in extended trading after the Juno deal was announced.

(Reporting by Rosmi Shaji in Bengaluru and Bill Berkrot in New York; Editing by Joyjeet Das and Don Sebastian)

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