Juno Therapeutics, Inc. (JUNO) Up Sharply on Deal With Celgene (CELG)

Shares of Seattle, Washington, based Juno Therapeutics, Inc. (JUNO) rose sharply on Tuesday, against the backdrop of a generally higher day in stocks overall. Juno's stock was up 15.18%, rising $7.03 per share, to close at $53.33, on volume of 15,700,903 shares. The company has received an offer from Celgene (CELG) to purchase 9.1 million shares of Juno stock at $93 per share, or nearly twice Tuesday's closing price for the stock.

Celgene's stock was up fractionally on the news.
Founded in 2013, Juno Therapeutics, Inc. develops cellular immunotherapies. Its platforms include chimeric antigen receptors (CARs) and T-cell receptors (TCRs). The CAR technology is designed to target cell surface antigens that are expressed on cancer cells. The high-affinity TCR technology can also detect alterations in intracellular proteins present in tumor cells. The treatments have the potential to reduce longer-term toxicities associated with current chemotherapeutics. The company's stock trades on the NASDAQ.

The company announced late Monday that Celgene has agreed to a $1 billion deal, which caused the price of Juno stock to rise almost 30% before settling back for a 15.18% gain by the closing bell. Celgene will pay $150 million upfront to purchase 9.1 million shares of Juno stock at $93 each, for $850 million. As a result of the deal, Celgene will have the option to license Juno's chimeric antigen receptor (CAR) T-cell therapies for cancer. It will include both Juno's CD19 and CD22 therapies.

Celgene will also have the option to license a third therapy of its own choosing. The third therapy will be marketed outside the US. Celgene can also select two or three other candidates for a profit sharing arrangement in which Juno has a 30% share of both expenses and profits, while Celgene has 70%. The deal will cover 10 years. During that time, Celgene will have two more options to buy Juno stock. If it exercises those stock purchase options, Celgene could own up to 30% of Juno. The arrangement will allow Juno to continue operating as an independent entity, but both companies will have access to the other's technology.

The price being paid in the deal is considered high by some analysts since Juno's therapies are still in the early stages. However, Ian Somaiya of Nomura Holdings estimates that the deal has the potential to increase Celgene's revenue by $20 billion by 2020. Similarly, Celgene CEO Bob Hugin also expects his company to start making money from the partnership by 2020.

As would be expected, the reaction from Juno was upbeat.

"Celgene is the ideal partner for Juno to help us realize the full potential of our science and clinical research while maintaining the independence we, our employees, partners, and investors believe is so critical for true innovation," said Hans Bishop, CEO of Juno. "This unique collaboration is designed to catalyze and create tremendous ongoing scientific and product development synergy by leveraging each company's strengths and assets...we believe we can more quickly and effectively develop potentially disruptive therapies in this new field of medicine and make them more readily available to patients worldwide."

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Published on Jul 1, 2015
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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