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June 30, 2015

Celgene Launches $1B Immunotherapy Collaboration with Juno

  • Celgene and Juno Therapeutics have launched a 10-year global collaboration to develop and commercialize cancer and autoimmune diseases immunotherapies.

    The deal will generate about $1 billion for Juno, which could see Celgene's investment stake in the company grow from 10% to almost one-third.

    The companies said Monday they will develop treatments with an initial focus on chimeric antigen receptor technology (CAR-T) and T cell receptor (TCR) technologies.

    Under the collaboration, Celgene has the option to serve as commercialization partner for Juno's oncology and cell therapy autoimmune product candidates, including Juno's CD19- and CD22-directed CAR-T product candidates. The collaboration will not develop products targeting B-cell maturation antigen (BCMA), the focus of a Celgene collaboration with bluebird bio that the companies revised nearly a month ago.

    For Juno-originated programs co-developed through the collaboration, Juno will oversee R&D in North America and will retain commercialization rights there. Celgene will be responsible for development and commercialization elsewhere in the world, and has agreed to pay Juno high single-digit to mid-teens royalties on sales in those territories depending on development stage, the companies said.

    Celgene has initial rights to select two programs—except for CD19 and CD22—with both subject to a global profit sharing agreement under which the companies will share worldwide expenses and profits equally, except in China. Celgene may also select a third program, subject to additional obligations, the companies said.

    Juno will have the option to enter into a co-development and co-commercialization agreement on some Celgene-originated development candidates that target T cells. For any such programs, the companies have agreed to share global costs and profits with 70% for Celgene and the remaining 30% for Juno. Celgene will lead global development and commercialization efforts, subject to a Juno co-promote option in the U.S. and certain EU territories.

    “We believe this long-term collaboration enhances the potential of both companies to deliver transformational therapies to patients with significant unmet medical needs,” Celgene chairman and CEO Bob Hugin said in a statement.

    Added Juno CEO Hans Bishop: “Celgene has leading small molecule and protein capabilities that complement Juno's advanced engineered T cell capabilities. By doing this together, 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.”

    In addition to the $150 million in upfront cash, Celgene agreed to buy more than 9.1 million shares of Juno's common stock—roughly 10% of the company’s shares as of June 26—at an aggregate price of about $850 million, or $93 per share.

    That ownership interest can grow to up to 19.99% if Celgene buys shares between June 29, 2019 and June 28, 2020. And as long as it owns at least 17% by June 29, 2024, Celgene will have the right through the end of the collaboration to buy up to 30% of outstanding shares of Juno’s common stock.

    In return, Celgene won the right to nominate a director to Juno’s board— Thomas O. Daniel, M.D., president of Celgene Research and Early Development—as well as the right to buy more shares in its partner at set time windows and market premiums.

    Those sweeteners are subject to conditions that include Juno agreeing to partner on select Celgene programs, and the biotech giant owning up to a maximum 30% of Juno's common stock. Celgene also agreed to Celgene has entered into a standstill agreement and agreed to certain lock-up provisions on its share ownership.

    “We believe this deal is mutually beneficial to each party, with Juno receiving very substantial upfront funding, recognition from an industry leader with heritage in cellular therapy while maintaining rights in North America and [Celgene] leaping to the forefront of cell-based immunotherapy and gaining access to potential CAR-T and TCR therapies,” Howard Liang, Ph.D., managing director, biotechnology with Leerink Research, said in a note to investors.

    Dr. Liang added that Juno’s pipeline of CAR-T cell products “is arguably the most extensive in the industry,” and includes JCAR015, which he noted was the clinically most advanced CD19-directed CAR-T product for adult acute lymphoblastic leukemia (ALL). He also cited Juno’s access to technology through the three institutions that launched the company in 2013, The Fred Hutchinson Cancer Research Center, the Memorial Sloan-Kettering Cancer Center, and the Seattle Children’s Research Institute.

    Even before the Celgene collaboration, Juno was already well funded, having raised about $265 million through an initial public offering in December 2014. Before the IPO, Juno had privately raised more than $300 million from investors that include Amazon.com founder Jeff Bezos.

    The boards of Celgene and Juno have approved the deal, which is subject to the expiration or termination of applicable waiting periods under all applicable antitrust laws and satisfaction of other usual and customary closing conditions. Both companies said they expect to complete the transaction during the third quarter of this year.

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