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January 22, 2018

Celgene to Acquire Juno for $9B, Expanding CAR-T, TCR Presence

  • Celgene has agreed to acquire Juno Therapeutics for approximately $9 billion, the companies said today, catapulting the buyer into the thick of the scramble to develop CAR (chimeric antigen receptor) T-cell (CAR-T) and TCR (T cell receptor) therapeutics.

    Celgene opted to step up its cancer presence in CAR-T nearly a year after Juno halted development of JCAR015, its lead CAR-T cancer immunotherapy, and terminated its Phase II ROCKET trial. That decision in March 2017 came nearly four months after the study was placed on its second clinical hold following two additional patient deaths. Those deaths brought to five the number of patients who died from cerebral edema in the ROCKET study, on which the FDA imposed a partial clinical hold in July 2016, a hold that was lifted days later.

    In their announcement today, Celgene and Juno cited Celgene’s plans to advance several Juno CAR-T cellular immunotherapies, the furthest along of which is JCAR017, now in a pivotal program for relapsed and/or refractory diffuse large B-cell lymphoma (DLBCL). In December, Juno presented positive data on JCAR017 in patients with relapsed or refractory (r/r) aggressive B-cell non-Hodgkin lymphoma (NHL) at the 59th American Society of Hematology (ASH) Annual Meeting and Exposition in Atlanta.

    At ASH, Juno announced a three-month overall response rate (ORR) of 74% (14/19) and a three-month complete response (CR) rate of 68% (13/19). Across doses, 80% (16/20) of core-group patients with CR at 3 months stayed in CR at 6 months, and 92% (11/12) of patients in response at 6 months remained in response as of the data cutoff date.

    The core group included patients with DLBCL (not otherwise specified and transformed from follicular lymphoma) who were ECOG Performance Status 0-1. The full analysis group represents all r/r patients in the DLBCL cohort, which included patients with poor performance status (ECOG Performance Status 2) or with niche subtypes of aggressive NHL.

    JCAR017 is a defined composition CD19-directed CAR T cell product candidate using a 4-1BB costimulatory domain, and is also known as lisocabtagene maraleucel (liso-cel).

  • $3B Sales Projected for JCAR017

    In their announcement today, the companies said JCAR017 is expected to add approximately $3 billion in peak sales—based on the expectation of winning FDA approval in 2019—and “significantly” strengthen Celgene’s lymphoma portfolio.

    That's a risky bet for the combined Celgene-Juno, according to Brad Loncar, CEO of Loncar  Investments, who tracks developments in cancer immunotherapy.

    “I think they are making a mistake by relying on JCAR-017,” Loncar tweeted this morning at 6:54 am ET. “Unclear if Juno will in fact be best in class or even if it will matter. The way this deal succeeds is if Celgene/Juno becomes a leader in CAR-T version 2.0, 3.0, etc many years down the line.”

    According to the companies, Juno’s scientific platform and scalable manufacturing capabilities will complement Celgene’s presence in hematology and oncology. Celgene said it plans to expand its existing center of excellence for immuno-oncology translational medicine by adding Juno’s research and development facility in Seattle, WA as well as Juno’s manufacturing facility in Bothell, WA.

    Celgene and Juno are building on a 10-year, approximately $1 billion global collaboration launched in 2015 to develop and commercialize cancer and autoimmune diseases immunotherapies, with an initial focus on chimeric antigen receptor (CAR) technology and T-cell receptor (TCR) technologies.

    Like Juno, Celgene is also intent on bouncing back from clinical failure: Its Crohn’s disease candidate GED-0301 (mongersen) failed a Phase III trial and a Phase III extension study in October 2017, despite the company committing up to $2.6 billion since 2014 toward developing the first-in-class oral antisense DNA oligonucleotide targeting Smad7 mRNA.

    Yet Celgene also views the Juno acquisition as an avenue toward a greater presence in cancer therapeutics. The company’s top-selling drug the multi-indication oncology treatment Revlimid® (lenalidomide), a thalidomide analogue that generated $5.999 billion in sales during the first three quarters of 2017, ranking the drug at the top of GEN’s recent list of Top 10 Best-Selling Cancer Drugs, Q1-Q3 2017.

    However, Revlimid is expected to begin facing generic competition in four years, having agreed to allow Natco Pharma to begin selling its version of the drug in the U.S.  starting March 2022, under a volume-limited license the companies agreed to in 2015 to settle a patent dispute.

  • Building on ‘Shared Vision’

    “The acquisition of Juno builds on our shared vision to discover and develop transformative medicines for patients with incurable blood cancers,” Celgene CEO Mark J. Alles said in a statement. “Juno’s advanced cellular immunotherapy portfolio and research capabilities strengthen Celgene’s global leadership in hematology and adds new drivers for growth beyond 2020.”  

    Added Juno President and CEO Hans Bishop: “The people at Juno channel their passion for science and patients towards a common goal of finding cures by creating cell therapies that help people live longer, better lives. Continuing this work will take scientific prowess, manufacturing excellence and global reach. This union will provide all three.”

    Celgene has projected the acquisition will reduce its adjusted EPS (earnings per share) in 2018 by approximately $0.50, but is expected to be incrementally additive to net product sales in 2020. The buyer said it has not changed its previously-disclosed 2020 financial targets of total net product sales of $19 billion to $20 billion, and adjusted EPS greater than $12.50.

    Under terms of their agreement, Celgene agreed to acquire all outstanding common shares of Juno through a tender offer for $87 per share in cash, net of cash and marketable securities acquired, and the approximately 9.7% of Juno shares already owned by Celgene. Celgene said it expects to fund the transaction through a combination of existing cash and new debt.

    The boards of both companies have approved the transaction, which is expected to close in the first quarter. The deal is subject to customary closing conditions, including expiration of the applicable waiting period under the Hart–Scott–Rodino Antitrust Improvements Act of 1976, and the tender of a majority of Juno common stock shares, including Juno common shares directly and indirectly owned by Celgene.

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