Juno Therapeutics, Inc. JUNO and Celgene Corporation CELG announced an agreement covering the global development and commercialization of immunotherapies. The collaboration will see the companies leveraging T cell therapeutic strategies to develop treatments for patients with cancer and autoimmune diseases. The initial focus will be on chimeric antigen receptor technology (CAR-T) and T cell receptor (TCR) technologies.
Terms of the Agreement
The deal, which does not cover B-cell maturation antigen (BCMA), provides Celgene with the option to partner Juno on the commercialization of its oncology and cell therapy auto-immune pipeline candidates, including Juno’s CD19 and CD22 directed CAR-T pipeline candidates.
For candidates originating from Juno’s pipeline, Juno will be responsible for research and development in North America and will retain commercialization rights in those territories. Celgene will have development and commercialization rights in the rest of the world, and Juno will receive a royalty on sales in those territories.
Meanwhile, Celgene has certain co-promotion options under which it can initially chose two programs (excluding CD19 and CD22). For these programs, worldwide expenses and profits will be shared equally, except in China. Celgene also has the option to select a third program.
As far as Juno is concerned, the company has the option to enter into a co-development and co-commercialization agreement for certain Celgene-originated pipeline candidates that target T cells. Global costs and profits related to these programs will be shared on a 70:30 basis (Celgene:Juno). Worldwide development and commercialization responsibilities lie with Celgene though Juno has an option to co-promote in the U.S. and certain EU territories.
Once the deal closes, Juno will get an upfront payment of about $150 million. Moreover, Celgene will purchase 9.1 million shares of Juno’s common stock at $93 per share. Celgene will have the right to nominate a member to Juno’s board and during the tenure of the 10-year deal, Celgene has contingent rights to purchase up to 30% of Juno common stock.
Our Take
This deal, slated to close in the third quarter of 2015, is a major positive for Juno, which saw its shares shoot up in pre-market trading. The company is getting a strong partner in the form of Celgene. Celgene, meanwhile, is looking to strengthen its position in the emerging and transformative area of immuno-oncology through this agreement. However, the price tag looks high with Celgene buying Juno’s shares at a huge premium.
Nevertheless, immuno-oncology remains a hot therapeutic area with immense commercial potential. Juno is looking to revolutionize cancer treatments by engaging the body’s immune system to treat cancer and is developing cell-based cancer immunotherapies based on CAR and high-affinity TCR technologies.
While Juno is a Zacks Rank #2 (Buy) stock, Celgene is a Zacks Rank #3 (Hold) stock. Some better ranked health care stocks include Gilead Sciences, Inc. GILD and Emergent BioSolutions, Inc. EBS. Both are Zacks Rank #1 (Strong Buy) stocks.
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