UPDATE 2-Celgene to invest $1 bln in Juno to partner in cancer therapies

30 Jun 2015 | Author: | No comments yet »

After the Bell: Juno Therapeutics Surges 38% on Celgene Deal.

Celgene, a leading biotech company, said on Monday that it would pay about $1 billion to start a collaboration with Juno Therapeutics, a leader in the hot new area of cancer drugs that harness patients’ immune systems to attack tumors.

Shares of Juno Therapeutics (JUNO) surged more than 38% after hours on news that biotech giant Celgene (CELG) is making a big investment in the drug maker. New Jersey-based Celgene will pay $150 million in cash and buy 9.1 million of Juno’s stock at $93 a share, more than double Juno’s closing price Monday. JUNO -0.67 % $1 billion as an initial investment in a 10-year collaboration that is the latest and one of the most ambitious partnerships to develop treatments that harness the immune system to fight cancer.

The payment surpasses the previous record, when Pfizer Inc. agreed to give Merck KGaA $850 million in a cancer drugs deal announced last year, according to Bloomberg Intelligence. That reflected the excitement around its technology, which involves genetically engineering patients’ immune system cells so they can recognize and attack tumors. The companies will initially focus on treatments Juno is developing that involve genetically engineering immune-system warriors called T cells to attack tumors, a hot and fast-moving strategy that has shown promise in treating leukemia and other cancers of the blood. No such drug is approved for sale yet, but in small clinical trials, the approach has led to some substantial remissions among patients with various blood cancers. “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,” Hans Bishop, the chief executive of Juno, said in a statement. Juno, based in Seattle, was launched just 19 months ago based on discoveries by scientists at Fred Hutchinson Cancer Research, Memorial Sloan Kettering Cancer Center and the Seattle Children’s Research Institute.

It is also known for entering into what some analysts see as generous deals with smaller companies for new drugs and technology, giving it access to a wide variety of potential approaches to treating cancer. Juno will be responsible for research and development in North America and will keep commercial rights there, while Celgene will be responsible for the rest of the world. Juno doesn’t have any drugs on the market, but expects to launch a trial of a CAR T cell treatment in adult lymphoblastic leukemia at midyear that could lead to approval in the U.S., Mr. CAR-T and related approaches are not yet totally validated, nor is it clear so far how applicable the techniques will be in treating so-called solid tumors like breast, lung and prostate cancers, which represent a far larger potential market than the blood cancers. “Celgene’s management are to be congratulated on the audacity of their deal-making, but we expect investors to bridle at the company’s increasingly aggressive front-end loading of their transactions,” Geoffrey Porges, a biotechnology analyst at Sanford C. Celgene executives said the collaboration would help change the face of cancer care. “We consider the combined efforts will far exceed the sum of the parts,” said Dr.

Celgene, based in Summit, N.J., has been on a deal-making spree in recent years as the threat of generic competition to its biggest drug by revenue, Revlimid, has loomed larger. Celgene derived nearly a third of its $7.67 billion in global sales last year from Revlimid, a blood-cancer treatment whose patents are being challenged by generic drug makers.

Under the terms of the agreement, Celgene has the option to be the commercialization partner for Juno’s cancer drugs and also any cell therapies it develops for autoimmune diseases. Some analysts have said that investors have become overly enthusiastic about engineered T cells, given that the therapies can have severe side effects.

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