Leading biotech firm Celgene Corp. said Tuesday it will pay $1 billion to enter into a 10-year collaboration with Juno Therapeutics. The move broadens the company's cancer drug portfolio by gaining access to Juno's budding pipeline of oncology immunotherapies.
Under the terms of the agreement, the New Jersey-based firm will agree to give Juno an upfront payment of $150 million and buy 9.1 million shares of Juno stock at $93 each, around double what was Juno's closing price on Monday of $46.30. Shares of Juno rose nearly 20% during Tuesday morning trading to $55.07 per share.
The companies expect to complete the transaction sometime during the third quarter.
“This transaction strengthens Celgene's position in the emerging and transformative area of immuno-oncology," said Bob Hugin, CEO of Celgene, in a statement. “Juno has assembled world-class experts and built impressive capabilities and technologies in the areas of T-cell biology and cellular therapy; we believe this long-term collaboration enhances the potential of both companies to deliver transformational therapies to patients with significant unmet medical needs.”
Seattle-based Juno has a pipeline of oncology and cell therapy auto-immune disease medications currently under development that Celgene will now be able to market outside of the U.S. During the 10-year collaboration period, Celgene will have the option to purchase as much as 30% of Juno's stock and will have the right to nominate one member to Juno's board of directors.
Analysts say the deal marks an investment into what many believe to be the next big advancement in cancer treatment, in particular, the development of chimeric antigen receptor technology and T-cell receptor immunotherapy technologies.
Some see the move as a way for Celgene to position itself for success once its blockbuster drug Revlimid loses its patent protection sometime after 2023.
“While many investors have some sticker shock ... we maintain our positive long-term view and stance on the deal that quite simply, Celgene is prepared to take a risk on big ideas that could turn out to be critical and important pipeline programs ... beyond 2020,” wrote RBC Capital Markets analyst Michael Yee in an investment note.