Celgene & Juno just struck a blockbuster $1B collab deal—but does it make sense?
- Celgene is paying a staggering $1 billion up front to Juno in a 10-year collaboration deal focused on developing chimeric antigen receptor (CAR-T) and T cell receptor (TCR) cancer immunotherapies.
- Under the terms of the deal, Celgene has the right to be the commercialization partner for Juno's oncology and auto-immune therapies, including Juno's CD19 and CD22 directed CAR-T product candidates. Juno will be responsible for R&D in North America and will retain commercialization rights in these territories.
- For this deal, Celgene will be purchasing 9.1 million shares of Juno at $93 per share, which amounts to a massive 102% premium on Juno's most recent closing price. That has some industry observers ringing the "bubble" bell once again, asking why on earth Celgene would pay such a massive price for therapies that are, in the optimistic scenario, years and years away from approval.
As the fourth largest biotech company in the world, Celgene has the reputation as being a good partner and a company that aggressively seeks synergistic partnership and collaboration opportunities. In 2014, Celgene forged 10 partnerships, setting a record in the industry for the year.
As for Juno, although it's a start-up that recently went public, this company is a top contender in the CAR-T race and has been competing against large companies like Novartis and other closely-watched firms like Bluebird Bio and Kite Pharma. As the two companies start to develop therapies over the next decade, Celgene will have the right to purchase additional equity in Juno. Celgene will lead global development and commericalization. However, it will be subject to a Juno co-promote option in the U.S., as well as in certain E.U. territories.
This is undoubtedly a stellar deal for Juno. But the question is: How much sense does it actually make for Celgene? Those who have been asserting that biotech is in the midst of a massive bubble—and that's a chorus that's been growing louder over the months—will likely to point to this exact sort of deal as proof positive of their thesis. This is obviously no Axovant-type of situation—but considering the promising, but ultimately unproven, nature of the pipeline that Celgene is buying itself access to, some in the industry are bound to scratch their heads over the sheer scale of the deal.