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Celgene To Pay $1B For A Big Piece of Juno and T Cell Therapies

Xconomy Seattle — 

[Updated 6/29/15 7:00 pm. See below.] It seemed only a matter of time. One of biotech’s most aggressive deal makers, Celgene (NASDAQ: CELG) has struck a wide-ranging, billion-dollar partnership with one of biotech’s highest-profile drug makers, Juno Therapeutics (NASDAQ: JUNO), whose T cell therapies are part of a wave of products that could transform the treatment of certain cancers.

Among other things, the deal calls for Summit, NJ-based Celgene to become Juno’s commercial partner on a wide range of Juno’s products outside the U.S. if it wishes to do so, to share global profits on up to three future programs, and to take a seat on Juno’s board of directors.

In exchange for options to take partial license to Juno products, Celgene is paying $150 million upfront and buying $850 million in Juno stock at $93 per share, roughly double the stock’s closing price today.

[Updated with comments from Celgene and Juno executives.] Over the length of the ten-year deal, Celgene can also buy more Juno stock at various times and take at most a 30 percent ownership stake in the Seattle company. Celgene has signed a standstill agreement, which typically means the company taking a significant minority share promises not to wrest control in the future. On a conference call this afternoon, Juno CEO Hans Bishop stressed more than once that the deal would allow Juno to preserve its independence.

On a day when the two major biotech indices closed down three percent, the deal was announced after market close and boosted Juno stock 41 percent in the first two hours of after-hours trading.

Juno is moving several programs through clinical trials, using engineered T cells to fight cancer. Juno is racing Kite Pharma (NASDAQ: KITE) and Novartis (NYSE: NVS), among others, to prove that this new type of therapy can become an important new cancer weapon.

Early clinical results from the companies, using chimeric antigen receptor T cell, or CAR-T therapy, have had remarkable success driving dozens of patients’ blood-borne cancers into remission when other treatments have failed. But those programs now need to prove their mettle in larger Phase 2 trials, some of which have begun. Celgene CEO Bob Hugin said on the conference call today that his company could opt to license these programs after seeing those Phase 2 data, but overall Celgene’s opt-in points are not necessarily tied to clinical milestones, he and other officials said.

Decisions for Celgene could come soon on Juno’s programs in acute lymphoblastic leukemia, which are the firm’s most advanced.

These cell therapies are one part of the emerging field of cancer immunotherapy, which after a few early successes—and a ton of investor enthusiasm—is entering a new phase of exploration, iteration, and deal making, as the Juno-Celgene pact illustrates.

This is not Celgene’s first CAR-T partnership. In 2013, it entered a wide-ranging deal with Bluebird Bio that potentially gave Celgene rights to any CAR-T program from Bluebird. Earlier this month, however, the companies narrowed their focus in the deal to the blood cancer multiple myeloma, which has not been among the cancers successfully treated so far with cancer immunotherapy.

Juno’s most advanced programs go after cancers that feature a protein called CD19. (Juno’s cells are programmed to recognize CD19 and attack those tumor cells.) Juno has added another target, CD22, to some of those programs. Celgene will have the right to be Juno’s commercial partner on those programs and others outside the U.S., a nod to the organization the big biotech has already built in Europe and elsewhere.

Juno chief financial officer Steve Harr said Celgene will be able to boost its stake in Juno to nearly 20 percent about half way through ten-year deal, then to nearly 30 percent toward the end of the deal.

Celgene’s president of research and early development Tom Daniel is joining Juno’s board.

The partnership will cut both ways. Juno gains the right to license undisclosed Celgene programs that target T cells. The companies will share costs and profits on those programs, with Celgene responsible for 70 percent and Juno 30 percent.