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junocelgeneShares of Seattle-based biotech startup Juno Therapeutics spiked more than 60 percent in after-hours trading on Monday after the company announced a $1 billion investment from Celgene.

The 10-year “collaboration” will allow Celgene to commercialize Juno’s cancer and autoimmune disease research.

New Jersey-based Celgene will pay Juno approximately $1 billion, which includes the purchase of 9.1 million shares at $93 per share (Juno’s stock closed on Monday at $46.30 per share). Juno will also receive an upfront payment of $150 million. The deal, described by financial analysts, is expected to close in the third quarter after clearing regulatory hurdles.

Juno CEO Hans Bishop.
Juno CEO Hans Bishop.

“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,” Juno CEO Hans Bishop said in a statement. “This unique collaboration is designed to catalyze and create tremendous ongoing scientific and product development synergy by leveraging each company’s strengths and assets.”

Celgene, a 29-year-old publicly-traded biotech company, boasts a market value of $92 billion. Its shares fell just over two percent in trading today.

In addition to the initial stock purchase, Celgene also has the option to purchase up to 19.9 percent of Juno’s shares in years four to five of the partnership. In years nine to 10, Celgene can purchase up to 30 percent of the company, if the initial purchase of shares is made.

Juno is developing technologies that takes a cancer patient’s T-cells, a key part of the immune system, and reprograms them using genetic engineering to fight that person’s cancer. The approach promises an alternative to radiation and chemotherapy for cancer patients.

Photo via Juno.
Photo via Juno.

Bishop noted that Celgene “has leading small molecule and protein capabilities that complement Juno’s advanced engineered T cell capabilities.”

“By doing this together, we believe we can more quickly and effectively develop potentially disruptive therapies in this new field of medicine and make them more readily available to patients worldwide,” he added.

As part of the deal, Celgene will take 70 percent of global costs and profits, while 30 percent will be allocated to Juno.

Mayor Ed Murray speaks at the ground-breaking of the new Alexandria Center. Photo: Fatyeti.com/Juno
Mayor Ed Murray speaks at the ground-breaking of the new Alexandria Center in Seattle where Juno will be headquartered. Photo: Fatyeti.com/Juno

“This transaction strengthens Celgene’s position in the emerging and transformative area of immuno-oncology,” Bob Hugin, Chairman and CEO of Celgene, said 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.”

Juno went public back in December after raising $314 million in venture funding from Arch Venture Partners, Amazon.com founder Jeff Bezos and others.

It initially raised $264 million in the IPO and the company’s stock shot up by 45 percent on the first day on NASDAQ. Shares of Juno have been on a wild ride in the past year, moving between $34 and $66.

Juno, which employs 123, was founded just two years ago. It spun out of research from the Fred Hutchinson Cancer Research Center, Memorial Sloan-Kettering Cancer Center and Seattle Children’s Research Institute. In February, it announced plans for a manufacturing facility in Bothell and is set to open a 90,000 square-foot office in Seattle’s South Lake Union neighborhood in 2017.

Juno has also made two acquisitions in the past few months, purchasing Germany-based Stage Cell Therapeutics for $59 million in cash and 486,279 shares, then buying Waltham, Massachusetts-based X-BODY Inc. earlier this month.

Follow-up: Juno CEO Hans Bishop: The $1 billion Celgene deal could be the ‘most productive’ collaboration in biotech

Here’s the full press release:

Celgene and Juno Announce Ten-Year Collaboration to Advance Potentially Groundbreaking Immunotherapies for Patients with Cancer and Autoimmune Diseases

SUMMIT, N.J. & SEATTLE–(BUSINESS WIRE)– Celgene Corporation (Nasdaq:CELG) and Juno Therapeutics, Inc. (Nasdaq:JUNO) announced today a global collaboration for the development and commercialization of immunotherapies. The two companies will leverage T cell therapeutic strategies to develop treatments for patients with cancer and autoimmune diseases with an initial focus on Chimeric Antigen Receptor Technology (CAR-T) and T Cell Receptor (TCR) technologies.

“This transaction strengthens Celgene’s position in the emerging and transformative area of immuno-oncology,” said Bob Hugin, Chairman and CEO of Celgene. “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.”

“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,” said Hans Bishop, CEO of Juno.

“This unique collaboration is designed to catalyze and create tremendous ongoing scientific and product development synergy by leveraging each company’s strengths and assets. In addition to its established global presence and commercial reach, Celgene has leading small molecule and protein capabilities that complement Juno’s advanced engineered T cell capabilities. By doing this together, we believe we can more quickly and effectively develop potentially disruptive therapies in this new field of medicine and make them more readily available to patients worldwide.”

Under the terms of the collaboration, Celgene has the option to be the commercialization partner for Juno’s oncology and cell therapy auto-immune product candidates, including Juno’s CD19 and CD22 directed CAR-T product candidates. B-Cell Maturation Antigen (BCMA) is excluded as a target in this collaboration.
For Juno-originated programs co-developed under the collaboration:

Juno will be responsible for research and development in North America and will retain commercialization rights in those territories;

Celgene will be responsible for development and commercialization in the rest of the world, and will pay Juno a royalty on sales in those territories; and

Celgene has certain co-promotion options:

Celgene will initially be eligible to select two programs, excluding CD19 and CD22, to be subject to a global profit sharing agreement under which the companies will share worldwide expenses and profits equally, except in China; and

Additionally, subject to additional obligations, Celgene may select a third program.

Juno will have the option to enter into a co-development and co-commercialization agreement on certain Celgene-originated development candidates that target T Cells. For any such Celgene-originated programs co-developed under the collaboration:
The parties will share global costs and profits with 70% allocated to Celgene and 30% allocated to Juno; and

Celgene will lead global development and commercialization, subject to a Juno co-promote option in the US and certain EU territories.

Upon closing, Juno will receive an upfront payment of approximately $150 million, and in addition Celgene will purchase 9,137,672 shares of Juno’s common stock at $93.00 per share. In conjunction with this stock purchase:

Celgene will receive the right to nominate a member to Juno’s board of directors;

During the 10-year term of the collaboration, Celgene will have the right to purchase additional equity in Juno during specified windows and at specified market premiums subject to satisfaction of certain conditions by each party including Juno opting in on select Celgene programs, such that, at a maximum, Celgene could own up to 30% of

Juno’s common stock then outstanding; and Celgene has entered into a standstill agreement and agreed to certain lock-up provisions on its share ownership.

This transaction has been approved by the boards of directors of both companies. Celgene and Juno currently expect to complete the transaction during the third quarter of 2015, subject to the expiration or termination of applicable waiting periods under all applicable antitrust laws and satisfaction of other usual and customary closing conditions.

Conference Call and Webcast Information

Juno will host a joint conference call today with Celgene to discuss the announced global collaboration at 2:00 p.m. PT, 5:00 p.m. ET. The conference call will be available by webcast on the Investor Relations page of Juno’s website, www.JunoTherapeutics.com and at www.celgene.com. An audio replay of the call will be available from midnight June 30, 2015, until midnight ET July 30, 2015. To access the replay in the U.S., dial (855) 859-2056; outside the U.S. dial (404) 537-3406. The participant passcode is 71894505.

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