As the health care sector remains hot, it is logical to expect ongoing mergers and acquisitions action to continue. Then there are the collaborative efforts within the sector that should continue. Celgene Corp. (NASDAQ: CELG) and Juno Therapeutics Inc. (NASDAQ: JUNO) are coming together in a global collaboration for the development and commercialization of immunotherapies.
The goal is to 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.
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. However, it does not stop there. Celgene also will receive the right to nominate a member to Juno’s board of directors.
Both companies will share global costs and profits, with 70% allocated to Celgene and 30% allocated to Juno.
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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 is excluded as a target in this collaboration.
Bob Hugin, chairman and CEO of Celgene, commented on the transaction:
This transaction strengthens Celgene’s position in the emerging and transformative area of immuno-oncology. 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.
Shares of Juno closed Monday down 0.7%, at $46.30 in a 52-week trading range of $38.00 to $69.28. In the after-hours trading session shares initially jumped up about 53% to $70.63 before coming back down to a more marginal gain of 37% to $63.69. We also saw some 2.4 million shares trade in the after-hours session.
Juno shares were indicated up 34% at $62.11 in early bird hours on Tuesday. With Juno’s market cap at $4.2 billion prior to the big pop, this is obviously a very large deal for the company. Celgene now matters handily for Juno — the company just got the bump of a buyout offer or buyout rumor, but shareholders get to keep their toe in the water if they choose to see if there is an even larger payout ahead.
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Celgene shares closed Monday down 2.5% to $114.94, in a 52-week range of $82.90 to $129.06. Celgene shares were down 0.6% at $114.22 in early trading indications on Tuesday. The stock has a consensus analyst price target of $137.15.
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