Juno Rises as Celgene Pays $1 Billion to Buy Cancer Stake

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Celgene Corp. will pay Juno Therapeutics Inc. about $1 billion as part of a 10-year partnership to study cures for cancer and autoimmune diseases, the largest upfront payment in a biotechnology licensing agreement ever.

Celgene will pay $150 million in cash and buy 9.1 million newly issued Juno shares at $93 a share, more than double Juno’s closing price Monday. In return, Celgene will get the right to sell Juno’s therapies around the world, the companies said in a statement Monday.

The payment surpasses the previous record, when Pfizer Inc. agreed to give Merck KGaA $850 million in a cancer drugs deal announced last year, according to Bloomberg Intelligence.

Juno shares rose 26 percent to $58.38 at 9:31 a.m. in New York. Celgene shares rose less than 1 percent to $115.75.

Celgene is betting on an approach to cancer treatment that uses modified versions of immune cells to target malignancies, a process known as CAR-T. It’s considered one of the most promising areas of treatment for blood cancers.

“We like that Celgene is making a big commitment to CAR-T as we think this will be an important hematological platform in the future -- but certainly would agree with the likely pending consensus view that the price tag is also big,” said Michael Yee, an analyst with RBC Capital Markets.

Celgene also has a 2013 agreement with Bluebird Bio Inc. to develop similar drugs. This month, it narrowed that agreement, giving back some candidates to focus on just one therapy target.

The partnership with Juno will likely yield approved treatments by 2020, Celgene Chief Executive Officer Bob Hugin said on a call with investors.

Deal Details

The deal will give Celgene about 10 percent of Juno’s stock with the option to buy more over time, up to a limit of 30 percent. Celgene will also add its head of research and development, Tom Daniel, to Juno’s board.

Juno will be responsible for research and development in North America and will keep commercial rights there, while Celgene will be responsible for the rest of the world.

The deal also gives Celgene the right to pick two products to share costs and profits with Juno. If both options are exercised Celgene will pay $100 million, according to a filing. Celgene will have to pay more the longer it waits to choose the products.

In addition, Juno will be able to co-develop Celgene treatments that target immune system cells. For those, Celgene will lead development and commercialization, taking 70 percent of costs and profits.

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