It turns out that August 28 was a red letter day for more than Kite or Gilead $GILD, which grabbed the industry’s attention with their announced buyout deal for $12 billion in cash. The same day as the headlines hit, Juno CEO Hans Bishop and CFO Steven Harr had a little chat about their upcoming meeting with some of the leaders at Celgene $CELG, a close partner that owned right at 10% of its shares.
Maybe some strategic options would be discussed, they thought. Maybe Morgan Stanley ought to get roped in — just in case.
A little more than three weeks later, Juno explained in an SEC filing, Bishop and Harr got together with Celgene CEO Mark Alles and chief dealmaker George Golumbeski. Maybe, suggested Alles and Golumbeski, they might want to talk about a buyout.
No numbers were discussed.
So Bishop took that to the board a few days later. But they had more to discuss than Celgene’s overture. During September, they had also been contacted by another company that was interested in partnering with Juno on its newly emerging BCMA program, which Celgene — already partnered with bluebird on BCMA — hadn’t tied up.
Party A, it turned out, was also ready to expand its discussions from a partnership into a broader strategic transaction. And on October 5, Juno had the makings of an auction, even though its execs would later say specifically that no auction was underway.
A month later, Party A came by for a tour and a chat about its interest in BCMA, again suggesting a willingness to enter into M&A talks. And a few days after that, their strategic committee asked Celgene and Party A to get down to brass tacks, and start talking about what kind of valuation they were giving Juno.
Alles got the bidding started on November 16, floating an $80 per share offering but signaling they could go higher. The Juno board agreed that $80 wasn’t enough to warrant the launch of a due diligence effort.
Alles balked at that, not wanting to go past $80 ahead of due diligence, and he and Bishop agreed to get together at ASH for a chat.
On November 22, Party A was still interested, but hadn’t mentioned a figure. I’ll take this next part of the negotiations straight from the SEC docs:
Mr. Bishop responded that Juno was not conducting an auction process, but that another party was interested in potentially pursuing an acquisition transaction for Juno.
On December 5 Party A tried to turn the conversation back to a BCMA partnership, but Harr made it clear that that wasn’t going anywhere. Party A said it was still interested in a broader transaction.
Then, on a snowy winter day on December 10, Alles and Golumbeski met with Bishop and Harr in Atlanta during ASH. A board meeting was coming up at Celgene, Alles told them, where they would be discussing CAR-T. What kind of number did they have in mind to get buyout talks seriously on track and due diligence underway?
The answer, it turned out a few days later, was $86 a share. That was good enough to get Celgene to the bargaining table for a closeup of Juno’s inside workings, and after telling Party A it was time to make an offer if it was interested, Party A took a hike on December 21. From the filing:
On December 21, 2017, Party A informed Dr. Harr that it was not interested in a BCMA partnership or acquisition of Juno at this time. Dr. Harr informed the Strategic Committee of this outcome on the same day.
Perhaps not coincidentally, that was the same day J&J announced a $350 million cash deal to partner with China’s Legend on their BCMA CAR-T program.
That left Celgene alone at the bargaining table, pursuing talks where Golumbeski had identified 4 key areas of interest: “1) Juno’s BCMA program; (2) JCAR017 (now also known as liso-cel); (3) Juno’s projected cost of goods; and (4) the projected value of Juno’s infringement lawsuit against Kite Pharma.”
The talks went on into early January, with Bishop getting a $20 million commitment from Celgene for a bonus pool for Juno staffers which he would personally direct.
On January 16, the Wall Street Journal nailed the talks, and Juno’s shares shot up. But then Celgene tried to introduce the idea of a buyout price tied to contingent value rights for a milestones.
Juno was not interested in a CVR deal.
Three days later, Juno suggested that Celgene might want to offer $88 a share. Alles came back with $87. And with no other potential buyer making a bid, that’s what the deal closed at.
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