Anato­my of a $9B buy­out: Cel­gene’s quick turn from Juno’s close col­lab­o­ra­tor to new own­er

Hans Bish­op

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.

Mark Alles

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.

Steven Harr

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.

George Golumbes­ki

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.

Hal Barron and Rick Klausner (GSK, Lyell)

Ex­clu­sive: GSK’s Hal Bar­ron al­lies with Rick Klaus­ner’s $600M cell ther­a­py start­up, look­ing to break new ground blitz­ing sol­id tu­mors

LONDON — Chances are, you’ve heard little or nothing about Rick Klausner’s startup Lyell. But that ends now.

Klausner, the former head of the National Cancer Institute, former executive director for global health at the Gates Foundation, co-founder at Juno and one of the leaders in the booming cell therapy field, has brought together one of the most prominent teams of scientists tackling cell therapy 2.0 — highlighted by a quest to bridge a daunting tech gap that separates some profound advances in blood cancers with solid tumors. And today he’s officially adding Hal Barron and GlaxoSmithKline as a major league collaborator which is pitching in a large portion of the $600 million he’s raised in the past year to make that vision a reality.

“We’ve being staying stealth,” Klausner tells me, then adding with a chuckle: “and going back to stealth after this.”

“Cell therapy has a lot of challenges,” notes Barron, the R&D chief at GSK, ticking off the resistance put up by solid tumors to cell therapies, the vein-to-vein time involved in taking immune cells out of patients, engineering them to attack cancer cells, and getting them back in, and more. “Over the years Rick and I talked about how it would be wonderful to take that on as a mission.”

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First place fin­ish: Eli Lil­ly just moved to fran­chise leader with their sec­ond mi­graine drug OK in 1 year

In a rare twist for Eli Lilly’s historically slow-moving R&D group, the pharma giant has seized bragging rights to a first-in-class new drug approval. And all signs point to an aggressive marketing followup as they look to outclass some major franchise rivals hobbled by internal dissension.

The FDA came through with an OK for lasmiditan on Friday evening, branding it as Reyvow and lining it up — once a substance classification comes through from the DEA — for a major market release. The oral drug binds to 5-HT1F receptors and is designed to stop an acute migraine after it starts. That makes it a complementary therapy to their CGRP drug Emgality, which has a statistically significant impact on preventing attacks.

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Patrick Mahaffy, Getty Images

Court green-lights Clo­vis case af­ter de­tail­ing ev­i­dence the board ‘ig­nored red flags’ on false safe­ty and ef­fi­ca­cy da­ta

Clovis investors have cleared a major hurdle in their long-running case against the board of directors, with a Delaware court making a rare finding that they had a strong enough case against the board to proceed with the action.

In a detailed ruling at the beginning of the month that’s been getting careful scrutiny at firms specializing in biotech and corporate governance, the Delaware Court of Chancery found that the attorneys for the investors had made a careful case that the board — a collection of experts that includes high-profile biotech entrepreneurs, a Harvard professor and well-known investigator as well as Clovis CEO Patrick Mahaffy — repeatedly ignored obvious warnings that Mahaffy’s executive crew was touting inflated, unconfirmed data for their big drug Roci. Serious safety issues were also reportedly overlooked while the company continued a fundraising campaign that brought in more than a half-billion dollars. And that leaves the board open to claims related to their role in the fiasco.

The bottom line:

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Allogene HQ Open House on September 17, 2019 in South San Francisco. (Jeff Rumans, Endpoints News)

The next 10 years: Where is biotech head­ed?

The last 10 years have seen a revolution in drug development. Timelines have shortened, particularly in oncology. Regulators have opened up. Investment has skyrocketed. China became a player. Biotechs have multiplied as gene and cell therapy has exploded — offering major new advances in the way diseases are treated, and sometimes cured.

So where are we headed from here? I journeyed out to San Francisco in September to discuss the answer to that question at Allogene’s open house. If the last 10 years have been an eye-opener, what does the next decade hold in store?

George Scangos / Credit: Cornell University

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George Scangos went back to Wall Street, and came back 700 million pennies short.

Scangos’ vaunted startup Vir Biotechnology raised $143 million in an IPO they hoped would earn $150 million. Shares were priced at $20, the low-end of the $20-$22 target.

Launched with backing from ARCH Venture’s Robert Nelsen, Masayoshi Son’s SoftBank Vision Fund, and the Bill & Melinda Gates Foundation, the infectious disease startup was one of a new wave of well-resourced biotechs that emerged with deep enough coffers to pursue a full R&D line rather than slowly build their case by picking off a single lead program.

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Ra shares closed at $22.70 on Wednesday.

There’s a small pipeline in play at Ra, but UCB is going for the lead drug — a C5 inhibitor called zilucoplan in Phase III for myasthenia gravis (MG) looking to play rival to Alexion’s Soliris. Soliris has the market advantage, though, with a much earlier approval in MG in late 2017 that UCB feels confident in challenging.

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Stuck with a PhI­II gene ther­a­py fail­ure at 96 weeks, Gen­Sight prefers the up­beat as­sess­ment

Two years after treatment, the best thing that GenSight Biologics $SIGHT can say about their gene therapy for vision-destroying cases of Leber Hereditary Optic Neuropathy is that it’s just a bit better than a placebo — just maybe because one treatment can cover both eyes.

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