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.

John Reed at JPM 2019. Jeff Rumans for Endpoints News

Sanofi's John Reed con­tin­ues to re­or­ga­nize R&D, cut­ting 466 jobs while boost­ing can­cer, gene ther­a­py re­search

The R&D reorganization inside Sanofi is continuing, more than a year after the pharma giant brought in John Reed to head the research arm of the Paris-based company.
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John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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In­vestor day prep at Mer­ck in­cludes a new strat­e­gy to pick up the pace on M&A — re­port

Mer­ck’s re­cent deals to buy up two bolt-on biotechs — Ti­los and Pelo­ton — weren’t an aber­ra­tion. In­stead, both ac­qui­si­tions mark a new strat­e­gy to beef up its dom­i­nant can­cer drug op­er­a­tions cen­tered on Keytru­da while look­ing to ad­dress grow­ing con­cerns that too many of its eggs are in the one I/O bas­ket for their PD-1 pro­gram. And Mer­ck is go­ing af­ter more small- and mid-sized buy­outs to calm those fears.

Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.

A new num­ber 1 drug? Keytru­da tapped to top the 10 biggest block­busters on the world stage by 2024

Analysts may be fretting about Keytruda’s longterm prospects as a host of rival therapies elbow their way to the market. But the folks at Evaluate Pharma are confident that last year’s $7 billion earner is headed for glory, tapping it to beat out the current #1 therapy Humira as AbbVie watches that franchise swoon over the next 5 years.

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