Celgene bags CAR-T player Juno in $9B buyout as biotech M&A suddenly explodes

The buyout buzz was accurate.

Celgene $CELG has struck a deal to buy Juno Therapeutics $JUNO for $87 a share, or about $9 billion, instantly vaulting into the front ranks of the CAR-T companies. And they plan to stay there, vowing to become the preeminent player in one of the most competitive R&D rivalries in the industry.

Mark Alles

Celgene stamped the deal with its own bullish forecast that the buyout will quickly deliver a new CAR-T that will hit peak sales of $3 billion a year.

The buyout gives Celgene JCAR017, which has produced some stellar efficacy and safety data. The therapy also validates Juno’s bet that it can make a comeback in a field where it was blighted by the lethal failure of its lead program, which killed patients both before and after an FDA hold.

Taking the lessons it had learned along the way, Juno had won back investors with proof that it could overcome the safety issues that scuttled JCAR015. And Celgene is now paying a hefty premium because of it.

For Celgene, the $9 billion deal also helps put some of its own setbacks in the rear view mirror, as well as some shaky financials that spooked investors late last year. In a call with investors Monday morning, Celgene CEO Mark Alles also underscored that their BCMA CAR-T partnership with bluebird bio $BLUE remains a top priority, even though they are also buying a rival BCMA program at Juno.

The executive team also hit hard on how the acquisition will fit into its existing I/O pipeline plans, which includes a newly acquired PD-1 as it plans to gradually move past its reliance on Revlimid for its revenue performance. And the company plans to keep the operations Juno has built up in the Seattle area, making it a new center of excellence in the company.

Some top analysts may also be disappointed by the final value number. Leerink in particular was looking for Celgene to fork over $93 a share, which is what Celgene pegged the price at when it bought a minority share in the biotech.

CAR-T has been one of the big success stories for biotech, offering a new approach to engineering T cells into attack weapons focused on cancer cells. Novartis and Kite led the way, and Gilead recently jumped in with a $12 billion deal to buy Kite just ahead of its pioneering first approval. Juno sits well behind the two leaders, but Celgene is betting that it can still jump in just as the marketing operations begin to mature, leaving plenty of franchise value to carve out for itself. And the race for next-gen tech is already well underway as the leaders look to expand from blood cancers into solid tumors.

The deal, coming right on the heels of Sanofi’s $11.6 billion buyout of Bioverativ in a play for the hemophilia market, will also stoke hopes in the banking community for a burst of new M&A deals in biotech, which will rain cash and fees in the industry after a long dry spell.

It will take awhile before it begins to pay off for Celgene, though. In their statement today, the company notes:

The acquisition is expected to be dilutive to adjusted EPS (earnings per share) in 2018 by approximately $0.50 and is expected to be incrementally additive to net product sales in 2020. There is no change to the previously disclosed 2020 financial targets of total net product sales of $19 billion to $20 billion and adjusted EPS greater than $12.50.

Notes Alles:

Juno’s advanced cellular immunotherapy portfolio and research capabilities strengthen Celgene’s global leadership in hematology and adds new drivers for growth beyond 2020.


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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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