Over the past year Celgene has committed $1.25 billion in cash – plus billions more in milestones – to a pair of major immuno-oncology deals with Juno and Agios. Today, Celgene has chosen its new star partner for cancer R&D, stepping up with a richly front-ended $2.56 billion deal to collaborate with upstart Jounce Therapeutics’ on its lead I/O program, plus a package of treatments in discovery.
It’s a classic Celgene deal, swinging for the fences for a potential blockbuster or two while aggressively wooing up-and-coming developers with an open checkbook and an open mind about leaving lead research efforts on the drugs to their new dance partner. More such deals are on the way, as top execs at Celgene pave the way to new pacts designed to take them well past the first wave of checkpoint inhibitors, as well as the T cell treatments now in late-stage development, to command a leading role for itself in the field.
Celgene is paying $225 million in the upfront, adding $36 million in equity and committing up to $2.3 billion in milestones to complete the deal. In turn the big biotech gets dibs on a 40% share of U.S. profits for Jounce’s lead drug, the preclinical JTX-2011, plus a 75% share for its unnamed successor and a split on three more programs. There’s also an opt-in available on an experimental checkpoint program taking shape at Jounce.
Once Celgene chooses to opt in, the two companies will divvy up expenses the same way they plan to share profits. And Celgene gets all ex-U.S. revenue with a royalty stream for Jounce.
“We love deals like this,” Celgene CSO Rob Hershberg tells me. “ICOS is the most advanced in the (Jounce) pipeline, driving the economics, but it is way beyond a T-cell deal. Agios is a perfect example, pushing the envelope beyond the conventional checkpoint story.”
Hershberg sees Agios as the best in cancer metabolics. And now he’s been deeply impressed by the team at Jounce – immuno-oncology rock star Jim Allison is a scientific co-founder – and its abilities to identify biomarkers while clearly defining patient subgroups most likely to benefit.
“The quality of the science and the people is really good,” says the CSO.
Celgene has a collaboration in place with AstraZeneca’s PD-L1 durvalumab, adds Hershberg. But when the checkpoints can reliably help about 25% of patients as a single agent, Celgene has a big focus on that other 75% of the market.
Adds Hershberg: “We don’t want to compete with 500 other trials in combination with a checkpoint.”
“This is really going to allow us to expand the way we need to,” says Jounce CEO Rich Murray. Currently operating with a staff of 60, Murray expects to add 20 more employees later in the year, with the lead drug going to its first, four-part adaptive study that starts with safety and PK and leads to the efficacy stage in the second half of next year.
That lines up with a popular strategy on cancer drug development, where the traditional breakdown in trials has now blended into a relatively fast shot at pivotal results. The lead program will be tested as a single agent and in combo with a PD-1 checkpoint inhibitor. And Jounce plans to push its own checkpoint program into the clinic as a “logical component” of a larger oncology effort like this.
The platform company was launched by Third Rock, ringing up $103 million in two venture rounds from investors deeply impressed by its marquee scientific co-founders, Allison and Pam Sharma.
The lead drug says a lot about Jounce. It’s focused on ICOS, AKA the Inducible T cell CO-Stimulator, a protein on the surface of T cells Jounce — and now Celgene — believes can spur an immune response against a patient’s cancer. Immuno-oncology has been at the crossroads of a multitude of deals over the past three years, and Celgene clearly wants to be in the front end of the second wave — what Murray calls immuno-oncology 2.0 — after Bristol-Myers and Merck led the way with Opdivo and Keytruda for checkpoint inhibition.
Celgene has a big focus on oncology, with franchises for Revlimid and Abraxane funding a large pipeline effort that includes pacts for Juno’s JCAR015 and JCAR017. After that comes immunology and inflammation.
Murray says Jounce started off 2016 with a variety of options on the table, primarily revolving around an IPO or a major pact. The market hasn’t cooperated, yet, on the IPO, and after trying out various “flavors” of potential deals, Jounce opted for a big scoop of Celgene.
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