Is Juno worth a $10B-$12B buy­out price? An­a­lysts see megabucks deal in the mak­ing on re­port­ed Cel­gene talks

Just a week af­ter bag­ging a blood can­cer drug at the FDA’s thresh­old in a multi­bil­lion-dol­lar deal, Cel­gene is re­port­ed­ly in talks to buy Juno Ther­a­peu­tics in a move that would give it a ma­jor, late-stage ef­fort on the CAR-T front.

The Wall Street Jour­nal is re­port­ing that sources close to the deal are telling them Cel­gene is in the hunt, and some an­a­lysts say that any fi­nal price could hit close to or even sur­pass the $10 bil­lion mark.

A spokesper­son for the biotech tells me that Juno doesn’t com­ment on mar­ket ru­mors. But you can be­lieve that there are plen­ty of pun­ters who are bet­ting that there’s fire un­der all that bil­low­ing smoke. Juno’s shares are up 55% in pre­mar­ket trad­ing Wednes­day. Be­fore the big spike, its mar­ket cap sat at $5.2 bil­lion.

Typ­i­cal­ly, with a mar­ket cap that big, a buy­out could be ex­pect­ed to ring up around a 50% pre­mi­um. But an­a­lysts who have been fol­low­ing these com­pa­nies say that’s all wrong. Cel­gene, they say, paid $93 a share to buy in­to Juno, and they ex­pect CEO Mark Alles to go all in on a deal that could range as high as $12 bil­lion.

Michael Schmidt at Leerink not­ed:

If a deal hap­pens like­ly de­pends on the price and if oth­er bid­ders emerge. We’d be sur­prised if JUNO would ac­cept an of­fer low­er than KITE’s ac­qui­si­tion price of $11.9Bn, giv­en the com­pa­ny’s high lev­el con­vic­tion of hav­ing de­vel­oped a best-in-class CAR-T plat­form and that CELG pre­vi­ous­ly ac­quired 10% of JUNO shares at $93/share.

Cel­gene will clear­ly be fo­cused on gain­ing the same ca­chet that Gilead found when it ac­quired Kite just ahead of its first land­mark ap­proval. But this one will take more time to bear reg­u­la­to­ry fruit. Nev­er­the­less, Ge­of­frey Porges al­so says it could wind up in the same ball­park as Gilead’s $12 bil­lion deal to ac­quire Kite. He notes:

We would ex­pect Cel­gene to pay up to at least the val­u­a­tion where they made their pri­or in­vest­ment ($93/share) in Juno. This would make it a ~$10bn trans­ac­tion, or a 98% or 82% pre­mi­um to Juno’s 30 day ($46.98) and 90 day ($50.82) trail­ing stock price. This would al­so, co­in­ci­den­tal­ly, put the trans­ac­tion price ($11bn gross with Juno’s cash) in the same range as the to­tal pay­ment by Gilead (GILD, MP) for Kite ($12bn), which al­so seems rea­son­able giv­en the sub­stan­tial sim­i­lar­i­ty be­tween the com­pa­nies.

There’s like­ly to be plen­ty of kick­back on that set of num­bers, though. Juno’s stock has re­gained much of its lost val­ue since the lead tri­al de­ba­cle, and pay­ing dou­ble the cur­rent mar­ket cap would like­ly raise ques­tions about Alles’ ne­go­ti­at­ing abil­i­ties. Bloomberg an­a­lyst Max Nisen counts him­self among the skep­tics, not­ing that Cel­gene it­self has al­ready pro­ject­ed peak sales for Juno’s JCAR017 at an unim­pres­sive $1 bil­lion.

Juno has al­so been spot­light­ing its own BC­MA CAR-T, leav­ing Cel­gene — close­ly part­nered with blue­bird bio on a close­ly-watched BC­MA pro­gram — with a po­ten­tial prob­lem that could lead to ei­ther elim­i­nat­ing one or see­ing one go to an­oth­er com­pa­ny.

Once a leader in the race to field the first CAR-T, Juno was slammed af­ter its lead drug had to be scrapped fol­low­ing a string of deaths in the piv­otal study. But armed with what it had learned in the process, the biotech was well along the way in mount­ing a come­back with a new lead ther­a­py that has pro­duced some stel­lar ef­fi­ca­cy and safe­ty da­ta.

Mark Alles

Cel­gene, mean­while, has been forced to mount a come­back ef­fort of its own af­ter Alles man­aged to rat­tle the mar­ket last year with a shaky fi­nan­cial per­for­mance that raised doubts about its con­tin­ued fast growth. Much of its growth now is due to hik­ing the price of its fran­chise drug Revlim­id. And af­ter a late-stage test proved mon­gersen was a flop, most eyes had turned to up­com­ing da­ta on ozan­i­mod for proof that Cel­gene has the goods to please a de­mand­ing set of in­vestors.

That set the stage for last week’s $1.1 bil­lion up­front deal to ac­quire Im­pact, a com­pa­ny that had been new­ly float­ed to take a sec­ond stab at run­ning the myelofi­bro­sis drug fe­dra­tinib back in front of FDA reg­u­la­tors af­ter John Hood, a co-in­ven­tor, made the case that the safe­ty is­sues that had tor­pe­doed the drug at Sanofi were in­ac­cu­rate.

In their ab­stract out for ASH last fall, Juno ex­ecs spelled out a key piece of da­ta for the high dose arm of the ear­ly study on JCAR017. Ze­ro­ing in on that one snap­shot, re­searchers say they tracked an 80% over­all re­sponse rate and a 73% com­plete re­sponse rate at 3 months for the high dose among a “piv­otal core” group of 15 pa­tients.

But Brad Lon­car, an in­de­pen­dent in­vestor who set up the Lon­car Can­cer Im­munother­a­py ETF $CN­CR, hasn’t been a big fan of Juno’s.

De­vel­op­ment of the Next Gen­er­a­tion NKG2D CAR T-cell Man­u­fac­tur­ing Process

Celyad’s view on developing and delivering a CAR T-cell therapy with multi-tumor specificity combined with cell manufacturing success
Transitioning potential therapeutic assets from academia into the commercial environment is an exercise that is largely underappreciated by stakeholders, except for drug developers themselves. The promise of preclinical or early clinical results drives enthusiasm, but the pragmatic delivery of a therapy outside of small, local testing is most often a major challenge for drug developers especially, including among other things, the manufacturing challenges that surround the production of just-in-time and personalized autologous cell therapy products.

Paul Hudson, Getty Images

UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 67,300+ biopharma pros reading Endpoints daily — and it's free.

Roger Perlmutter, Merck

#ASH19: Here’s why Mer­ck is pay­ing $2.7B to­day to grab Ar­Qule and its next-gen BTK drug, lin­ing up Eli Lil­ly ri­val­ry

Just a few months after making a splash at the European Hematology Association scientific confab with an early snapshot of positive data for their BTK inhibitor ARQ 531, ArQule has won a $2.7 billion buyout deal from Merck.

Merck is scooping up a next-gen BTK drug — which is making a splash at ASH today — from ArQule in an M&A pact set at $20 a share $ARQL. That’s more than twice Friday’s $9.66 close. And Merck R&D chief Roger Perlmutter heralded a deal that nets “multiple clinical-stage oral kinase inhibitors.”

This is the second biotech buyout pact today, marking a brisk tempo of M&A deals in the lead-up to the big JP Morgan gathering in mid-January. It’s no surprise the acquisitions are both for cancer drugs, where Sanofi will try to make its mark while Merck beefs up a stellar oncology franchise. And bolt-ons are all the rage at the major pharma players, which you could also see in Novartis’ recent $9.7 billion MedCo buyout.

ArQule — which comes out on top after their original lead drug foundered in Phase III — highlighted early data on ‘531 at EHA from a group of 6 chronic lymphocytic leukemia patients who got the 65 mg dose. Four of them experienced a partial response — a big advance for a company that failed with earlier attempts.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 67,300+ biopharma pros reading Endpoints daily — and it's free.

Paul Hudson, Sanofi

Paul Hud­son promis­es a bright new fu­ture at Sanofi, kick­ing loose me-too drugs and fo­cus­ing on land­mark ad­vances. But can he de­liv­er?

Paul Hudson was on a mission Tuesday morning as he stood up to address Sanofi’s new R&D and business strategy.

Still fresh into the job, the new CEO set out to convince his audience — including the legions of nervous staffers inevitably devoting much of their day to listening in — that the pharma giant is shedding the layers of bureaucracy that had held them back from making progress in the past, dropping the duds in the pipeline and reprioritizing a more narrow set of experimental drugs that were promised as first-in-class or best-in-class.  The company, he added, is now positioned to “go after other opportunities” that could offer a transformational approach to treating its core diseases.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 67,300+ biopharma pros reading Endpoints daily — and it's free.

Am­gen puts its foot down in shiny new South San Fran­cis­co hub as it re­or­ga­nizes R&D ops

Amgen has signed up to be AbbVie’s neighbor in South San Francisco as it moves into a nine-story R&D facility in the booming biotech hub.

The arrangement gives Amgen 240,000 square feet of space on the Gateway of Pacific Campus, just a few minutes drive from its current digs at Oyster Point. The new hub will open in 2022 and house the big biotech’s Bay Area employees working on cardiometabolic, inflammation and oncology research.

Ab­b­Vie, Scripps ex­pand part­ner­ship, for­ti­fy fo­cus on can­cer drugs

Scripps and AbbVie go way back. Research conducted in the lab of Scripps scientist Richard Lerner led to the discovery of Humira. The antibody, approved by the FDA in 2002 and sold by AbbVie, went on to become the world’s bestselling treatment. In 2018, the drugmaker and the non-profit organization signed a pact focused on developing cancer treatments — and now, the scope of that partnership has broadened to encompass a range of diseases, including immunological and neurological conditions.

South Ko­rea jails 3 Sam­sung ex­ecs for de­stroy­ing ev­i­dence in Bi­o­Log­ics probe

Three Samsung executives in Korea are going to jail.

The convictions came in what prosecutors had billed as “biggest crime of evidence destruction in the history of South Korea”: a case of alleged corporate intrigue that was thrown open when investigators found what was hidden beneath the floor of a Samsung BioLogics plant. Eight employees in total were found guilty of evidence tampering and the three executives were each sentenced to up to two years in prison.

Nick Plugis, Avak Kahvejian, Cristina Rondinone, Milind Kamkolkar and Chad Nusbaum. (Cellarity)

Cel­lar­i­ty, Flag­ship's $50M bet on net­work bi­ol­o­gy, mar­ries ma­chine learn­ing and sin­gle-cell tech for drug dis­cov­ery

Cellarity started with a simple — but far from easy — idea that Avak Kahvejian and his team were floating around at Flagship Pioneering: to digitally encode a cell.

As he and his senior associate Nick Plugis dug deeper into the concept, they found that most of the models others have developed take a bottom-up approach, where they assemble the molecules inside cells and the connections between them from scratch. What if they opt for a top-down approach, aided by single-cell transcriptomics and machine learning, to gauge the behavior of the entire cellular network?

Sanofi’s big week in­cludes a promis­ing PhI­II for an or­phan dis­ease drug, with plans for a pitch to the FDA

The biopharma R&D food chain is paying off with a plan at Sanofi to pitch regulators on a new drug for an orphan disease called cold agglutinin disease.

The pharma giant ushered out a statement Tuesday morning — after it spelled out plans to radically restructure the company, abandoning cardio and diabetes research altogether — saying that their C1s inhibitor sutimlimab had cleared the pivotal study.