Celgene pays $1bn for stake in CAR-T specialist Juno

US firm Celgene is desperate not to be left out of the race to develop chimeric antigen receptor T cells (CAR-T) for cancer, paying $1 billion for a slice of Juno Therapeutics, one of the leaders in the emerging field.

Celgene is digging deep into its pockets to purchase more than 9 million shares in Seattle-based Juno, which recently reported encouraging early clinical data on JCAR014, a CAR-T therapy for B-cell cancers, at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago.

Juno's lead candidate is JCAR015, which recently completed a phase I evaluation in acute lymphoblastic leukaemia (ALL), has been awarded breakthrough status by the US FDA.

CAR-T therapies involve the engineering of a patient's own immune cells so that they are more effective at identifying and destroying malignant cells. They are considered one of the most promising new approaches in immune-oncology, along with checkpoint inhibitor drugs that switch off mechanisms used by tumour cell to evade detection by the immune system.

The alliance throws down a gauntlet to Novartis - Juno's arch-rival in the CAR-T category – which is developing a therapy called CTL019 that recently started Phase II testing in ALL patients and also reported data of a therapy for solid tumours earlier this year. The two companies settled litigation on CAR-T patents earlier this year but are still locked in a race to bring the first therapy to market amidst other players such as Kite Pharma and Bluebird Bio.

The 10-year agreement gives Celgene an option to sell Juno therapies outside North America, including the latter's CD19 and CD22 directed CAR-T product candidates, but excluding a programme looking at B-Cell Maturation Antigen (BCMA). In return, Juno gains co-development and co-promotion rights for Celgene product candidates targeting T cells, according to the two companies.

Should the collaboration prove fruitful, Celgene also has the option to buy up to 30 percent of Juno's common stock.

"Celgene is the ideal partner for Juno to help us realise the full potential of our science and clinical research while maintaining the independence we ... believe is so critical for true innovation," said Hans Bishop, the company's chief executive.

Investors in Juno seemed bullish on the deal, with shares in the company spiking in after-hours trading yesterday, although their counterparts in Celgene seemed a little less impressed. Celgene stock was down a couple of percentage points, presumably as shareholders reacted to the premium paid for the stake.

Analysts also expressed their concern about the financials of the deal, which at $93 per share is more than twice the value of Juno stock before the agreement was disclosed, particularly as the technology is unproven and any products are still years away from the market. Juno is also receiving a $150 million upfront fee from Celgene.

In a research note, Geoffrey Porges of Sanford C. Bernstein said Celgene's management "are to be congratulated on the audacity of their deal-making, but we expect investors to bridle at the company's increasingly aggressive front-end loading of their transactions."